Why is Organic Food expensive?

Pushed by big retail and peddled by celebrities, organic food—safe, good, wholesome stuff that ought to be within the reach of everyone—is today a lifestyle fad. Why is chemical-free produce so fashionable, and so expensive?

 

There’s no escaping it. Organic is everywhere these days—the papers are full of nutrition experts singing hallelujahs to organic food, on TV there’s a celebrity passionately recommending organic as a ‘way of life’, and just about every other corporate type you encounter harbours the dream of taking up organic farming some day.

The big retail chains have their dedicated shelves for organic food, and some of the biggest corporate houses are considering ‘getting into’ the organic business in a big way.TV commercials like the one for Sahara Q scare you with visuals of hospital beds and wheel chairs, presumably the fate that awaits you if you are still refusing to go organic.

True, by now we have all heard enough horror stories to know that chemical fertilisers and pesticides are bad for us, and nature knows best when it comes to growing food. But why then is ‘organic’ less food and more style statement, and importantly, why is it so expensive that even a leading fashion guru (read on) says he can’t afford it? Is safe food and good health the prerogative of the superrich?Why is this pesticide-free food unaffordable and unavailable to most people in the country?

pic courtesy: Krishna Prasad

Pay for the frills

 

Not surprisingly, consumers have to shell out more for organic food for the same reason they do so for fashion labels: branding andpackaging. According to marketing expert Harish Bijoor, organic produce is niche, and “whatever is niche is expensive, and whatever is expensive is chic.” The very definition of chic is that it should differentiate itself from mass products. Organic food fits the bill, not just because it tastes and looks different from those produced using chemical methods, but also because of its celebrity quotient. Bijoor points out that companies promoting organic produce have packaged and branded them well, which allows them to charge a premium.

Companies that market organic food claim that packaging has to do more with competition than profit margins. “We need to package well to meet international standards and compete with countries like Germany,which is in No 1 in export. In the domestic market, conventional food is packaged well and we have to compete with them too,” says Mukesh Gupta, executive director of Morarka Organic Foods Pvt Ltd, which owns popular organic brands like Down to Earth and Back to Basics. He admits that organic products are branded as lifestyle products, but insists that his company’s products are value for money.

The branding-packaging factor is also affecting small-scale producers of organic food. G Krishna Prasad, director of farmer’s group Sahaja Samruddha, says, “Our farmer’s group sells a particular kind of rice for Rs 40 a kg. We supply the same grains to the retail chains too. The same product is packed well and sold for Rs 65 a kg. Of this, only Rs 30 goes to the farmer. When we want to sell our produce in malls, they demand a 40 per cent commission.”

N Balasubramanian, CEO of Sresta Natural Bioproducts Private Limited, which owns the organic food brand 24 Letter Mantra, blames the retail outlets as well for the higher prices. “Since organic food is a new category, retailers expect higher margins compared to conventional products,” he says.

 

Consumers who like it pricey

 

Krishna Prasad holds the loose purse-strings of its well-off consumers equally responsible for the high pricing of organic food. “When the products are reasonably priced, people don’t appreciate it. So, we are forced to brand them and sell,” he says.

Prasad has been selling traditional rice varieties long before the organic movement gained momentum. When he first attempted to sell the Navara and Kari rice varieties years ago, there weren’t many takers. Navara rice is traditionally gifted to young brides in Andhra by their mothers. Prasad tested the rice in the lab and found it rich in iron, so he branded it as ‘rice for pregnant women’. Sales shot up. He reveals another of his secrets, behind his bestselling ‘diabetics’ rice.’ “Kari rice has a bran layer, which is nothing but digestible fibre. People knew about its benefits in the olden days too, but I had to call it ‘diabetics’ rice’ for city-dwellers to accept it.

Kavitha Kuruganti, national convenor of the Alliance for Sustainable and Holistic Agriculture (ASHA), agrees that branding has driven up the price of organic foodstuff.“These days we want everything branded.This kind of marketing has to change,” she says.

Fashion choreographer Prasad Bidappa believes people are willing to spend more on organic food because they consider it fashionable.“When someone reads of a New Yorkbased dietician talk of organic food, they go for it. Hollywood and celebrities like Madonna have popularised the concept of organic food,” he says

Bidappa does not believe in ‘going organic’ simply because he finds it too expensive.“It is priced almost two and a half times more than the regular food. It is not viable,”he says.

The certification facto

Krishna Prasad holds the loose purse-strings of its well-off consumers equally responsible for the high pricing of organic food. “When the products are reasonably priced, people don’t appreciate it. So, we are forced to brand them and sell,” he says.

Fashion choreographer Prasad Bidappa believes people are willing to spend more on organic food because they consider it fashionable. “When someone reads of a New Yorkbased dietician talk of organic food, they go for it. Hollywood and celebrities like Madonna have popularised the concept of organic food,” he says.

Bidappa does not believe in ‘going organic’ simply because he finds it too expensive.“It is priced almost two and a half times more than the regular food. It is not viable,” he says.

Most organic farming done in India is done keeping export in mind. The products are targeted at the European market, where there is a high level of awareness about organic food,and an equally high demand. The catch is that the EU is stringent with quality control, and insists specific types of certification on produce it imports from India. “When certification comes into the picture, the prices escalate,” explains Kavitha.

Prasad of Sahaja Samruddha, who works with traditional farmers, finds the demands of EU-style bureaucracy—with its accompanying tribe of ‘experts’ and ‘consultants’ cumbersome enough to call the certification regime “a mafia.”

This certification is very expensive and a lengthy procedure with a lot of paper-work. The cost is automatically passed on to the consumer. This EU style of certification should not be applied to food for the domestic market,” he complains.

Vijay Grover, the founder of Bangalore Organic Store, testifies to the price difference caused by certification. “Our store keeps both branded certified produces and also produce from local farmers. The certified ones are definitely more expensive,” he says.

Certifying agencies say certification is a must only if the produce is to be exported to Europe, Japan or US. “There is no law in India that asks for certification if the produce is to be sold in the domestic market,” says Vasudeva, quality manager at IMO Control,an international quality assurance and certifying company for agricultural produce. However, most high-end branded organic produce in the Indian market does have expensive international certification.

Vasudeva suggests that the certification helps companies build a brand image and give assurance to the people. “When the consumer sees the certification, they are convinced that the product is genuine,” he says. He says that the cost of certification is about two percent of the total turnover, which is passed on to the consumers. However, he admits that it is not viable for small farmers, or even those who have 10 acres of farm land.

Sresta CEO Balasubramanian agrees that certification adds on to the cost. “Farm and production methods must comply with certain standards, which may require the modification of facilities. Employees must be hired to maintain the quality and keep the product ready for inspection at any time,” he says

Recently, yielding to agitations by organic farmer’s groups, the central government has recognised the Participatory Guarantee System (PGS), a cheaper form of certification. Kavitha points out that under this system, a group of farmers is certified collectively, and instead of an external agency keeping an eye on the farms, the checks are kept by the farmers themselves. In addition, there are random checks by a third party too. “If any one farmer is found to be cheating, the certification for the entire group is cancelled. So the farmers make sure that they and their counterparts are sincere,” she says.

 

 No state support

 

Karnataka was the first state to come up with an Organic Farming Policy which sought to put farmers’ interest first. The policy has since been deemed a failure. The BJP government then renamed it the Amruta Bhoomi Project, but it never really took off. Last year, the government announced a budget of Rs 206 crore to promote organic farming in the state, but not a paisa was released. This year, Rs 200 crore has been allotted again; it has to be seen if anything will come of it.

Critics like Prasad say that the government is only interested in boosting revenueearning export of organic produce rather than encouraging local farmers who cater to the domestic market. Further, he points out how many schemes that aresupposedly meant to help the farmer actually end up benefiting the big retail chains. He recalls a scheme by the horticulture department, where Rs one crore loan was offered to “promote organic farming”. “I went there, but they asked for something like a guarantee of Rs 50 lakh, which our farmers could not provide. I went back after six months and asked who have taken the loan. They revealed the names of some big retail chains run by MNCs,” he says

With no subsidy from the government, organic farmers find it difficult to match the prices of the produce from chemical farms. “The government gives subsidy on seeds, urea and pesticides to farmers using chemical methods. Their yield too is much higher. At the most, what we get is a supply of vermicompost once in a year.” He further points out that organic farmers do not even get loans easily, unlike conventional farmers, all of which add to the cost factor, and discourage those who want to take up organic farming.

 

Transport and labour

 

Organic farmers Talk spoke to recall that in the initial years of shifting to this method, the yields were lower than of conventional farming.It takes two to three years for the soil to regain the nutrients it has lost due to chemical methods.While the low yields put pressure on the farmers to mark up their prices, transport costs further add to it, owing to the smaller quantities they produce.

It takes two to three years for the soil to regain the nutrients it has lost due to chemical methods.While the low yields put pressure on the farmers to mark up their prices, transport costs further add to it, owing to the smaller quantities they produce.

Organic at regular prices

Manorama’s organisation runs a shop called Vaanya in Sirsi in Uttar Kannada district.Surprisingly, they manage to sell organic produce at market rates.Manorama says this is partly because they are selling at a lower margin, given that they are trying to promote the concept, and they don’t incur the heavy transportcharges a city like Bangalore pays for its farm produce.

Kavitha suggests we buy organic produce from local farmers, and not from big stores and brands. “We could go to farmer markets and buy directly. Here the costs are higher by only 10-15 per cent when compared to regular produce. It is a win-win situation for both the consumer and the cultivator,” she says.

Grover of Bangalore Organic Store echoes her views, and insists that many customers who have tried organic products from local farms keep away from the branded ones. “They try the local ones and if they find it the same,they buy again. They buy it purely on trust,” he says.

IMO Control’s Vasudeva too agrees that one needn’t worry about certification if there’s a rapport between the seller and the buyer. “If there is a neighbourhood farmer or farmer’s organisation you trust, you can buy it from him at a lower price.”

s origin might have been as an international fad, but today there is a general consensus that organic food is good for you, and the environment. And for farmers who give up conventional farming in favour of less lucrative organic, a helping hand from urban consumers would be  welcome.

 

http://talkmag.in/cms/trends/item/109-organic-the-food-and-the-fad

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3 responses to this post.

  1. Posted by Organic Shop on November 13, 2012 at 7:39 am

    You can buy certified and branded organic food online at http://organicshop.in/organic-food

    Reply

  2. […] Why is Organic Food expensive? | Placid Fire – Pay for the frills Not surprisingly, consumers have to shell out more for organic food for the same reason they do so for fashion labels: branding andpackaging. […]

    Reply

  3. Posted by subhashish ghosh roy on February 9, 2016 at 5:39 am

    fat pay cheques of mbas employed by companies also adds to price tags of organic branded foods

    Reply

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