Organic food exports surge but certification remains a major issue

At a time when India's overall agriculture exports have been stagnating since 2015-16, there is segment within it that has been growing by leaps and bounds. 

Export of organic foods has risen by almost 25 per cent between 2015-16 and 2016-17 from Rs 19.76 billion to Rs 24.78 billion at a time when overall farm exports grew by less than one per cent from Rs 1,074.31 billion to just Rs 1,084.26 billion, official data showed.

Though it is a very small portion of India’s overall agriculture export basket (less than 3 per cent), organic food has shown a consistent increase the last few years. 

In fact, in the past decade, organic food exports have grown from around Rs 5 billion a year to almost Rs 25 billion.

Soybean seeds and raw cotton make up almost half these exports while spices, tea, pulses, cereals and millets constitute the remaining. 

“US and EU, along with Canada, are the major destinations for India’s organic food exports, which have a lot of potential,” Pankaj Agarwal, co-founder of Just Organik, a Gurgaon-based organic firm says.

He feels unless there is proper synergy between various agencies and bodies working for the promotion of organic products in India and abroad, the sector cannot grow.

Certification by a multitude of authorities remains a big problem for the sector.

Recently, the Food Safety Standards Authority of India (FSSAI) said in a notification that any product that hasn’t been certified by it and does not carry a label on its organic status can’t be sold. 

Organic food produced by small farmers and some that have been self-certified, in a process called PGS certification, are exempted from this. 

Activists have termed the notification retrograde and something that can impede the growth of organic produce in the country. 

It isn't just for domestic sales that this problem persists. Even for exports, traders and industry players have to deal with a multitude of authorities and rules and bylaws, which complicates the entire process and leads to cost escalation.

“Though exports of organic products are rising as the number of players in the market has grown in the past few years, much potential is constrained due to factors like non-recognition of PGS or self-certification by Apeda (Agricultural and Processed Food Products Export Development Authority), which insists on third-party certification for exports while the agriculture ministry grants subsidy to PGS certified products,” Arpita Mukherjee, a professor in Indian Council for Research on International Economic Relations (ICRIER) said.

As a result, a large portion of India’s organic food grown with the help of government subsidy isn’t exported. 

“The database of India’s organic products is very poor and traceability, which is key for export growth, remains weak, while third party certification as insisted by APEDA is very costly,” Mukherjee added. 

The result of all these is that India’s loses out on the organic export market in a big way. This is something that Agarwal of ‘Just Organik’ too believes should be attended to at the earliest, if India wishes to improve its standing in the world market. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel