Organic Produce in the Nilgiris

77 Pages·2007·1.12 MB·English

Organic Produce in the Nilgiris – Promoting Local Markets

A MARKET STUDY REPORT

Keystone Foundation
Nilgiris
August 2006

Funded by AGRECOL, Germany
Under the Project

- Local Markets Development in Organic Agriculture –
TABLE OF CONTENTS
1. INTRODUCTION……………………………………………………………..…..…..5
1.1 Organic Farming in India…………………………………………………………………………………………....6
1.2 Rationale of Study…………………………………………………………………………………………. …...….8
1.3 Objectives…………………………………………………………………………………………………. . …...…8

2. LITERATURE REVIEW AND STUDY AREA……………………………….……9

2.1 Literature Review……………………………………………………………………….………………………………..……..9

2.1.1 Organic Agriculture Policy in India ………………………………………………………………………………………...9
2.1.2 Indian domestic market…………………………………………………………………………………………………......10

2.1.3 Export Market……………………………………………………………………………………………………………….11
2.2 Study Area …………………………………………………………………………………………………..….....12

2.2.1 Nilgiris…………………………………………………………………………………………………………………..…..12
2.2.2 The people……………………………………………………………………………………………………………..…….13

3. METHODOLOGY…………………………………………………………………..15

3.1 Phases of the Study………………………………………………………………………………………………..15
3.2 Sampling Frame…………………………………………………………………………………………...…… 15
3.3 Data Collection Technique………………………………………………………………………………….…….16
3.4 Methodology for Consumer Survey……………………………………………………………………………....17
3.5 Secondary Data…………………………………………………………………………………………….……..19
3.6 Analysis and Presentation ……………………………………………………………………………………......19

4. FINDINGS AND ANALYSIS OF CONSUMER SURVEY………………….....….20

4.1 Profile of Household Respondent…………………………………………………………………………………20
4.2. Awareness regarding organic and forest produce……………………………………………………………….……...... 21

4.2.1 Awareness or understanding of the term ‘Organic’………………………………………………………….……………... 22
4.2.2 Source of organic produce………………………………………………………………………………………………....... 23
4.3. Willingness to Buy, having bought and willingness to pay the premium……………………………………..... .24

4.3.1 Willingness to Buy………………………………………………………………………………...……………………….. .24
4.3.2 Having bought……………………………………………………………………………………...……………………. … 24
4.3.3 Willingness to pay the premium…………………………………………………………………...………………………... 25
4.4. Factors influencing buying action………………………………………………………………………...…………………....... 26
4.4.1 Place of purchase of foodgrains, spices and other food items except vegetables………...…………………………………. 26
4.4.2 Preferred place for availability of Organic products except Vegetables…………………………………………………..... 27
4.4.3 Place of purchase of vegetables………………………………………………………………...………………………...…. 27
4.5. Reasons for not willing to buy organic foods readily……………………………………...…………………...... 28
4.5.1 Concerns Raised………………………………………………………………………………...……………………...……. 29
4.6 Factors influencing buying action………………………………………................................................................. 29
4.6.1 Attributes in organic produce………………………………………………………………...……………………………... 29
4.6.2 Willingness to buy organic: Reasons……………………………………………………...………………………………… 30
4.7. Forest base Produce…………………………………………………………………...…………………………..………...... 30
4.7.1 Criteria for buying forest based produce……………………………………………………………………………………. 30
4.7.2 Having bought Forest based produce………………………………………………...……………………………………... 31
4.7.3 First item to be changed to organic in diet………………………………………………………………………………….. 32
4.8. The Perception of Environment Friendly Product……………………………………………………….……………….. 32
4.9. Attitudinal Profile…………………………………………...……………………………………………………………..…. 33
4.9.1 Significant Findings…………………………………………………………………………………………………………. 34

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5. FINDINGS AND ANALYSIS OF TOURIST SURVEY……..…………………….35

5.1 Tourist Profile…………………………………………………………………………….………………………....35
5.2 Awareness regarding organic and forest produce and reasons for buying…………………….…………………....36

5.2.1 Awareness of the source of Amla, Shikakai and other medicinal plants used in ‘herbal Products’…………..……………... .36
5.2.2. Reasons for buying organic ……………………………………………………………………………..………………….....37
5.2.3 Awareness on source of organic produce…………………………………………………………..………………………. …38
5.3 Willingness to pay the premium………………………………………………………………………………….... 38
5.4 Factors influencing buying action………………………………………………………………………………….. 39

5.4.1 Reading the literature written on organic and indigenous products…………………………………….…………………….. 39
5.4.2 Influence of Label and other information on buying action……………………………………………………………………39
5.4.3 Attribute of Organic Produce……………………………………………………………………………….……………… ..40
5.4.4 Criteria for buying forest based produce……………………………………………………………….………………………41
5.5 The perception of environment friendly products…………………………………………………………………...41
5.6 Fair Trade…………………………………………………………………………………...…………………….....42
5.7 Willingness to buy Indigenous produce………………………………………………………...……………...………….......43

6. FINDINGS AND ANALYSIS OF SCHOOL SURVEY……………………….…...44

6.1 Attitudinal Profile………………………………………………………………………………………………….....44
6.1.1 Significant Findings………………………………………………………………………………………………………….... 45
6.2 Possibility of using organic Foodgrains, fruits and vegetables………………………………………………………….. .46
6.3 Accepted level of price for organic food………………………………………………………………………………...…..... 46
6.4 Frequency of purchase……………………………………………………………………………………………………...….... 47

6.4.1 Foodgrains…………………………………………………………………………………………………………….……… 47
6.4.2 Vegetables and Fruits……………………………………………………………………………………………….…………. .47
6.4.3 Spices…………………………………………………………………………………………………………….………………48

7. FINDINGS AND ANALYSIS OF HATTI SURVEY…………...……………….. 48

7.1 Awareness regarding organic and forest produce………………………………………………..………………................. 48
7.2 Willingness to buy organic produce and willingness to pay the premium………………………….……………….…. 49
7.3 Willingness to grow organic…………………….………………………………………………….…………………….…… 49
7.3.1 Marketing problems………………………………………………………………………………………………………….. 50
7.4 Focus group discussion with women………..………………………………………………………………………...……... 51
7.5 The Earth Trust………………………………..………………………………………………………………………………… 51

8. FINDINGS AND ANALYSIS OF GREEN SHOP SURVEY………………...…. 53

8.1 Need for a survey……………………………………………………………………………………………………...……….. 53
8.2 Green shop customer survey……………………………………………………………………………………………...…... 53
8.3 Green shop Tourist survey………………………………………………………………………………….……………..….. 54
8.4 Hatti Survey……………………………………………………………………………………………………………..……… 54

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9. WAY FORWARD - FUTURE STRATEGIES AND RECOMMENDATIONS 55

9.1 Major Issues…………………………………………………………………………………………………...………………. 55
9.1.1 Need for greater awareness among producers and consumers…………………………………………………………...….55
9.1.1.1 Consumers……………………………………………………………………………………………………………….55
9.1.1.2 Producers………………………………………………………………………………………………………..……... 56
9.1.2 Government policy and program support for encouraging organic cultivation………………………………………..…. ..56
9.1.3 Marketing and Promotion……………………………………………………………………………………………..….… 56
9.1.4 Certification and Regulation………………………………………………………………………………………..……….56
9.1.5 Information exchange……………………………………………………………………………………………..…………56
9.2 Developing a strategy for marketing organic products ……………………………………………….………………….57
9.2.1 Marketing Strategy……………………………………………………………………………………………..…………….58
9.2.1.1 In Towns……………………………………………………………………………………………………..…………...58
9.2.1.2 In Hattis……………………………………………………………………………………………………………. …....58
9.3 Cultivating and organizing the supply base………………………………………………………………………..59
9.4 Future strategy for Green Shop……………………………………………………………………………………….………59
9.5 The organic Farm Shop………………………………………………………………………………..…………....................60
9.6 The organic Bazaar………………………………………………………………………………………………………. …... 60
9.7 Conclusion……………………………………………………………………………………………………………………60

REFERENCES……………………………………………………………………………..…………….62

ANNEXURES
List of Hattis surveyed…………………………………………………………………………………… 63
Questionnnaires of survey…………………………………………………………………………… 64-77
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CHAPTER ONE
INTRODUCTION

Background and context

Keystone started work in the Nilgiris in 1995 with Adivasi
Organic – A way of living that
communities on honey gathering and beekeeping. Initially
has completed a full circle and work concentrated around these activities covering aspects
is now accepted as an ideal of training, documenting practices, sustainable harvesting
methods, hygienic methods of processing, use of bees wax
choice for healthy and
and simple methods for domesticating bees. One of the
sustainable living. In the
biggest problems faced by the community was of marketing
natural cycles of production
honey. The honey collected after hours of work in the
and consumption, human beings forest with skill and years of ancient knowledge, sold for
have experimented with between Rs. 17-30/- ($0.35–0.65) (0ne US$=48 Indian
rupees) in the local market. This situation led Keystone to
various means to grow food.
take its first steps towards marketing this special product,
From natural farming to
by purchasing honey at twice the prevailing rate. This
chemical applications, from caused trouble with the existing traders in the market, but
green revolutions to integrated discussions with them helped resolve the issue. This helped
in increasing the purchase price of honey, locally.
pest management, farming has

witnessed several ups and
Since then, Keystone’s work has expanded into several fields
downs. Yet, the underlying
addressing issues of forest conservation, non timber forest
element that runs through produce, sustainable agriculture, revival of food crops,
most methods of farming is a water resources, etc. Enterprise development is one of the
major areas of work in Keystone, which links up to all other
need to preserve and conserve
projects, providing support to market goods and services, in
the soil. This element is
efforts towards viability.
manifested best through
organic ways of farming and Value addition and production centres were initiated in the
villages. Today, the programme markets several products
this is the prime reason of the
from the community besides honey and bees wax under the
return of this system of
Last Forest brand. These are coffee, pepper, silk cotton,
farming.
lime, gooseberry and some other non timber forest produce
(NTFPs) in minor quantities. Most of these are value added
An organic method of farming and packed in the villages, in resource/production centres.
These products are marketed locally (50-60%) and the
is the best means to ensure
balance in some outlets in cities like Pondicherry, Auroville,
air, water and soil are,
Chennai and Coimbatore. Over the years, through networks
unpolluted leaving the and contacts, Keystone has continued to be in touch with
environment safe for the several groups, NGOs and farmers who also need support in
marketing. Some of these products are added to the
present and future
marketing profile. Keystone has started 2 Green Shops in
generations. The past forty
Kotagiri and Coonoor in the Nilgiris, which are exclusive
years has seen man experiment
outlets for these products (with another expected to begin
with chemicals and now there operations by the end of the year).

are ample overt and subtle
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hints that chemical applications are unsafe with possible ramifications in the near
future.

Consumers, more now than ever before have woken up to this fact and are consciously
demanding a better quality of life. This demand is being translated into a persistent
demand for organic goods, with consumers in some cases, willing to pay a higher value
for food that is safe and grown naturally. Consumers in the developed countries and a
few developing countries have become more health conscious and they have started to
spend more on green, healthy and natural food stuffs. The better selling products have
been milk products and vegetables.

One of the factors which promote growth in organic markets worldwide is consumer
awareness of health, environment issues (Yossefi and Willer, 2002) and food scandals.
One of the other key factors that influence further development of organic markets
are increasing promotion and strategies, used by key players like retailers (Yossefi and
Willer, 2002).

Organic agriculture also offers trade opportunities for farmers in the developing and
developed countries. The market of organic products is expected to grow globally in
the coming years and high growth rates over the medium term (from 10-15 to 25-30%)
are expected. This organic market expansion makes it possible for farmers to reap
the benefits of a trade with relatively high premiums (Yussefi and Willer, 2002).
However, this market is not well known to most farmers, especially those living in the
developing countries. Absence of sufficient technical and market information and
financial support also means that few farmers will risk changing their method of
production.
Asian governments have recently become interested in organic farming with the
expansion of the market for organic products and their potential for promoting
sustainable agriculture. Accordingly, almost all have put priority on organic
certification and accreditation, even though the major constraints in organic farming
in Asia are still at the level of farm production. The proliferation of public organic
standards and inspection systems, however, seems to have caused confusion among
Asian traders of organic products. What is crucial is to build simple and transparent
systems of guaranteeing the credibility of organic produce for the local and regional
markets. This will also help build the farmers’ confidence for more complex
international trade, if required.

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1.1 Organic Farming in India

India is a country with a huge number of small farmers practicing rain fed agriculture
and having production systems that are compulsively organic (they can not afford
chemical inputs and also in many cases new technology suitable for their condition does
not exist).

According to the Indian Competence Centre for Organic Agriculture (ICCOA), the
global market for organically produced foods is $26 billion and is estimated to
increase to $102 billion by 2020. As part of 10th Five Year Plan (2002-07), the
government earmarked Rs 100 crore (Rs 1 billion) for the promotion of sustainable
agriculture in the country, but the main components of this initiative are to benefit
export oriented initiatives, from the establishing of national organic standards under
NPOP (National Programme for Organic Production), putting in place a system of
certification for products, and establishing APEDA (Agricultural and Processed Food
Export Development Authority) as the nodal agency to promote exports opportunities.
The Central Government’s strategy on organic foods has always slanted toward the
global market, leaving the critical mass of domestic consumers out in the cold.
Currently, about 70 per cent of organic agriculture items produced in India are being
exported.

In developing countries, it is
essential for major key
players (e.g. NGOs that
promote organic farming) and
other organizations support
farmers in these aspects. An
organic movement is now
emerging in India at
different levels - producer
groups, trainers and advisors,
certification bodies,
processors and traders. On
the consumer side, there is a
Farming in the Nilgiris
growing awareness on the
effects of consuming
pesticide laden food and with an increasing number of health and environment
conscious people; the demand for organic natural food is on the rise. The prime
concern is with vegetables and fruits, which many believe contains high amount of
pesticides which cannot be eliminated by washing and cleaning.

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So, in the current context of some eco-friendly farming activities prevailing in
villages, and an increasing demand for organic food it would be highly appropriate to
facilitate local markets for organic and eco-friendly products which link the producers
and consumers, directly besides creating a network between organic growers so that
sustainability and progress could be achieved:

1.2 Rationale of Study

Keystone’s experience from the past years points out that the effort of marketing
organic homestead produces and forest products, grown and collected by indigenous
communities, needs to be expanded. This will help in covering a greater number of
farmers and popularizing organic products. Till now, Keystone has focused on the
producer community by developing products, but presently it is necessary to address
consumer related issues.

It is important for the expansion and sustainability of the marketing effort to develop
local marketing concepts. A step in this direction is to study the demand side - the
customer profile, their needs and requirements with reference to organic products,
especially from the Nilgiris. This information will assist Keystone in product
development, alternate marketing avenues, improving packaging and increasing the
range of produce. The `local demand’ for organic produce and awareness generated
will enable the application of organic marketing principles by reducing packaging
material, transport costs and also facilitate sustained use of these products. It will
crucially, bring the consumer and producer closer and help bring change in the Nilgiris,
increasing the preference for organically grown products.

1.3 Objectives

The Objectives of the Study are:
• To analyze the demand and product criteria of different organic produce by
consumer and product segment.
• To develop a strategic plan for the future for Keystone to promote and market
organic products in the Nilgiris. The strategy will include the type of
shops/outlets; packaging; quality; price range etc.
• To conduct a consumer survey in the Nilgiris for the demand, acceptability and
interest regarding organically grown and value added products.
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CHAPTER TWO
LITERATURE REVIEW AND STUDY AREA

2.1 Literature Review

Focus on an organic lifestyle has been less forthcoming in Indian as compared to much
of the developed world. There are by far, too few organizations with most of them too
spread out to make a concerted effort in promoting an organic life. As part of our
endeavour to document prominent issues and concerns arising from the use and abuse
of natural systems particularly agriculture, we embarked on an extensive literature
survey. Encompassing different strands of thought processes, government initiatives
and community organizations, the review looks into all aspects as a composite whole.
The review also includes an extensive survey of literature on the Nilgiris, Indian
Agriculture, and Organic Farming in India. Literature was gathered from a wide range
of sources including the internet, IIRD Aurangabad as well as data and previous
studies available with Keystone.

2.1.1 Organic Agriculture Policy in India

The Indian definition: “Organic agriculture is a system of farm design and
management that creates an ecosystem which can achieve sustainable productivity
without the use of artificial external inputs such as chemical fertilizers and
pesticides.”

Legislation: The Indian government’s strategy for organic agriculture is covered by
the National Programmme for Organic Production (NPOP) which aims to promote
sustainable production, environmental conservation, reduction in the use and import of
agrochemicals, promotion of export and rural development. This strategy is promoted
by the Ministries of Agriculture, of Environment and of Commerce. Specific legislation
has been developed only for the export of organic products.

Support to organic agriculture

Economic: A programme of direct economic support is provided to farmers; however
this is limited in scale. As an incentive to adopt organic farming Rs 10,000
(approximately US $230) per ha is provided, both during the conversion period (3
years) and after (as required). The total cost is expected to be Rs 3.5 million (US
$80,000) per year, till 2006-07. This support aims to compensate for losses during
the conversion period, promote organic agriculture, support infrastructure
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development, for conducting feasibility studies and preparation of guidelines for
organic production. Some other specific incentives do exist such as tax reductions and
preferential conditions to credit.

Research: Although support to agriculture is not specific to organic agriculture,
backing is given to, for example, the development of biofertilizers and biological
control of pests and diseases.

Inspection and certification: India has very few locally based certification bodies,
primary among them being INDOCERT, based in Alwaye, Kerala. However, international
certification organizations have branches in India, a couple of active agencies being
IMO India (head office in Switzerland) and Skal India (head office in Netherlands).
ECOCERT International, from Germany, is also active within India. These organizations
market for export to the European Union under article 11 of EU Regulation 2092/91,
but also certify to standards of non-European Union countries. A National
Accreditation Policy has been approved in India (May 2001) for the accreditation of
certification bodies. The certification bodies already working within India are now
being accredited. For the present, the National Steering Committee for organic
Farming has been set up under the Chairmanship of the Secretary Of Commerce to
the Government of India in association with members from the Ministry Of
Agriculture.

2.1.2 Indian Domestic Market

Though the benefits of Green Revolution in the 1960s, reached major production areas
of the country, there were still certain areas and communities, especially adivasi
groups that did not adopt the use of agro-chemicals. However, over the last few years
an increasing number of farmers have consciously abandoned agro-chemicals and now
produce organically, as a viable option to the Green Revolution.
Estimating the area under organic agriculture in India is a difficult task, as there is no
central agency that collects and compiles this information. Different agencies have
estimated the area under organic agriculture, differently. For instance, a study
undertaken by FIBL and ORG-MARG (Garibay S V and Jyoti K, 2003) estimated the
area under organic agriculture to be 2,775 hectares (0.0015% of gross cultivated area
in India). However, another estimation through a survey undertaken by SOEL,
Germany shows that the land area under organic cropping is 41,000 hectares. The
total numbers of organic farms in the country as per the SOEL Survey are 5,661 but
FIBL and ORG-MARG survey puts it as 1,426. The APEDA website puts the figure of
land under organic cultivation as 25,08,826 ha (this includes wild herbs collection from
forest area of MP & UP of 24,32,500 ha).
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