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Contents
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INTRODUCTION
Organic Food 3
Market Opportunities for Developing Countries in U.S. Market 4
What India should do to enter US MARKET? 5
U.S. MAKRETS
Definition of Organic Food in US Markets 6
Market Characteristics of the U.S. Organic Sector 6
Import Requirements 8
Trends in Organic Food Sales 11
Emerging Issues in the U.S. Organic Sector 12
INDIAN MARKETS
Rationale for Organic Farming in India 13
Significance of Organic Farming to Indian Farmers 14
Indian Organic Products 14
Products Comparative Advantage 15
Organic Food Exports from India 16
Obstacles and Possible Solutions 18
SWOT Analysis 20
Strategies to be adopted for increasing Organic Production 21
Certification Agencies 24
CONCLUSION 25
References
INTRODUCTION:
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The global demand for organic food is growing at a very rapid rate. Ever since
the environmentalists raised their concern regarding harmful effect of increasing use of
chemicals in farming, the consumers are getting conscious and selective about edible
foods. The increasing awareness has caused shifts in consumers’ tastes and
preferences which have led to the domestic as well as global rise in demand for organic
foods. The organic food industry is estimated to grow by 20% from US $ 35 billion with
growth concentrated mainly in U.S.A, U.K. and Japan. The share of India in organic
trade in the world market is less than a percent due to various challenges like
consumer education, branding and promotion. There are large growing opportunities in
this sector. The major export destinations for organic food products are Australia,
Canada, USA, China, Japan, South Africa, European Union etc. This study is mainly
ORGANIC FOOD:
Organic Foods are grown under a system of agriculture without the use of
insecticides and herbicides is greatly restricted and saved as a last resort. In case of
livestock, they must be reared without the routine use of antibiotics. Since the early
1990’s the growth rate of organic food foods is 20% ahead of the rest of the food
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MARKET OPPORTUNITIES FOR DEVELOPING COUNTRIES IN US MARKET
With retail sales of organic food amounting to about $8 billion in 2000 (expected to
reach about $9.5 billion in 2001), the United States is the world’s largest market for this
product group. One of the main reasons behind these very positive growth expectations
including a growing resistance amongst consumers towards food products made with
important factor behind this is the aggressive and targeted marketing and promotion
schemes by the retail sector. Consequently the country’s major food producers are
organic products.
most important:
• Products, mostly tropical, that are not produced in the United States or in very
small quantities. Examples include coffee, tea, various spices and herbs, dried
• Off season products, such as fresh fruits and vegetables that are not produced in
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• Novelty or specialty products, like high quality organic wines, retail packed food
products.
Import demand in the near future is likely to be more for fruits and vegetables in
both on production and marketing side. At country level a good agricultural supply base
important to offer a wide variety of high quality organic food products that fulfill the
market demand.
The producer should make sure that the organic certification is recognized and
accepted within the U.S. National Organic Program (NOP) and that export products
for an exporter along with a strong and reliable relationship with an importer or
India should look at the United States not only as a potential future market for
organic products but also consider it as a possible partner in various forms of co-
U.S. MARKET
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Definition of organic in the U.S. Market
The new National Organic Program (NOP) of the USDA determines four product
categories:
weight.
organic ingredients.
ingredients: cannot use the term organic in the principal display panel.
As of 21st October 2002 the USDA ORGANIC seal can be used on the first two
• The U.S. Organic Food industry crossed a threshold in 2000: for the first time,
• Organic products are now available in nearly 20,000 natural food stores and are
demand.
• According to USDA estimates, U.S. certified organic cropland was 4.8 million
acres in 2008. From the consumer side new products were introduced rapidly.
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For example, over 800 organic products were introduced within which desserts
• Organic food is sold to the consumers through three main outlets in the United
consumer markets. Fresh produce is the top selling organic category followed by
non-dairy beverages, breads and grains, packaged foods, and dairy products.
• Organic producers market their food directly to consumers much more frequently
than conventional farmers do. Producers capture a much higher share of the
consumer food dollar when they market their produce directly to the consumers.
arrangement that organic farmers have pioneered in the United States for about
a decade. Over 800 CSAs are currently listed in the US database maintained by
USDA.
IMPORT REQUIREMENTS
Although the United States is a very important producer of organic producer and
also produces quite a broad range of organic food and beverages, the country is far
from self-sufficient in this area and needs to import significant quantities from all over
mainly for fresh produce and bulk-packed organic raw material or ingredients for further
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processing and packaging or re-packing, although other organic products may also find
a market.
The specific product groups discussed below include those most likely to be of
interest to India:
Fresh fruits and vegetables: This product group is the most important in terms of
retail sales of organic foods and is also amongst the biggest import products. It
includes tropical fruit and vegetables all year round, e.g. banana, pineapple,
tomatoes.
Top fruit and berry prospects: apples, bananas, grapes, mangoes, melons,
Dried fruits and nuts, edible seeds and kernels: Although there is a considerable
in particular products that are not grown in the United States, but also for other
Dried fruits: apples, dates, raisins and tropical fruit, like banana, mango, papaya
and pineapple.
Processed fruits and vegetables: This product group consists of a broad range of
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o Dehydrated fruit and vegetables, including freeze-dried items.
and pulp.
There is some import demand for certain canned organic fruits and vegetables
(like hearts of palm), while frozen fruits and vegetables are imported in bulk quantities
Herbs, spices and essential oils: A full range of organic herbs and spices and
also several essential oils are also imported in US. Imports include, for example,
nutmeg etc. Though spices are imported but the major requirement is in the
Coffee, tea and cocoa: The sale of organic coffee, tea and cocoa are on a move
ahead in the food stores. According to sources more than 93 million pounds of
coffee was imported in the United States in 2009. Most of the organic coffee is
imported from Latin America, particularly Mexico, Bolivia, Costa Rica, Peru etc.
Other suppliers include Indonesia, East Timor and Uganda. The importers are
interested in tapping other sources as well. In the same way organic tea and
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Grains and flours: Though the United States is a large producer of organic
grains, e.g. wheat, rice, millet etc. it is also an important of rice and of non-
tradition cereals.
Oil crops, vegetable oils and fats: India produces various organic oil crops like
Coconut, Sesame Seed, and Sunflower Seed. Special mention should be made
of soybean, which is an important oil crop used for the production of food items
that replace meat and dairy products which is produced in large quantities in
India. A large volume of vegetable oils and fats are produced in India. India
should take an initiative in this field as United States is an importer of many of the
oil crops.
While a small percentage of all food sales, organic sales are growing faster than
the rate of growth for conventional food products. The 15.8 percent increase in organic
food sales since 2007 propelled the organic share of total food sales to nearly 3.5
percent in 2008. The level of penetration has doubled in the past five years.
millions)
2004 11,902 14.6% 544,141 2.19%
2005 13,831 16.2% 566,791 2.48%
2006 16,718 20.9% 598,136 2.80%
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2007 19,807 18.5% 628,219 3.15%
2008 22,929 15.8% 659,012 3.47%
(* Source OTA’s Manufacturer Industry Survey 2006-2009)
The fruit and vegetable category accounts for the largest portion of the organic
food sales. This one category represented 37 percent of the total organic food sales in
2008. The second largest categories were beverages and dairy products representing
14 percent contribution each. The strongest growth was seen in the categories of
breads and grains (35 percent over 2007) and beverages (32 percent).
The sales for non-food organic products are growing at a faster rate than sales of
organic food. The non-food organic sales reached to 1.6 billion in 2008. New products
categories and new products are introduced in the U.S. market. The sale of non-food
products increased from $ 1,182 million to $ 1,648 million at a growth rate of 39.4 %.
Since the late 1990’s, U.S. Organic Production has more than doubled but the
consumer demand has grown at a faster pace. This change in the consumer demand
has brought a massive change in the market and supply chain. Since the demand is
store brand lines of organic food which is forcing the organic food suppliers to import
huge quantities of organic food from developing nations which meet the USDA
standards.
The certified U.S. acreage has also increased and the organic production has
spread to every state and every product category. Even though the acreage has
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increased but the adoption level of organic farming is still low as conventional farmers
Limited organic supply has become a bigger issue over the last decade. By the
late 1990s organic handlers faced problems in procuring large quantities of organic
produce from farmers to distribute it to the retailers. More recently, the long term
suppliers have reported the lack of reliable supplies of organic raw material as a major
Keeping in view all the above mentioned issues the U.S. National Organic
Program (NOP) streamlined with the certification for international as well as domestic
production. This gave a path to various exporters to export various organic produce to
USA provided they met the NOP standards. Imports increased as growth in the organic
demand exceeded the domestic supply. Another reason for the increase in imports was
the cost of production of organic food. Organic farming is often labor intensive and
developing countries with lower labor costs may have a comparative advantage for
INDIAN MARKETS
Rationale for Organic Farming in India:
promote organic farming. High cost modern farming and its un-sustainability due to
overcapitalization and rising input costs has made organic farming a necessity in many
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agriculturally grown regions. Organic farming is not only financially less draining for the
small farmer and good for environment, it also helps the government to reduce its
subsidy bill meant for modern inputs. The logic for organic farming also comes from the
more recent environmental related non-tariff barriers like pesticide residues and fruit fly
problem in fruit and vegetable exports from India. India had been delisted from the list of
approved countries in the EU for import of egg powders, two years ago, for non-
Growing market is another important stimulant for organic products in India. The
consumers are willing to pay premium prices for organic products up to 10 percent in
countries like the USA. Only 20 percent of the consumers in India are aware of organic
produce and only 10 percent buy it. The traditional strength of Indian farmers in organic
The Indian Government has recognized the export potential of organic agriculture
and is in the process of strengthening the sector by putting a legal framework in place
In the Indian context, organic farming can be significant in two distinct ways:
soils.
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To increase product value: In areas where farmers have access to established
organic markets within the country or abroad, products can achieve a higher
Major organic produces from India include plantation Crops; Spices; Cereals;
Pulses; Oilseeds; Fruits and Vegetables, besides honey, cotton and sugarcane. Organic
production of meat items like poultry, livestock and fisheries is yet to figure in India.
TYPE PRODUCTS
Commodity Tea, Coffee, Rice, Wheat
Spices Cardamom, Black pepper, White pepper, Ginger, Turmeric,
Vanilla extracts
Pulses Red gram, Black gram, Chickpea, Green gram
Fruits Mango, Banana, Pineapple, Orange, Cashew nut, Walnut,
A new trend is developing in India to produce some of the crops organically not
only on account of the love for protection of nature but also because of the need for
having safe products for consumption. Some of the agricultural products that enjoy a
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Products that have a comparative advantage in Organic Market
Organic food exports from India are increasing with more farmers shifting to
organic farming. With domestic consumption being low, the prime market for Indian
organic food lies in the US and Europe. India is now becoming a leading supplier of
organic herbs, spices, organic basmati rice etc. In 2005 exports amounted to 53 percent
of the organic food produced in India. In 2003 only 6-7 percent of organic produce was
exported.
Exports are driving organic food production in India. The increasing demand for
organic food products in the developed countries and the extensive support by the
Indian government coupled with its focus on agriculture exports are driving the Indian
production. It allocated USD 22.2 million during the Tenth Five Year Plan for promoting
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Organic products exported from India include rice, wheat, tea, spices, coffee,
A breakdown of the export sales of organic products to is given below in the form
of a pie chart:
share, followed by Tea, Dry Fruits and Nuts having 16 percent, Cotton 10 percent,
Honey 9 percent, Fruits 8 percent, Spices 4 percent, Oil Crops 3 percent, Medicinal and
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Through the trend line we can see that the Organic Industry is on a progressive
path. The exports in the year 2009 reached $ 125 million from $ 87 million MT in the
year 2008. The organic industry has never shown a declining trend in exports with great
PRODUCTS:
The obstacles and possible solutions for the low import of Indian organic
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contamination reason, higher quality standards must
good reputation
Availability Reliability of exporters More promotion from Indian traders and
for importing Indian organic from the place of dispatch for shipment.
institutions.
Administration Inconvenient modes of Indian traders must show more flexibility
Strengths:
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Wide variety of fruits and vegetables and other commodities can be grown
organically.
Weaknesses
Price competitiveness
Opportunities
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Price- premiums in different markets.
Rising demand for organic products in major markets like USA, Europe and
Japan.
Threats
The following steps should be taken to improve organic farming in India which
o Small farmers should form an organization that produces and market their
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o Training programs for farmers and NGOs not only in organic agriculture
methods, but also in how to sell, promote and diversify their markets and
products.
buyers.
database.
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o Support domestic marketing initiatives.
The Government of India estimating the growth in this sector took the following
steps:
• Increasing Investments: As a part of the 10th Five year plan the Government of
India had earmarked Rs. 100 cr. for the promotion of organic agriculture in the
different countries.
• Promoting Green Agriculture Market: APEDA is the nodal agency to promote the
Indian organic agriculture and its export opportunities. The National Organic
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Standards have evolved. In developing these standards due attention is paid to
• Other Efforts: Some of the other efforts to promote organic exports include
attempts to collaborate with all the major importing countries. Towards this
APEDA is deliberating with the European Union for inclusion of India in the list of
the third countries, so that India’s National program gets recognized under the
CERTIFICATIONS
other organic agricultural products. Requirements vary from country to country, and
generally involve a set of production standards for growing, storage, processing, and
nature. There are no tests to distinguish between organic and non-organic food and
hence a certification remains the only way of proving that your produce is organic. In
India, APEDA regulates the certification of organic products as per National Standards
for Organic Production. “The NPOP standards for production and accreditation system
products duly certified by the accredited certification bodies of India are accepted by the
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• Ecocert SA
CONCLUSION
Indian organic food market is on growth the demand for organic food in India is
on a move ahead it has been estimated that the domestic consumption of organic food
chairman of APEDA “Through various bilateral agreements, India’s organic exports can
USA and Europe are the major markets for organic producers. The US industry
for organic food is on a rapid growth. Growing consumer demand has taken organic
products from their traditional place in natural stores to more mainstream venues such
as Wal-Mart and Costco. The United States continues to import a major portion of its
organic food from Europe, Asia, Canada, and Latin America to meet growing consumer
demand. USDA sources estimate that the ratio of organic imports to exports is
approximately 10 to 1.
The Indian organic exports have shown a drastic change in the last 5 years. The
2009 exports realized over $ 125 million for the organic industry showing an increase of
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50.31 percent over the last year. Out of this export only 20 percent is exported to US,
the exporters should find potential buyers for their organic produce in the US as there is
a mismatch in their demand and supply position. The US National Organic Program
(NOP) certifications have opened a door for many exporters to export their produce to
Indian organic producers in order to increase their exports should get themselves
certified from various certifying agencies as certificates play a vital role in the exports.
The Govt. of India under the 11th Five year plan has targeted the development of five
scheme to compensate farmers for the lower yield of such crops. The Govt. also
organizes various trade fairs in order to promote the exports of organic products. The
common people along with the government should promote organic production by
creating awareness among the people as it would help the nation prosper and the
REFERENCES
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Recent growth in U.S. Market for organic food
http://www.intracen.org/mds
www.indianjournals.com
http://www.apeda.com/organic/
http://www.ams.usda.gov/AMSv1.0/nop
http://en.wikipedia.org/wiki/Organic_food
http://www.organicfacts.net/organic-food/organic-food-trends/organic-food-
exports-from-india.html
http://www.slideshare.net/ds_iimk/em-term-paper-organic-farming
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