Barriers to organic farming: Experience of Kansari Organics

 A farmer harvests the season's cauliflower crop near Kullu town, Himachal Pradesh (Image: Neil Palmer, CIAT; Wikimedia Commons)
A farmer harvests the season's cauliflower crop near Kullu town, Himachal Pradesh (Image: Neil Palmer, CIAT; Wikimedia Commons)

Agriculture in India directly or indirectly provides livelihoods to 60% of the population and so the problems of this sector are most relevant for the country’s overall development and have to be effectively addressed. Especially in distress are the small and marginal farmers who have less than 2 hectares of land and constitute 85% of all farm households (Agricultural Census, 2016). Additionally, modern agriculture drastically reduces agricultural biodiversity with its stress on mono-cultures.

Sustainable internal input agriculture is more energy, water and nutrient efficient, and results in lower greenhouse gas emissions than modern external input agriculture per unit of crop produced, which is a crucial parameter, given the need for food production to feed the world’s population. It is also community dependent rather than market dependent and so it revitalises the local economy. What is required is collective action by communities at the grassroots as individual farmers cannot bring about this radical change (Ostrom, 1990).

It opens up huge possibilities for women to play a decisive role in agriculture and so in society. This kind of sustainable agriculture has to be complemented by ecosystem restoration and decentralized renewable energy generation for a comprehensive attack on both poverty and climate change.

The United Nations has declared the ten-year period from 2021 to 2030 as the decade of ecosystem restoration (UNO, 2021). However, this will not materialize unless concrete steps are taken in this regard.

The remedial intervention

Mahila Jagat Lihaaz Samiti, a collective of Dalit and Adivasi women of Western Madhya Pradesh set up in 2016 has been working on the reorientation of scheduled tribe farmers towards sustainability and gender equity in an area around Bisali village in Udainagar tehsil of Dewas district. Scheduled tribe farmers have been chosen because they are traditionally nature friendly and are default organic in their subsistence agriculture (Rahul, 1992).

The overall framework for the development intervention is aimed at achieving sustainability and equity for the tribes people through organic agriculture and ecosystem restoration which also mitigates climate change at the global level with the use of survival edge technology. This is an assortment of simple technologies that is implemented by communities through collective action to mitigate the agriculture, water, energy and climate crises that face humanity and with the agency of women in its planning and implementation (Banerjee, 2020).

A collective named Kansari Organics was set up to undertake the production and marketing of organic produce. The problem started with the selection of farmers. Such is the hegemony of chemical agriculture that it was initially not possible to find farmers to take up organic agriculture even though they were assured of being provided a subsidy for preparing organic manure followed by a fair income. Farmers just do not believe that it is possible to do agriculture in an organic way.

Eventually, two marginal farmers, with about 1 acre of land each, undertook organic cultivation of the Lok1 variety of wheat with support from MAJLIS. This is a hybrid variety of wheat but since its introduction by the NGO Lok Bharti in 2000, over the years it has stabilised and the seeds were selected from the production on the pilot farm of MAJLIS in Pandutalab village.

Ideally with a proper application of chemical fertilisers Nitrogen (N), Phosphorus (P) and Potassium (K) in the right proportion of 24 kg of N, 12 kg of P and 12 kg of K per acre, the output should be 18 quintals of Lok1 wheat. However, when a shift is made to organic compost there is a reduction in yield initially and so the two farmers produced about 12.5 quintals of output from an acre each though it slowly increases later over a period of three years or so. The seed sown was 0.5 quintals per acre and so the net output was 12 quintals per acre.

Economics of organic Lok1 wheat variety production

The costs of production per acre for Lok1 wheat are as follows -

  • Cost of manure – Rs 6600
  • Preparation of field and sowing of wheat @ Rs 220 per day (agricultural minimum wage in MP) in the 2020 rabi season – Rs 2200
  • The electricity cost for running the pump for irrigation was Rs 2000
  • Five waterings were done each requiring one person to work for two days – Rs 2200
  • Preparation and application of microbial culture thrice – Rs 1800
  • Harvesting and threshing of wheat – Rs 3600
  • Cleaning, grading, storing and packaging of wheat – Rs 2200
  • Total Agricultural Cost A2 (sum of costs on items 1-7 above) – Rs 20600
  • Family Labour (FL) in protecting the crop for 140 days – Rs 6600
  • Total cost C2 = A2 + FL – Rs 27200

Therefore, the price at the farm for the organic wheat by applying the government formula (Indian Express, 2020) is 1.5 x C2 = Rs 40,800 for 12 quintals which comes out to Rs 34 per kg. Thus, after giving the statutory minimum wage to the farmer and also a 50% profit over and above the costs so as to ensure enough to invest in soil and water conservation and meet other household expenses, the cost of wheat produced by Kansari is double that being offered to the farmers in the open market of Rs 17 per kg.

The Madhya Pradesh government offers slightly more at Rs 19.75 per kg under its minimum support price scheme but that too cannot cover the cost of organic wheat at the farm gate and additionally for chemically produced wheat the government subsidises the cost of chemical fertiliser purchase whereas there is no such support for the preparation of organic manure.

Problems of marketing organic produce

The price of the organic Lok1 wheat in Indore being sold by Kansari Organics after adding Rs 1 per kg for transportation from the farm to the city is Rs 35 per kg. Comparable quality of Lok1 wheat graded and cleaned and produced by chemical methods sells at Rs 25 per kg in Indore and so the organic wheat produced by Kansari is 40% more costly.

Consequently, despite this wheat being healthier, it has few takers. The problem becomes, even more, when the wheat has to be sold outside Indore. To be able to reduce the transportation and delivery cost in an external location there has to be a hub and spoke model in that location. The wheat is transported in bulk to the hub from the farms and there it is packed in smaller retail sale quantities and delivered to the stores or to homes. However, for this to be possible there must be brand recognition and high demand among customers for the product.

Unfortunately, as there is a lack of credibility regarding the authenticity of organic products among consumers and consequently a reluctance to pay a premium price for them, the demand for them is low generally and a new brand like Kansari has very little traction. In fact, the difficulty of getting farmers to produce organic crops going against the strong tide of chemical agriculture is there across the country and so even established organic produce firms too are unable to ensure the purity of their offerings.

A study conducted by the Consumer Education and Research Centre, Ahmedabad, showed that the products of seven leading organic food brands in India had traces of heavy metals in them and some had pesticides also (CERC, 2017). Tests conducted by MAJLIS recently on the organic produce of some of the firms that were tested by CERC, Ahmedabad, being sold in Indore, revealed the same presence of heavy metals and pesticides, indicating that chemical produce is being passed off as organic.

Given this situation, the organic firms have to courier their produce across India or set up dedicated stores themselves. This increases the cost by a substantial amount as even the cheapest courier, India Post, charges about Rs 37 per kg. So organic wheat or flour made from it is very expensive compared to chemical wheat or flour which can be delivered cheaply through the hub and spoke model because of the huge demand. There are thus both severe demand and supply-side constraints for organic produce which organic producers cannot overcome on their own.

The products of Kansari Organics are the cheapest among all organic produce on the market because not only is there no mark up for profits but the management costs also are being subsidised by MAJLIS from grant funds.  While there are a few customers across the country and in Indore and one in the USA who are doing repeat orders and have paid glowing tributes to the quality of its products, they are not enough to consume the whole of the very low production of 25 quintals of wheat that Kansari had this year. Over the year only about 8 quintals of the wheat will be sold through word of mouth advertising and the trust networks of MAJLIS.

The problem of storage of produce

This brings up another intractable problem of storage of wheat as after about 5 months after the harvest in March it starts getting attacked by pests. The big traders of chemical wheat who deal in lakhs of tonnes use pesticide fumigation to keep the wheat free of pests. Organic producers can’t do that and so have to resort to fumigation with carbon dioxide which is not only costlier but also a contributor to global warming.

A small player like Kansari cannot invest in machinery required for carbon dioxide fumigation and anyway it is harmful from a climate change perspective. So MAJLIS bought 17 quintals of the wheat from Kansari at Rs 35 a kg and then spent some more in distributing it free to poor Adivasi households in the form of COVID relief.

The problem of storage is a little bit more for organic produce but it is there even for the produce of chemical agriculture. The Food Corporation of India and the various state government agencies that procure grains under the minimum support price mechanism eventually end up losing a portion of the procured grains. There is no data regarding this loss and even though the government claims that the loss is only about 6%, experts say that it is more likely to be greater than 10% (TPCI, 2020).

Status of big organic companies

The gross annual value-added from agricultural production of crops is around Rs 17 lakh crores (GoI, 2018). Whereas, only 1.3% of all farming households are doing some organic farming on 1.5% of the total arable land with gross annual value addition of only Rs 16,000 crores (Khurana and Kumar, 2020). The export component of this value addition is about Rs 7,000 crores with soya meal constituting 57% of the total value (APEDA, 2021).

The big organic companies and multinational corporations are involved in this lucrative export market as the complications involved in exporting organic produce are many which cannot be tackled by small producers. Most of the exports are done by multinational corporations.

The biggest Indian company, Sresta Natural Bioproducts Private Limited which sells its produce under the brand name 24 Mantra, had a total annual turnover in 2019-20 of just Rs 217 crores with a net profit after tax of Rs 3.1 crores, up from a turnover of Rs 176 crores and a net profit after tax of Rs 1.3 crores in the previous year. This, after a higher profit rate from exports as the Indian market, is not ready to pay for the high prices of organic products and so its Indian operations are less profitable. Moreover, studies have revealed that overall the farmers have not benefited in financial terms from the practice of organic agriculture whether on their own or as contract farmers for big organic companies (Peramaiyan et al, 2012).   

Conclusion

The organic farmer and any organisation, whether an NGO like MAJLIS or a commercial entity like Sresta Natural Bioproducts that tries to promote organic farming, is thus faced with a herculean task.

First, given the huge support that is being provided to chemical farming by the government and the market over the past six decades and next to no support for organic farming, most farmers are reluctant to believe that it is possible to successfully do organic farming. The government subsidy is about Rs 500 crores for organic agriculture as opposed to Rs 5 lakh crores for chemical agriculture.

Second, this has resulted in a lack of authenticity of organic produce, which in addition to its high price in the absence of subsidy makes even the well-off consumer suspicious and reluctant to buy organic produce. The common consumer can’t afford organic produce anyway and it is exclusively bought by the rich.

In fact, as mentioned earlier most farming households are not producing enough food for themselves and so are dependent on additional work to make ends meet and are suffering from chronic hunger. This severe restriction of the consumer base means that organic producers cannot deliver their goods to the consumers through the hub and spoke model and have to rely on couriers and dedicated stores instead and this further increases the price.

Then there is the problem of storage and loss due to pest attacks which reduce the shelf life of organic produce and also increase the costs of loss prevention. Consequently, companies engaged in organic farming and trade are not able to grow the sector and provide remunerative prices to farmers and so organic farming remains marginal to the agricultural economy.

Overall, the farmers and especially the smallholder farmers, even after getting subsidies for chemical agriculture, cannot solve the twin crises of the unsustainability of this agriculture and the adversities of climate change on their own given the huge and complex problems that they face in terms of lack of adequate government support and remunerative prices in the market. This is even more so in the case of organic farmers who do not get even a fraction of the support that chemical farmers get. Consequently, despite grandiose promises being made to the farmers by the government, their plates are in reality empty as in a Barmecide feast and they are suffering from both indigence and hunger.

Thus, the primary onus for promoting sustainable agriculture in particular and ecosystem restoration and climate change mitigation, in general, is on the governments both union and state to switch subsidies and investments from chemical agriculture to the promotion of sustainable agriculture, ecosystem restoration and decentralised renewable energy generation through collective action at the grassroots.

Along with this, big companies in India must use their massive corporate social responsibility funds to promote organic farming and grow the organic consumption market because commercially-run companies cannot do so on their own given the poor returns from the market and the immense obstacles in terms of authentic organic production, its storage and distribution.  

The full report that analyses the current situation and identifies barriers to organic farming faced by Kansari Organics is here

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