BUSINESS PLAN FOR SETTING UP AN ORGANIC

FARM

Submitted by:

Mohammad Ali

MBA(IB)-4th semester

A7002008002

Under guidance of:

Prof.Anil Dubey

Dupt.Director

ABS, Lucknow

(DISSERTATION REPORT IN PARTIAL FULFILLMENT OF THE AWARD OF FULL TIME

MASTERS IN BUSINESS ADMINISTRATION (INTERNATIONAL BUSINESS) 2008-10

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH, LUCKNOW

i
 STATEMENT BY THE STUDENT

I here by state that this project is submitted in partial fulfillment for the requirements
of MBA (IB) program of the AMITY UNIVERSITY, UTTAR PRADESH is an
original research work carried out by me under the guidance and supervision of Prof.
Anil Dubey, Dupt. Director, AMITY BUSINESS SCHOOL ,LUCKNOW and the
thesis or any part has not been previously submitted. previously

Date.

Signature Signature Signature

Mohammad Ali Prof.Anil Dubey Prof. R P Singh

Student Faculty Guide Director (ABS)

ii
 CERTIFICATE BY FACULTY GUIDE

Certified that this report is prepared based on the dissertation topic BUSINESS PLAN
FOR SETTING UP AN ORGANIC FARM undertaken by Mohammad Ali Student
of MBA(IB) 4th semester, AMITY BUSINESS SCHOOL, LUCKNOW CAMPUS in
partial fulfillment of award of degree of Master Of Business Administration In
International Business from AMITY UNIVERSITY, UTTAR PRADESH.

DATE:

FACULTY GUIDE:

Prof.Anil Dubey

Dupt. Director

iii
 ACKNOWLEDGEMENT
As a part of our course curriculum, I had to make a dissertation report on any topic to
get the right exposure to the practical aspects of business management. I got an
opportunity to work upon this topic, where I work on the project entitled BUSINESS
PLAN FOR SETTING UP AN ORGANIC FARM

Dedication, hard work and application are vital for achieving any goal but these are
also awarded by guidance / co-operation and proper assistance. A number of persons
have given their ideas and precious time to complete the report. I wish to express my
heartfelt gratitude to the following individuals who have played a crucial role during
my project. Without their active cooperation the preparation of this project could not
have been completed within the specified time limit.

The first person I would like to acknowledge is my project guide Prof.Anil Dubey
who, supported me throughout this project with utmost cooperation and patience. I am
very much thankful to him for sparing his precious time for me and for helping me in
doing this project.. He was a constant source of support during my research.

I would also like to thank Mrs. Charu Bisaria, coordinator for Dissertation for her
help. I give my sincere thanks to my partners Shantanu Sing and Rahul Shankar,
for giving me the opportunity and creating a nice work environment for me to
complete my Business Plan report within the stipulated period of time. I would like to
thank my parents for supporting me during my research.

Finally I thank Krishi Vigyan Kendra, Unnao, for their continued support in this
project. This is a small contribution towards the greater goal.

Above all, I would like to thank THE ALMIGHTY for always helping me.

MOHAMMAD ALI

iv
 SYNOPSIS

The emerging global prospects for organic farm produce and the realisation of long-
lasting damages caused to soils by chemical fertilisers and pesticides have propelled
a shift to organic farming methods both in developed and developing countries.
World wide, about 130 countries produce certified organic products on a commercial
scale.

Reasons for the increase in organic food production are: market premiums of 2 to 2.5
times the conventional market price; an expansion in the consumer sector willing to
pay the higher prices demanded by organic food; an expansion of markets in the
developed world where Saskatchewan farm exports traditionally are targeted; and
lower input prices due to organic production.
This document is a proposed business plan, with a financial model, for setting up
and operating an organic grain farm in Uttar Pradesh

The success of Farm would depend largely on a few factors. Such factors would
include the successful organic certification for the year of production, maintaining the
industry average yields for organic crops and receiving the premium prices expected.
Failure of one or a combination of these factors would mean certain failure for the
business. An angle that was not addressed in this business plan would be to diversify
an existing traditional grain farm into organic production over a number of years.
This approach would seem more logical as the owner would have previous experience
in the farming industry. However, if the individual that is investing their equity is
confident that all the criteria can be met and continually achieved, Oraganic Farm
would be a successful endeavor when started up on its own.

v
 OBJECTIVE

The objective behind setting up an organic farm is to attract and invite more farmers
towards this form of farming. It is clear from current scientific researches and through
environmentalists that use of chemical pesticides have been one of the major cause
behind the deteriorating level of crop production, and let the farmers know that
organic farming will not only enhance there crop production but also help in
maintaining the land fertility as it uses the sustainable agricultural techniques.
Moreover, organic farming is also the need of the hour as it now very well known that
this kind of farming is environment friendly and can be a farmers input against the
fight against global warming. The sum up of objectives is as under:-
 To increase crop productivity
 To use sustainable crop production methods
 To switch over to natural and environment friendly methods of crop
cultivation
The purpose of this study is to –

 To find out the prospects of establishing an organic farm in Uttar Pradesh.

 To find out the benefits of establishing an organic farm in Uttar Pradesh.

vi
 CONTENTS

1. Students certificate
2. Certificate by Faculty Guide
3. Acknowledgement
4. Synopsis
5. Objective of the report

CHAPTER -1 9

1. Background 10
2. History 10
3. Significance of the study 14
4. Review of literature 15
5. Hypothesis 19
6. Problems and constrains 20

CHAPTER-2 26

1. Generation of idea 27
2. Promoter 27
3. Product
4. SWOT analysis 32

CHAPTER-3 34

1. Methodology 35
2. Sample size 35
3. Area 35

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CHAPTER-4: 36

1. Organic farming around the globe 37

2. Organic farming in India 40
3. Organic farming gaining momentum 41
4. Organic farming in rural India 42
5. Need for organic farming 44
6. Methods 48
7. Industry statistics 52
8. Growth 54
9. Economics 55
10. Critical analysis 56
11. Progress 60
12. Procedure 64
13. Prospects 65

CHAPTER-5 : 72

1. Presentation of Business Plan 73

2. General Information 74
3. Production details 75
4. Miscellaneous Fixed Assets 76
5. Preliminary Expenses 76
6. Working Capital 76
7. Marketing 77
8. Target clients, Marketing strategy, Manufacturing Process 77
9. Pollution Control, Energy Conservation 78
10. Production Schedule, sales revenues 79
11. Raw material, Utilities, salary, repairs 81
12. Selling Distribution, Administrative Exp., Interest 82

viii
CHAPTER-6 86

1. Conclusions 87
2. Recommendations

ANEXTURES AND BIBLOGRAPHY

ix
CHAPTER ONE

10
BACKGROUND
Organic farming

Organic farming is the form of agriculture that relies on crop rotation, green
manure, compost, biological pest control, and mechanical cultivation to maintain soil
productivity and control pests, excluding or strictly limiting the use of
synthetic fertilizers and synthetic pesticides, plant growth regulators, livestock feed
additives, and genetically modified organisms. Since 1990, the market for organic
products has grown at a rapid pace, to reach $46 billion in 2007. This demand has
driven a similar increase in organically managed farmland. Approximately 32.2
million hectares worldwide are now farmed organically, representing approximately
0.8 percent of total world farmland. In addition, as of 2007 organic wild products are
harvested on approximately 30 million hectares.

Organic agricultural methods are internationally regulated and legally enforced by

many nations, based in large part on the standards set by the International Federation
of Organic Agriculture Movements (IFOAM), an international umbrella
organization for organic organizations established in 1972. IFOAM defines the
overarching goal of organic farming as follows:

"Organic agriculture is a production system that sustains the health of soils,

ecosystems and people. It relies on ecological processes, biodiversity and cycles
adapted to local conditions, rather than the use of inputs with adverse effects. Organic
agriculture combines tradition, innovation and science to benefit the shared
environment and promote fair relationships and a good quality of life for all
involved.."

History of organic farming

The history of organic farming dates back to the first half of the 20th century at a
time when there was a growing reliance on synthetic fertilizers. The organic
movement began in the 1930s and 1940s as a reaction to agriculture's growing
reliance on synthetic fertilizers. Artificial fertilizers had been created during the 18th
century, initially with superphosphates and then ammonia derived fertilizers mass-

11
produced using the Haber-Bosch process developed during World War I. These early
fertilizers were cheap, powerful, and easy to transport in bulk. Similar advances
occurred in chemical pesticides in the 1940s, leading to the decade being referred to
as the 'pesticide era'.

Sir Albert Howard is widely considered to be the father of organic farming. Further
work was done by J.I. Rodale in the United States, Lady Eve Balfour in the United
Kingdom, and many others across the world.

As a percentage of total agricultural output, organic farming has remained tiny since
its beginning. As environmental awareness and concern increased amongst the
general population, the originally supply-driven movement became demand-driven.
Premium prices from consumers and in some cases government subsidies attracted
many farmers into converting. In the developing world, many farmers farm according
to traditional methods which are comparable to organic farming but are not certified.
In other cases, farmers in the developing world have converted for economic reasons .
As a proportion of total global agricultural output, organic output remains small, but it
has been growing rapidly in many countries, notably in Europe.

20th Century

Technological advances during World War II accelerated post-war innovation in all

aspects of agriculture, resulting in large advances in mechanization (including large-
scale irrigation), fertilization, and pesticides. In particular, two chemicals that had
been produced in quantity for warfare, were repurposed to peace-time agricultural
uses. Ammonium nitrate, used in munitions, became an abundantly cheap source of
nitrogen. And a range of new pesticides appeared: DDT, which had been used to
control disease-carrying insects around troops, became a general insecticide,
launching the era of widespread pesticide use.

At the same time, increasingly powerful and sophisticated farm machinery allowed a
single farmer to work over larger areas of land and fields grew bigger.

In 1944, an international campaign called the Green Revolution was launched in

Mexico with private funding from the US. It encouraged the development of hybrid
12
plants, chemical controls, large-scale irrigation, and heavy mechanization in
agriculture around the world.

During the 1950s, sustainable agriculture was a topic of scientific interest, but
research tended to concentrate on developing the new chemical approaches. In the
US, J.I. Rodale began to popularize the term and methods of organic growing,
particularly to consumers through promotion of organic gardening.

In 1962, Rachel Carson, a prominent scientist and naturalist, published Silent Spring,
chronicling the effects of DDT and other pesticides on the environment . A bestseller
in many countries, including the US, and widely read around the world, Silent
Spring is widely considered as being a key factor in the US government's 1972
banning of DDT. The book and its author are often credited with launching the
worldwide environmental movement.

In the 1970s, global movements concerned with pollution and the environment
increased their focus on organic farming. As the distinction between organic and
conventional food became clearer, one goal of the organic movement was to
encourage consumption of locally grown food, which was promoted through slogans
like "Know Your Farmer, Know Your Food".

In 1972, the International Federation of Organic Agriculture Movements, widely

known as IFOAM, was founded in Versailles, France, and dedicated to the diffusion
and exchange of information on the principles and practices of organic agriculture of
all schools and across national and linguistic boundaries.

In 1975, Fukuoka released his first book, The One-Straw Revolution, with a strong
impact in certain areas of the agricultural world. His approach to small-scale grain
production emphasized a meticulous balance of the local farming ecosystem, and a
minimum of human interference and labor.

In the 1980s, around the world, various farming and consumer groups began seriously
pressuring for government regulation of organic production. This led to legislation
and certification standards being enacted through the 1990s and to date.

Since the early 1990s, the retail market for organic farming in developed economies
has been growing by about 20% annually due to increasing consumer demand.

13
Concern for the quality and safety of food, and the potential for environmental
damage from conventional agriculture, are apparently responsible for this trend.

21st Century

Throughout the history, the focus of agricultural research, and the majority of
publicized scientific findings, has been on chemical, not organic farming. This
emphasis has continued to biotechnologies like genetic engineering. One recent
survey of the UK's leading government funding agency for bioscience research and
training indicated 26 GM crop projects, and only one related to organic agriculture.
This imbalance is largely driven by agribusiness in general, which, through research
funding and government lobbying, continues to have a predominating effect on
agriculture-related science and policy.

Agribusiness is also changing the rules of the organic market. The rise of organic
farming was driven by small, independent producers, and by consumers. In recent
years, explosive organic market growth has encouraged the participation of
agribusiness interests. As the volume and variety of "organic" products increases, the
viability of the small-scale organic farm is at risk, and the meaning of organic farming
as an agricultural method is ever more easily confused with the related but separate
areas of organic food and organic certification.

In Havana, Cuba, a unique situation has made organic food production a necessity.
Since the collapse of the Soviet Union in 1989 and its economic support, Cuba has
had to produce food in creative ways like instituting the world’s only state-supported
infrastructure to support urban food production. Called organopónicos, the city is able
to provide an ever increasing amount of its produce organically.

14
Significance of the study

There are three categories of opinions about the relevance of organic farming for
India. The first one simply dismisses it as a fad or craze. The second category, which
includes many farmers and scientists, opines that there are merits in the organic
farming but we should proceed cautiously considering the national needs and
conditions in which Indian agriculture functions. They are fully aware of the
environmental problems created by the conventional farming. But many of them
believe that yields are lower in organic cultivation during the initial period and also
the cost of labour tends to increase therein. The third one is all for organic farming
and advocates its adoption wholeheartedly. They think that tomorrow's ecology is
more important than today's conventional farm benefits.
However, among many a major reservation, the profitability of organic farming vis a
vis conventional farming, is the crucial one from the point of view of the Indian
farmers, particularly the small and marginal.
Organic farming involves management of the agro-eco system as autonomous, based
on the capacity of the soil in the given local climatic conditions. In spite of the
ridicule poured out on organic farming by many, it has come to stay and is spreading
steadily but slowly all over the world. India has been very slow to adopt it but it has
made Inroads into our conventional farming system. One advantage we have here is
the fact that the farming techniques practiced in this country before the advent of the
green revolution were basically eco-friendly and they have not faded away from the
memories of the present elder generation of our farming community.
India's options in finding out an alternative method to the conventional farming are
limited. The World Trade Organization (WTO) deadline for banning exports of
vegetables and horticulture products based on inorganic farming will expire in 2005.
Sensing the importance, the Central and state governments have taken several
initiatives to popularise organic farming in the country.

15
Review of Literature

Howard's (1940) Agricultural Testament draws attention to the destruction of soil and
deals with the consequences of it. It suggests methods to restore and maintain the soil
fertility. The study contains a detailed deposition of the famous Indore method of
maintaining soil health. The reasons and sources of the erosion of soil fertility and its
effect on living things are discussed. The criticism of the agriculture research and
examples of how it had to be carried out to protect soil and its productivity are
discussed in detail.
Bemwad Geier (1999) is of the opinion that there is no other farming method so
clearly regulated by standards and rules as organic agriculture. The organic
movement has decades of experience through practicing ecologically sound
agriculture and also in establishing inspection and certification schemes to give the
consumers the guarantee and confidence in actuality. Organic farming reduces
external inputs and it is based on a holistic approach to farming. He describes the
worldwide success stories of organic farming based on the performance of important
countries in the west. The magnitude of world trade in organic farming products is
also mentioned. To the question of whether the organic farming can feed the world,
he says that neither chemical nor organic farming systems can do it; but the farmers
can.
Save and Sanghavi (1991) are of the view that after their intensive experiments with
organic farming and narrating the results to the informed, it is time that the
governments and farmers are brought around. They firmly state that the economic
profitability of organic farming can be proved. Four crops of banana grown by the
natural way on the same farm by them are compared with those produced by the
conventional way. While the natural farm yielded 18 kg of banana in the first round,
the conventional one gave 25 kg. 30 kg was the yield at the second round on both the
farms. However, on the third round, the natural farm gave 25 kg, the conventional
one yielded only 20 kg. The results on the fourth round were stunning - the plants on
the conventional farm died out; but the natural ones gave 15 kg on an average. Thus,
the aggregate output was 88 kg on the natural farm and 75 kg on the conventional
one.

16
While, the natural banana commanded a price of Rs 2.50 per kg, the conventional one
could fetch only Rs 1.75 per kg. This has been the major reason for the substantial net
profit (Rs 154) earned from the cultivation of natural banana (conventional banana
could get only a net profit of Rs 26.25). The expenses incurred were Rs 66 and Rs
105 for the natural and conventional bananas respectively. However, a stringent cost
and return analysis representing a larger sample size will be necessary to draw
meaningful conclusions. It should be born in mind that the output obtained from the
natural banana farm was also because of the accessibility to the inputs and expertise,
which the authors happened to possess. Farmers placed in less advantageous positions
may not derive such results. The price advantage to the natural organic farming
products will also taper off when the supply increases. The environmental costs and
returns have to be internalized and it is quite possible that the organic farming will
prove to be a far better alternative to the conventional one. However, these aspects
will have to be built into a scientific and tight economic reasoning, among others.
Kaushik (1997) analyses the issues and policy implications in the adoption of
sustainable agriculture. The concept of trades off has a forceful role to play in organic
farming both at the individual and national decision making levels. Public vis-a-vis
private benefits, current vis-a-vis future incomes, current consumption and future
growths, etc. are very pertinent issues to be determined. The author also lists a host of
other issues. While this study makes a contribution at the conceptual level, it has not
attempted to answer the practical questions in the minds of the farmers and other
sections of the people.
Sharma (2001) makes a case for organic farming as the most widely recognized
alternative farming system to the conventional one. The disadvantages of the latter
are described in detail. Other alternatives in the form of biological farming, natural
farming and perm culture are also described. The focus is on the organic farming,
which is considered as the best and thus is discussed extensively. The work is not
addressing the relevant issues in the adoption of organic farming on ground.
Veeresh (1999) opines that both high technology and sustainable environment cannot
go together. Organic farming is conceived as one of the alternatives to conventional
agriculture in order to sustain production without seriously harming the environment
and ecology. However, he says that in different countries organic farming is

17
perceived differently. While in the advanced countries, its focus is on prevention of
chemical contamination, we, in countries like India are concerned of the low soil
productivity. Even the capacity to absorb fertilizers depends on the organic content of
the soil. The principles of organic farming are more scientific than those of the
conventional. India's productivity of many crops is the lowest in the world in spite of
the increase in the conventional input use. The decline in soil nutrients, particularly in
areas where the chemical inputs are increasingly being used in the absence of
adequate organic matter is cited as a reason for low productivity. Doubts about the
availability of massive sources of organic inputs also exist. He advocates an advance
to organic farming at a reasonable pace and recommends conversion of only 70 per
cent of the total cultivable area where unirrigated farming is in vogue. This 70 per
cent supplies. only 40 per cent of our food production. While this analysis has several
merits, it is more addressed to the policy makers and less to the farmers.
Sankaram Ayala (2001) is of the view that almost all benefits of high yielding
varieties based farming accrue mostly in the short term and in the long term they
cause adverse effects. There is an urgent need for a corrective action. The author rules
out organic farming based on the absolute exclusion of fertilizers and chemicals, not
only for the present, but also in the foreseeable future. There ought to be an
appropriate blend of conventional farming system and its alternatives. The average
yields under organic and conventional practices are almost the same and the declining
yield rate over time is slightly lower in organic farming. The author also quotes a US
aggregate economic model, which shows substantial decreased 5aelds on the
widespread adoption of organic farming. Decreased aggregate outputs, increased farm
income and increased consumer prices are other results the model gives. While the
details about this US analysis are not known, its relevance to India where we already
have the lowest yields of a number of crops under the conventional system appears to
be open.
Singh and others (2001), recording the experiments on rice-chick pea cropping
sequence using organic manure, found the yields substantially higher compared to
the control group. Similar results were obtained for rice, ginger, sunflower, soyabean
and sesame.

18
Ahn Jongsung opines that organic agriculture is economically viable (Anon, 1998).
The author gives emphasis on marketing the organic products on the basis of
reputation and credibility. In Japan, the farmers sell the produces directly to the
consumers. The Kenyan farmers have seen that in organic farming, costs go down
and profits increase. A farmer from UP who allotted a portion of his land exclusively
for organic farming found that the yields of sugarcane, rice, wheat and vegetables
were lower than those under chemical farming. An Englishman, settled in Tamil
Nadu, who runs an organic farm in 70 acres planted with coffee, citrus, other fruits,
rice, pepper and vegetables says that he does not earn a profit and does not have
confidence in organic farming.
Somani and others (1992) have published a collection of 42 papers presented at a
National Seminar on Natural Farming. Korah Mathen recounts several problems in
evolving representative and rigorous yardsticks for comparison between modern and
alternative farming. Yields cannot be compared, because of monoculture nature of
chemical farming with those of multi crops raised under organic/natural farming.
Economic analysis is also problematic because one has to quantify the intangibles. He
advocated the resource use efficiency analysis. But the question of profitability of
different systems of farming seems difficult to be examined in the absence of an
economic analysis although the author does not rely upon it.
Save (1992) found that after three years of switching over to natural cultivation, the
soil was still recovering from the after effects of chemical farming. When the soil
regained its health, production increased and the use of inputs decreased. The farm,
which was yielding 200 to 250 coconuts per tree, gave 350 to 400 per annum.
Rahudkar and Phate (1992) narrate the experiences of organic farming in
Maharashtra. Individual farmers growing sugarcane and grapes, after using vermi
compost, saw the soil fertility increased, irrigation decreased by 45 per cent and
sugarcane quality improved. The authors say that net profits from both the sugarcane
and grape crops are high in organic farms.
The foregoing overview of the literature makes it clear that opinions about organic
farming are divided both among the farmers and experts. Disputes about the
profitability and yield increases in organic farming are acute, but there Is a consensus
on its eco-friendly nature and inherent ability to protect human health. There are

19
strong views for and against organic farming (the latter, mainly on the grounds of
practicability of feeding a billion people, financial and economic viability, availability
of organic inputs and the know-how). Those who are totally against it are prepared to
ignore the ill effects of the conventional farming system. There are many who while
approving organic agriculture, want a mixture of both the systems or advocate a
careful approach by proceeding slowly towards the conversion of the conventional
farms into organic. The questions about the yield and financial viability are crucial
from the point of view of farmers; but they remain unanswered to a large extent. The
study of a geographical area in the country endowed with a large number of resources
for organic farming, but has not made any significant stride towards it, is also not
found in the literature overview.

Objectives of the dissertation

 To understand the need for organic farming in India in the light of the
experiences of other countries.
 To assess and evaluate the factors which may facilitate the adoption of organic
farming in the country.
 To analyse the constraints, both political and social, and above all economic,
in the introduction of organic farming in India.

Hypothesis

About 65% of India's cropped area is not irrigated and it can be safely assumed that
high-input demanding crops are not grown on these lands. Fertiliser use on drylands is
always less anyway as chemical fertilisers require sufficient water to respond.
Pesticide use in these lands would also be less as the economics of these hardy or
"not-so profitable" crops will not permit expensive inputs. These areas are at least
"relatively organic" or perhaps even "organic by default". While neither of these terms
necessarily denotes a healthy farm or a recommended agriculture system, it would at
least imply a non-chemical farm that can be converted very easily to an organic one
providing excellent yields and without the necessity and effort of a lengthy conversion
period.

20
Problems and Constraints
The most important constraint felt in the progress of organic farming is the inability
of the government policy making level to take a firm decision to promote organic
agriculture. Unless such a clear and unambiguous direction is available in terms of
both financial and technical supports, from the Centre to the Panchayath levels, mere
regulation making will amount to nothing. The following are found to be the major
problem areas for the growth of organic farming in the country:

Lack of Awareness
It is a fact that many farmers in the country have only vague ideas about organic
farming and its advantages as against the conventional farming methods. Use of bio-
fertilizers and bio pesticides requires awareness and willingness on the part of the
farming community. Knowledge about the availability and usefulness of
supplementary nutrients to enrich the soil is also vital to increase productivity.
Farmers lack knowledge of compost making using the modern techniques and also its
application. Proper training to the farmers will be necessary to make vermi-compost
on the modern lines. Attention on the application of composts/organic manure is also
lacking. The organic matter is spread during the months when the right moisture level
is absent on the soil. The whole manure turns into wastes in the process. The required
operation is of course labour intensive and costly, but it is necessary to obtain the
desired results.

Output Marketing Problems

It is found that before the beginning of the cultivation of organic crops, their
marketability and that too at a premium over the conventional produce has to be
assured. Inability to obtain a premium price, at least during the period required to
achieve the productivity levels of the conventional crop is a setback. It was found that
the farmers of organic wheat in Rajasthan got lower prices than those of the
conventional wheat. The cost of marketing of both types of products was also same

21
and the buyers of wheat were not prepared to pay higher prices to the organic variety
(Rao, 2003).

Shortage of Bio-mass
Many experts and well informed farmers are not sure whether all the nutrients with
the required quantities can be made available by the organic materials. Even if this
problem can be surmounted, they are of the view that the available organic matter is
not simply enough to meet the requirements.
The crop residues useful to prepare vermi-compost are removed after harvest from
the farms and they are used as fodder and fuel. Even if some are left out on the farms
termites, etc destroy them. Experiments have shown that the crop residues ploughed
back into soil will increase productivity and a better alternative is conversion into
compost.
The small and marginal cultivators have difficulties in getting the organic manures
compared to the chemical fertilizers, which can be bought easily, of course if they
have the financial ability. But they have to either produce the organic manures by
utilizing the bio-mass they have or they have to be collected from the locality with a
minimum effort and cost. Increasing pressure of population and the disappearance of
the common lands including the wastes and government lands make the task difficult.

Inadequate Supporting Infrastructure

The state governments are yet to formulate policies and a credible mechanism to
implement them. There are only four agencies for accreditation and their expertise is
limited to fruits and vegetables, tea, coffee and spices. The certifying agencies are
inadequate, the recognized green markets are non-existent, the trade channels are yet
to be formed and the infrastructure facilities for verification leading to certification of
the farms are inadequate.

High Input Costs

The small and marginal farmers in India have been practicing a sort of organic
farming in the form of the traditional farming system. They use local or own farm
renewable resources and carry on the agricultural practices in an ecologically friendly

22
environment. However, now the costs of the organic inputs are higher than those of
industrially produced chemical fertilizers and pesticides, including other inputs used
in the conventional farming system. The groundnut cake, neem seed cake, vermi-
compost, silt, cow dung, other manures, etc. applied as organic manure are
increasingly becoming costly making them unaffordable to the small cultivators.

Marketing Problems of Organic Inputs

Bio-fertilizers and bio-pesticides are yet to become popular in the country. There is a
lack of marketing and distribution network for them because the retailers are not
interested to deal in these products, as the demand is low. The erratic supplies and the
low level of awareness of the cultivators also add to the problem. Higher margins of
profit for chemical fertilizers and pesticides for retailing, heavy advertisement
campaigns by the manufacturers and dealers are other major problems affecting the
markets for organic inputs in India.

Absence of an Appropriate Agriculture Policy

Promotion of organic agriculture both for export and domestic consumption, the
requirements of food security for millions of the poor, national self-sufficiency in
food production, product and input supplies, etc. are vital issues which will have to be
dealt with in an appropriate agriculture policy of India. These are serious issues, the
solution to which is hard and consistent efforts along with a national consensus will
be essential to go forward. Formulation of an appropriate agriculture policy taking
care of these complexities is essential to promote organic agriculture in a big way.

Lack of Financial Support

The developing countries like India have to design a plethora of national and regional
standards in attune with those of the developed countries. The adoption and
maintenance of such a regulatory framework and its implementation will be costly.
The cost of certification, a major component of which is the periodical inspections
carried out by the certifying agencies, which have freedom to fix the timings, type
and number of such inspections appears to be burdensome for the small and marginal
farmers. Of course, the fees charged by the international agencies working in India

23
before the NPOP were prohibitive and that was a reason for the weak response to
organic agriculture even among the large farms in the country. No financial support
as being provided in advanced countries like Germany is available in India. Supports
for the marketing of the organic products are not forthcoming neither from the State
nor from the Union governments. Also, the financial assistance extended to the
conventional farming methods are absent for the promotion of organic farming.

Low Yields
In many cases the farmers experience some loss in yields on discarding synthetic
inputs on conversion of their farming method from conventional to organic.
Restoration of full biological activity in terms of growth of beneficial insect
populations, nitrogen fixation from legumes, pest suppression and fertility problems
will take some time and the reduction in the yield rates is the result in the
interregnum. It may also be possible that it will take years to make organic
production possible on the farm.
Small and marginal farmers cannot take the risk of low yields for the initial 2-3 years
on the conversion to organic farming. There are no schemes to compensate them
during the gestation period. The price premiums on the organic products will not be
much of help, as they will disappear once significant quantities of organic farm
products are made available.

Inability to Meet the Export Demand

The demand for organic products is high in the advanced countries of the west like
USA, European Union and Japan. It is reported, that the US consumers are ready to
pay a premium price of 60 to 100 per cent for the organic products. The upper classes
in India are also following this trend as elsewhere. The market survey done by the
International Trade Centre (ITC) during 2000 indicates that the demand for organic
products is growing rapidly in many of the world markets while the supply is unable
to match it.
India is known in the world organic market as a tea supplier and there is a good
potential to export coffee, vegetables, sugar, herbs, spices and vanilla. In spite of the
several initiatives to produce and export organic produces from the country, the

24
aggregate production for export came to only about 14000 tonnes. This also includes
the production of organic spices in about 1000 ha under certification. Some export
houses are also engaged in exporting of organic fruits, vegetables and coffee from
India. The country could export almost 85 per cent of the production indicating that
demand is not a constraint in the international markets for organic products.

Vested Interests
Hybrid seeds are designed to respond to fertilizers and chemicals. The seed, fertilizer
and pesticide industry, are also the importers of these inputs to the country having a
stake in the conventional farming. Their opposition to organic farming stems from
these interests.

Lack of Quality Standards for Biomanures

The need for fixing standards and quality parameters for bio-fertilizers and
biomanures has arisen with the increasing popularity of organic farming in the
country. There are a very large number of brands of organic manures, claiming the
high levels of natural nutrients and essential elements. But most farmers are not aware
of the pitfalls of using the commercially available biomanure products. While the
concept of organic farming itself lays great stress on the manures produced on the
farm and the farmers' household, many of the branded products available in the
market may not be organic. Elements of chemicals slipping into the manures through
faulty production methods could make the product not certifiable as organic. Even if
the farmers are using manure produced by different methods, proper parameters for
biomanure are yet to be finalized. Most farmers are still unaware of the difference
between biomanure and bio-fertilizer. While biomanure contains organic matter,
which improves the soil quality, bio-fertilizers are nutritional additives separated
from the organic material, which could be added to the soil, much like taking vitamin
pills. Bio-fertilizers do nothing to enhance soil quality while the loss of soil quality
has been the major problem faced by farmers these days.

25
Improper Accounting Method
Understanding the real costs soil erosion, human health and the loss of welfare of
both humans and other living things, the computation of these costs are necessary to
evaluate the benefits of organic farming. These costs will have to be integrated to a
plan for the implementation of organic agriculture.
A recent study shows the inappropriateness of the cost and return accounting
methods adopted to find out the economics of the organic farming (Prakash, 2003).
An economic evaluation of the bad effects of inorganic agriculture and their
internalization through environmental taxes is proposed for a market based approach
to promote organic farming in India.

Political and Social Factors

Agriculture in India is subject to political interventions with the objectives of
dispensing favours for electoral benefits. Subsidies and other supports from both the
Central and state governments, government controlled prices of inputs like chemical
fertilizers, the public sector units' dominant role in the production of fertilizers,
government support/floor prices for many agricultural products, supply of inputs like
power and water either free of cost or at a subsidized rate, etc are the tools often used
to achieve political objectives. Any movement for the promotion of organic farming
in India will have to counter opposition from the sections who benefit from such
policies in the conventional farming system. The political system in a democracy like
India is likely to evade the formulation of policies, which affect the interests of the
voting blocks unless there are more powerful counter forces demanding changes.
In the absence of alternative employment opportunities and other considerations, the
organized workforce particularly in the public sector fertilizer, pesticide and seed
industries is also likely to oppose moves on the part of the government to promote
organic farming on a large scale.

26
\

CHAPTER TWO
Company profile

27
The generation of idea

The rapid urbanization in the country has resulted in the declining progress in the
agricultural sector due to which the current agricultural growth is at 4% where as the
industrial growth rate is at 12% .To minimize the gap between the two sectors we
need investment in the agricultural sector. Through this project we are planning to do
the following things, which will ultimately result in overall growth of the agricultural
sector along with the improvement in the lifestyle of the economically backward
sector of the society.

1. We will take the agricultural lands on lease or some other feasible alternative
by discussing with the owners of the land.
2. We will invest money to build a good agricultural infrastructure viz irrigation,
power, modern equipments etc.
3. We will exploit the local unemployed villagers, train them in organic
farming and make them engage in production process.
4. We will recruit people from various agricultural schools and colleges to
improve this project and train local peoples
5. The production from the agricultural lands will be sold in the local market by
opening various outlets.
6. The project gradually will become “Agricultural Park” which can be a source
of a income by attracting the tourist and this is possible as government is now
more concerned about the rural tourism in India.

THE PROMOTERS :

KRISHI VIGYAN KENDRA, Unnao.

Genesis of KVK

Taking the note of the developmental activities of PIRENS the Indian Council of
Agricultural Research, New Delhi granted its sanction for establishment of the

28
Krishi Vigyan Kendra (the Farm Science Centre) in May 1992. However the actual
implementation of its programmes could be started during March, 1993 only.
Before launching its programmes and activities, a Benchmark survey of the
selected villages was done to make a socio-economic appraisal and to understand
the existing practices of the farmers. This enabled the KVK to identify the
technological gaps and critical needs and requirements of the farmers. This formed
the basis for framing operational modality like training, demonstration and on-
farm-trials by the KVK. Simultaneously the farm development work was also
started as an important requirement for the strengthening of training-cum-
demonstration infrastructure of the KVK.

Initially the off campus training were given emphasis due to unavailability of
infrastructure. However, since 1995, the on campus training has become a core
activity of the KVK. Comparatively the demonstrations under the LLPs and FLDs
took off on an earlier note during 1993-94.

Apart from conducting these demonstrations various innovative approaches were

undertaken for providing the environment friendly packages to meet the farmer’s
problem. An overwhelming response of the farmers to these eco-freindly practices
later paved the way for forming various farmers interest groups and self help
groups. The response to these groups organized under the domain of Krishi Vigyan
Mandal further motivated the KVK to establish the Innovative Farmers Club in the
year 1996. The club is an informal group of self experimenting farmers that
provides an opportunity for sharing their innovations and practices among
themselves. Further the KVK started the Innovative Farm Women's Club for
involvement of farm women in the dissemination of various technological
interventions at faster rate.

The KVK has excelled in bringing the modern technological packages at the
farmers doorstep with the help of various instructional units. The KVK today has
sufficient resources to impart training skills for not only the farmers but also the
rural youth. The training schedule typically incorporates the existing needs and
problems of the farmers for making a positive impact. The trainings are conducted
both at the on-campus and off-campus locations. It invariably emphasizes on
providing both the short term as well as long durational courses specifically to
impart practical orientation to these courses. The KVK has started the instructional
units for not only imparting the skills but also for providing the critical inputs as
per the demand and need of the farmers. Wherever the response of the farmers to
technologies under the Lab to Land Programmes and the on-farm-trials
demonstrated by the KVK was multifold the need to take the assistance from the
other funding agencies arose. The KVK took bold initiatives in convincing
different State and Central Govt. funding agencies to provide the financial support

29
to undertake the innovative schemes and projects for further extending the
extension programmes outside the purview of the KVK selected villages.

In the current scenario the mandates of the KVKs are as follows

Mandate

 Conducting “on-farm testing” for identifying technologies in terms of

location specific sustainable land use systems (Technology Assessment and
Refinement).
 Organize training programmes to update the extension personnel with
emerging advances in agricultural research on regular basis (In-service
training).
 Organize short and long-term vocational training courses in agriculture and
allied vocations for the farmers and rural youth with emphasis on “learning
by doing” for higher production on farms and generating self
employment (Vocational training).
 Organize Front Line Demonstration on various crops to generate production
data and feedback information (Front Line Demonstration).

Other Activities

 Formation of Farmers Commodity based Groups

 Conducting Monthly Zonal Workshop with extension functionaries
 Rendering need based farm advisory services
 Implementing State and Central Governments sponsored agriculture related
development programmes
 Developing location specific technologies
 Conducting skill demonstrations
 Dissemination of technologies through AIR, Doordharsan, Websites and
Newspapers
 Precision Farming, National Horticulture Mission, ATMA, IAMWARM,
etc.

30
31
TYPE OF PRODUCT/SERVICES
Type of the Project: Production of agricultural food items and rendering services to
the rural society

Product/Services description (Type, Quality & uses): The rapid urbanization in the
country has resulted in the declining progress in the agricultural sector due to which
the current agricultural growth is at 4% where as the industrial growth rate is at 12%
.To minimize the gap between the two sectors we need investment in the agricultural
sector. Through this project we are planning to do the following things, which will
ultimately result in overall growth of the agricultural sector along with the
improvement in the lifestyle of the economically backward sector of the society.

1. We will take the agricultural lands on lease or some other feasible alternative
by discussing with the owners of the land.
2. We will invest money to build a good agricultural infrastructure viz irrigation,
power, modern equipments, sustainable agricultural techniques, etc.
3. We will exploit the local unemployed villagers, train them in organic
agricultural techniques and make them engage in production process.
4. We will recruit people from various agricultural schools and colleges to
improve this project and train local peoples.
5. The production from the agricultural lands will be sold in the local market by
opening various outlets.
6. The project gradually will become “Agricultural Park” which can be a source
of a income by attracting the tourist and this is possible as government is now
more concerned about the rural tourism in India.

Major Consumers: All classes of Indian family

32
SWOT-ANALYSIS OF INDIAN ORGANIC AGRICULTURE
(DOMESTIC AND EXPORT MARKET)
Organic farming is one such part of agriculture sector which is unexploited yet,
especially in the state of Uttar Pradesh. The projects strength, weaknesses,
opportunities and threats are discussed as below-
Strengths:
The export of Indian organic products is progressing. The Government support to
organic agriculture, awareness for healthy food harmful effects of pesticides and
presence of their residues. International and national certification bodies in India –
these four facts are the dominating strengths. The supply (quantity, not considering
the quality) is certainly not the bottle neck for further development of OA in India.

Weaknesses:
Major weaknesses are on the level of information/awareness: most farmers have only
small holdings and quality consciousness is low besides lack of marketing skills (e.g.
disjointed sector for the domestic market). Another weakness to be noted is that the
organic market is not onsumer demand -based, but supply driven. From this fact a lot
of threats can be derived. For the success of the organic market, powerful, well
organized and consumerbased farmer organizations are certainly very important.

Opportunities:
To quantify the potential of the organic products is not simple because the fast
development of the Indian society and economy. For further progress, more
information should be gathered on the market opportunities. Nevertheless, the need
assessment shows that on the level of the opportunities, a considerable potential for
the organic market exists, even though the size of the potential can not be quantified
exactly. There is a consensus within the Indian organic agriculture sector (private and
government) that an interface organisation is needed to provide information and
services. The founding of the Indian Competence Centre of Organic Agriculture is a
promising initiative for this and can serve as a platform for various activities related to
market development (as given in Business Plan of ICCOA).

33
Threats:
Some of the major threats are really dangerous. The awareness about pesticide
residues is to be considered as strength. However, a bigger threat is that all kind of
products are offered under declarations like “without pesticides”, “eco-friendly” or
even “organic”. In this sense most threats are related to the problem of faithful
declaration, role of government, and clarification of the term “organic”. These threats
should be quickly overcome; otherwise the Indian organic market might fail before it
has even started off.

34
CHAPTER THREE
Research methodology

35
Methodology

The paper is based on secondary data. Information from literature on the historical
evolution of the organic farming and the progress it has made both in India and
abroad collected from the published sources like the websites of the European Union
countries. International Federation of Organic Farming Movements (IFOAM), books
and periodicals and news paper reports is liberally used for the preparation of the
paper.

This study used the analytical research design, as it was not intended to develop or
defend any particular hypothesis. In Analytical Research design, research is done on
the basis of already available facts or information to make a critical evaluation.

Sample Size:

I had done documentary observation to rearch up to the result so there is no need of

sample size.

AREA:

The area of my research is Uttar Pradesh (India).

36
CHAPTER FOUR
Analysis of data

37
Organic farming- a global picture

The following information is taken from the 2009 edition of the yearbook "The World
of Organic Agriculture", published by the International Federation of Organic
Movements IFOAM, the Research Institute of Organic Agriculture FiBL and the
International Trade Centre ITC.

According to the latest survey on organic agriculture, carried out by the Research
Institute of Organic Agriculture FiBL and the International Federation of Organic
Agriculture Movements IFOAM, organic agriculture is developing rapidly, and
statistical information is now available from 141 countries of the world. Its share of
agricultural land and farms continues to grow in many countries. The main results of
the global survey on certified organic farming show that 32.2 million hectares of
agricultural land are managed organically by more than 1.2 million producers,
including smallholders (2007). In addition to the agricultural land, there are 0.4
million hectares of certified organic aquaculture. Global demand for organic products
remains robust, with sales increasing by over five billion US Dollars a year. Organic
Monitor estimates international sales to have reached 46.1 billion US Dollars in 2007
(FIBL, IFOAM, ITC 2009).

Africa

In Africa, there are almost 900’000 hectares of certified organic agricultural land (end
2007). This constitutes about three percent of the world’s organic agricultural land.
The countries with the most organic land are Uganda (296'203), Tunisia (154'793
Hectares), and Ethiopia (140’308 hectares). The highest shares of organic land are in
Sao Tome and Prince (5 percent), Uganda (2.3 percent) and Tunisia (1.6 percent). The
majority of certified organic produce is destined for export markets, with the large
majority being exported to the European Union, which is Africa’s largest market for
agricultural produce. The African market for organic products is still small. Three
countries have an organic regulation and seven are in the process of drafting one. A
first African Organic Conference will be held in Kampala, Uganda, from May 19-22,
2009. (FIBL, IFOAM, ITC 2009).

38
Asia

The total organic area in Asia is nearly 2.9 million hectares. This constitutes nine
percent of the world’s organic agricultural land. 230’000 producers were reported.
The leading countries are China (1.6 million hectares) and India (1 million hectares)
The total organic area in Asia is nearly 2.9 million hectares. This constitutes nine
percent of the world’s organic agricultural land. 230’000 producers were reported.
The leading countries are China (1.6 million hectares) and India (1 million hectares).
The highest shares of organic land of all agricultural land are in Timor Leste (seven
percent). Organic wild collection areas play a major role in India and China.
Production of final processed products is growing, although a majority of production
is still fresh produce and field crops with low value-added processing, such as dry or
processed raw ingredients. Aquaculture (shrimp and fish) on the other hand, is
emerging in China, Indonesia, Vietnam, Thailand, Malaysia and Myanmar. Textiles is
another important trend. Sector growth is now also driven by imports, and local
markets have taken off in many of the big cities in the South and Eastern part of
region besides Japan, South Korea, Taiwan and Singapore. Kuala Lumpur, Manila,
Bangkok, Beijing, Shanghai, Jakarta, Delhi, Bangalore and other cities are increasing
internal consumption of organic products. Nine organic regulations are in place. In
seven countries work on national standards and regulations is in progress.(FIBL,
IFOAM, ITC 2009).

Europe

As of the end of 2007, 7.8 million hectares in Europe were managed organically by
more than 200'000 farms. In the European Union, 7.2 million hectares were under
organic management, with more than 180’000 organic farms. 1.9 percent of the
European agricultural area and four percent of the agricultural area in the European
Union is organic. Twenty-four percent of the world's organic land is in Europe. The
countries with the largest organic area are Italy (1'150'253 hectares), Spain (988'323
hectares) and Germany (865'336 hectares). The highest percentages are in
Liechtenstein (29 percent), Austria (13 percent) and Switzerland (11 percent).

39
Compared to 2006, organic land increased by more than 0.3 million hectares. Sales of
organic products were approximately 16 billion Euros in 2007. The largest market for
organic products in 2007 was Germany with a turnover of 5.3 billion Euros (2008: 5.8
billion Euros), followed by the UK (2.6 billion Euros), France and Italy (both 1.9
billion Euros). As a portion of the total market share, the highest levels have been
reached in Austria, Denmark and Switzerland, with around five percent for organic
products. The highest per capita spending is also in these countries. Support for
organic farming in the European Union and the neighboring countries includes grants
under rural development programs, legal protection and a European as well as
national action plans. One of the key instruments of the European Action Plan on
organic food and farming, an information campaign, was launched during 2008, with
the aim of increasing awareness of organic farming throughout the European Union.
Furthermore, most EU member states have national action plans. In order to boost
organic farming research, a technology platform joining the efforts of industry and
civil society in defining organic research priorities and defending them vis-à-vis the
policy-makers was launched in December 2008. The platform’s vision paper reveals
the potential of organic food production to mitigate some of the major global
problems from climate change and food security, to the whole range of socio-
economic challenges in the rural areas).(FIBL, IFOAM, ITC 2009).

North America

In North America, almost 2.2 million hectares are managed organically, representing
approximately a 0.6 percent share of the total agricultural area. Currently, the number
of farms is 12'064. The major part of the organic land is in the US (1.6 million
hectares in 2005). Seven percent of the world’s organic agricultural land is in North
America. Valued at more than 20 billion US Dollars in 2007 (Organic Monitor), the
North American market accounted for 45 percent of global revenues. Growing
consumer demand for healthy & nutritious foods and increasing distribution in
conventional grocery channels are the major drivers of market growth. The U.S.
organic industry grew 21 percent in sales in 2006, and was forecast to experience 18
percent sales growth each year on average from 2007 through 2010. Whether this rate
will actually be realized is uncertain due to the economic downturn and reduction in

40
consumer spending in the last quarter of 2008. Likewise, a downturn is expected in
Canada, even though the market growth in Canada, paired with the introduction of the
new organic regulations, should provide a good outlook over the coming years. In the
United States, the National Organic Program has been in force since 2002. Canada
has had a strong organic standard since 1999; this had been, however, voluntary and
not supported by regulation. Canada’s Organic Product Regulation will be fully
implemented on June 30, 2009. Canadian labeling requirements will very similar to
those of the US and the EU. In 2008, the new Farm Bill was passed by the US
Congress. Increasing expenditures on organic agriculture and programs to
approximately 112 million US Dollars1 over the course of its five-year life, the 2008
Farm Bill provides a five-fold increase for the organic sector compared with federal
funding in the previous bill.(FIBL, IFOAM, ITC 2009).

Latin America and the Caribbean

In Latin America, 220’000 producers managed 6.4 million hectares of agricultural

land organically in 2007. This constitutes 20 percent of the world’s organic land. The
leading countries are Argentina (2'777'959 hectares), Brazil (1'765'793 hectares) and
Uruguay(930'965 hectares). The highest shares of organic agricultural land are in the
Dominican Republic and Uruguay with more than six percent and in Mexico and
Argentina with more than two percent. Most organic production in Latin America is
for export. Important crops are tropical fruits, grains and cereals, coffee and cocoa,
sugar and meats. Most organic food sales in the domestic markets of the countries
occurs in major cities, such as Buenos Aires and São Paulo.

Fifteen countries have legislation on organic farming, and four additional countries
are currently developing organic regulations. Costa Rica and Argentina have both
attained third country status according to the EU regulation on organic farming.

In recognition of the growing importance of the organic sector to Latin America’s

agricultural economy, governmental institutions have begun to take steps towards
increasing involvement; governments are beginning to play a central role in the
promotion of organic agriculture. The types of support in Latin American countries
range from organic agriculture promotion programs to market access support by

41
export agencies. In a few countries, limited financial support is being given to pay
certification cost during the conversion period.

An important process underway in many Latin America countries is the establishment

of regulations and standards for the organic sector (FiBL, IFOAM, ITC 2009).

Oceania

This region includes Australia, New Zealand, and island states like Fiji, Papua New
Guinea, Tonga and Vanuatu. Altogether, there are 7'222 producers, managing almost
12.1 million hectares. This constitutes 2.6 percent of the agricultural land in the area
and 38 percent of the world’s organic land. Ninety-nine percent of the organically
managed land in the region is in Australia (12 million hectares, 97 percent extensive
grazing land), followed by New Zealand (65’000 hectares) and Vanuatu (8'996
hectares). The highest shares of all agricultural land are in Vanuatu (6.1 percent),
Samoa (5.5 percent) and the Solomon Islands (3.1 percent). Growth in the organic
industry in Australia, New Zealand and the Pacific Islands has been strongly
influenced by rapidly growing overseas demand; domestic markets are, however,
growing. In New Zealand, a key issue is lack of production to meet growing demand.

Australia has had national standards for organic and biodynamic products in place
since 1992, and like New Zealand, it is on the third country list of the European
Union. It is expected that the Australian Standard, based on the National Standard
employed since the early 1990s for the export market, will be adopted in 2009. In
New Zealand, a National Organic Standard was launched in 2003. There is little
government support to encourage organic agriculture in Australia. However, over the
recent past, governments have been supportive of the Australian Standards issue.
Furthermore, funding is made available to promote an understanding among
consumers. In New Zealand, through the establishment of the sector umbrella
organization Organics Aotearoa New Zealand and the Organic Advisory Programme
as well as other initiatives, there is political recognition of the benefits of organic
agriculture.

In the Pacific Islands work on a regional strategy and national plans to lay the
foundation of sustainable organic agriculture development in the region is in progress.

42
The Regional Organic Task Force, a technical group representing all sectors and
countries involved in organics, was charged with developing the Pacific Standard and
will be responsible for implementing the Regional Action Plan. Pacific High Level
Organics Group consists of Pacific leaders who have shown a commitment to the
development of organic agriculture in the region and provide high level political
support and advocacy. The first Pacific Organic Standard was endorsed by Pacific
Leaders in September 2008. This provides a platform for further regional policy
development around organic agriculture. (FIBL, IFOAM, ITC 2009).

Organic farming in India

The official position

As per a Food and Agriculture Organisation (FAO) study of mid-2003, India had
1,426 certified organic farms producing approximately 14,000 tons of organic food /
produce annually. In 2005, as per Govt. of India figures, approximately 190,000 acres
(77,000 hectares) were under organic cultivation. The total production of organic food
in India as per the same reference was 120,000 tons annually, though this largely
included certified forest collections.

Another side to the story

There are a number of farms in India which have either never been chemically-
managed / cultivated or have converted back to organic farming because of their
farmers' beliefs or purely for reason of economics. These thousands of farmers
cultivating hundreds of thousands of acres of land are not classified as organic though
they are. Their produce either sells in the open market along with conventionally
grown produce at the same price or sells purely on goodwill and trust as organic
through select outlets and regular specialist bazaars. These farmers will never opt for
certification because of the costs involved as well as the extensive documentation that
is required by certifiers.

43
Organic farming gains momentum in India
(As published in Business Standard: January 03, 2008)

Chennai/Bangalore: Four-fold rise targetted to take area beyond 2 million hectares by

2012. Organic agriculture movement is gaining in momentum in the country. The area
under organic cultivation is likely to cross the 2 million hectare mark by 2012,
according to National Centre for Organic Farming (NCOF), a body under the Union
Ministry of Agriculture. This means a growth of nearly 4 times from the present
528,000 hectares, which includes both certified and in-conversion lands. According to
Bangalore-based International Competence Centre for Organic Agriculture (ICCOA),
a government recognised not-for-profit organisation promoting organic farming,
organic farming is witnessing a growth of over 40 per cent year-on-year. While the
domestic market for organic products is estimated at Rs 560 crore last year, the
exports were in excess of Rs 250 crore. The Indian organic produce is mainly
exported to Japan, Netherlands, Italy, France, Switzerland, the UK and USA.

Said Manoj Kumar Menon, Executive Director, ICCOA, "The major reason for the
growth in organic farming is increased awareness among consumers in the country.
Till now organic food was mainly being exported. But over the last couple of years,
the domestic market has started growing. Many state governments have woken up to
the importance of organic farming and have announced several incentives for farmers
to go organic." The fact that organic movement has gained a wider acceptance was
evident at the recently-concluded 'India Organic 2007', a trade fair and seminar.

The third edition of India's first organic products trade fair, which was held for the
first time in Delhi (Bangalore hosted the event in 2005 and 2006) saw participation of
a record 184 companies and 25 state governments and 12 countries. The event
generated business enquiries worth Rs 150 crore, a growth of 80 per cent over 2006,
Menon said.

The fair, organised by NCOF, Agricultural and Processed Food Products Export
Development Authority (APEDA), Research Institute of Organic Agriculture (FiBL),

44
Switzerland and ICCOA, witnessed 15,000 business visitors and key policy makers
from the Central ministries and state governments.

The buyer-seller meet was a huge success. Large number of participants showed
interest to have trade interactions with Indian organic producers. Out of 128 such
meets, 58 B2B meets were held with foreign buyers directly.

Workshop on organic cotton and marketing of organic products, organic food festival
and farmers meet were the other highlights of India Organic 2007.

Impressed with the progress made by the country in organic, the ministry of
agriculture, government of Sri Lanka has invited by ICCOA to prepare a strategy for
domestic market development in Sri Lanka, Menon said. The Sri Lanka government
has also asked ICCOA to help them organise a trade fair on the lines of India Organic
in Sri Lanka.

In India, the governments of Rajasthan, Maharashtra, Andhra Pradesh and Assam

have also invited ICCOA to organise the organic trade fair in their states.

Organic Farming in India (Rural Economy)

The role of Organic Farming in India Rural Economy can be leveraged to mitigate
the ever-increasing problem of food security in India. With rapid industrialization
of rural states of India, there has been a crunch for farmland. Further, with the
exponential population growth of India, the need for food sufficiency has become
the need of the hour. Furthermore, the overuse of plant growth inhibitor, pesticides
and fertilizers for faster growth of agricultural produce is detrimental to human
health and the environment as a whole. The proposition of Organic Farming in
India Rural Economy holds good, as an alternative to arrest this problem. The
introduction of the process of Organic Farming in India Rural Economy is a very
new concept. The huge furor over the overuse of harmful pesticides and fertilizers
to increase agricultural out put has in fact catalyzed the entry of Organic Farming

45
in India Rural Economy. The process of organic farming involves using of
naturally occurring and decomposable matter for growth and disease resistance of
different crops. The concept of organic farming in India dates back to 10,000 years
and it finds its reference in many Indian historical books.

Agriculture was the main source of livelihood in India and the use of naturally
occurring matters for increased productivity, disease resistance and pest control
was always in use, since time in memorial. The use of oil cakes, cow dungs, neem
leaves, etc. is still practiced in India to ward of pests and used as preservatives.
The use of chemical fertilizer for increased productivity started from late 1850s. In
India, the first use of chemical fertilizer for increased agriculture productivity
started from 1906.

The Indian states involved in organic farming in India are as follows -

 Gujarat
 Kerala
 Karnataka
 Uttarachal
 Sikkim
 Rajasthan
 Maharashtra
 Tamil Nadu
 Madhya Pradesh
 Himachal Pradesh

The main organic agricultural products of India are as follows-

 Bajra-mustard-wheat
 Chilly
 Cereals-cereals
 Cereals-pulses

46
  Kholar
 Maize
 Ginger
 Soybean
 Large cardamom
 Passion fruit
 Dungarpur Pulses-cereals
 Bajra
 Mustard
 Til
 Wheat
 Nagour Guar-cumin
 Guar-wheat
 Moong
 Mustard
 Ganganagar Cotton
 Bhilwara Urd
 Jaisalmer Bajra
 Bharatpur Bajra and wheat
 Jhunjhunu Pulses and wheat
 Alwar Wheat and bajra
 Banswara Maize
 Cotton-grass
 Jaipur Guar

NEED FOR ORGANIC FARMING IN INDIA

The need for organic farming in India arises from the unsustainability of agriculture
production and the damage caused to ecology through the conventional farming
practices.
The present system of agriculture which we call 'conventional' and practiced the
world over evolved in the western nations as a product of their socio-economic

47
environment which promoted an over riding quest for accumulation of wealth. This
method of farming adopted by other countries is inherently self destructive and
unsustainable.
The modern farming is highly perfected by the Americans who dispossessed the
natives of their farms right from the early period of the new settlers in US (Wadia,
1996). The large farms appropriated by the immigrants required machines to do the
large scale cultural operations. These machines needed large amount of fossil fuels
besides forcing the farmers to raise the same crops again and again, in order to utilize
these machines to their optimum capacities. The result was the reduction of bio-
diversity and labour. The high cost of the machines necessitated high profits, which
in turn put pressure to raise productivity. Then, only those crops with high
productivity were cultivated which needed increased quantities of fertilizers and
pesticides. Increasing use of pesticides resulted in the damage to environment and
increased resistance of insects to them. Pesticides harmed useful organisms in the
soil.
The monoculture of high yielding seeds required external inputs of chemical
fertilizers. The fertilizers also destroy soil organisms. They damage the rhizobia that
fix nitrogen and other micro organisms that make phosphates available to plants
(Wadia, 1996). The long term effect was reduction of crop yields. The damaged soil
was easily eroded by wind and water. The eroding soil needed use of continuously
increasing quantities of fertilizers, much of which was washed/leached into surface
and underground water sources.
The theme of consumer welfare has become central in the economic activities in the
developed countries in the world. Sustainable agriculture based on technologies that
combine increased production with improved environmental protection has been
accepted as absolutely essential for the maximization of the consumer welfare. The
consumers are increasingly concerned about the quality of the products they consume
and food safety has become a crucial requirement. Safety, quality and hygienic
standards are increasingly being made strict. The mad cow disease and the question of
genetically modified food production are the recent instances, which made the
countries to tighten the laws. Mycotoxln contamination, unacceptable levels of
pesticide residues and environment degradation are the problems on which the

48
attention is centred. Keeping the interests of the consumers, the European Union has
taken tough measures including criminal prosecution to ensure food safety. Another
area to increase the consumer welfare is promotion of the eco-friendly methods in
agriculture. No-till, or conservation agriculture, lower input approaches of integrated
pest or nutrient management and organic farming are some of them.

The Indian agriculture switched over to the conventional system of production on the
advent of the green revolution in the 1970s. The change was in the national interest
which suffered set backs because of the country's over dependence on the foreign
food sources. The national determination was so intense that all the attention was
focused on the increase in agriculture production.
The agriculture and allied sectors in India provide employment to 65 per cent of the
workers and accounts for 30 per cent of the national income. The growth of
population and the increase in income will lead to a rise in demand for foodgrains as
also for the agricultural raw materials for industry in the future. The area under
cultivation, obviously, cannot be increased and the present 140 million hectares will
have to meet the future increases in such demands. There is a strong reason for even a
decline in the cultivated area because of the urbanization and industrialization, which
in turn will exert much pressure on the existing, cropped area.
Science and technology have helped man to increase agricultural production from the
natural resources like land. But the realization that this has been achieved at the cost
of the nature and environment, which support the human life itself, is becoming clear.
It has been fully evident that the present pattern of economic development, which
ignores the ecology and environment, cannot sustain the achievement of man without
substantial erosion of the factors that support the life system of all living things on
the Earth. The evidence of the ill effects of development is well documented. As said
earlier, we in India have to be concerned much more than any other nation of the
world as agriculture is the source of livelihood of more than 6-7 million of our people
and it is the foundation of the economic development of the country.
There were times when people lived close to nature with access to flora and fauna in
healthier and cleaner surroundings. One has to look back at our present metropolitan
cities or other large towns before the past fifty years as recorded in

49
history/memmories of the present elder generation to see the striking differences in
the surroundings in which the people lived there. Land, water and air, the most
fundamental resources supporting the human life, have degraded into such an extent
that they now constitute a threat to the livelihood of millions of people in the countiy.

Ecological and environmental effects have been highly publicised all over the world.
Many times, these analysis have taken the shape of doomsday forecasts. Powerful
interests in the developed western countries have also politicised these issues to take
advantage of the poor nations of the world. Efforts to impose trade restrictions on the
plea of environment protection are a direct result of these campaigns. But we have to
recognize that the abysmal level to which we have degraded our resources ,requires
immediate remedial measures without terming the demand for them as the ploys of
the rich nations to exploit the poor.
Another turn of the events has been the blame game for ecological problems stated at
the Earth Summit and other international conferences. The developed countries, it is
true, are to a great extent instrumental to degrade the environment. However, the
poorer countries of the world including India cannot delay or ignore the need for
remedial measures, which are to be effectively implemented. We cannot gloss over
the fact that we have also contributed to the degradation of ecology; look at the
droughts and floods, disappearance of forests, high noise level and air pollution in the
cities which are our own creations.
Organically cultivated soils are relatively better attuned to withstand water stress and
nutrient loss. Their potential to counter soil degradation is high and several
experiments in arid areas reveal that organic farming may help to combat
desertification (Alam and Wani, 2003). It is reported that about 70 hectares of desert
in Egypt could be converted into fertile soil supporting livestock through organic and
biodynamic practices. India, which has some areas of semi-arid and arid nature, can
benefit from the experiment.
The organic agriculture movement in India received inspiration and assistance from
IFOAM which has about 600 organizational members from 120 countries. All India
Federation of Organic Farming (AIFOF) is a member of IFOAM and consists of a
number of NGOs, farmers' organisations, promotional bodies and institutions.

50
The national productivity of many of the cereal crops, millets, oilseeds, pulses and
horticultural crops continues to be one of the lowest in the world in spite of the green
revolution. The fertilizer and pesticide consumption has increased manifold; but this
trend has not been reflected in the crop productivity to that extent. The country's
farming sector has started showing indications of reversing the rising productivity as
against the increasing trend of input use.
The unsustainability of Indian agriculture is caused by the modern farming methods
which have badly affected/damaged production resources and the environment.

METHODS OF ORGANIC FARMING

"An organic farm, properly speaking, is not one that uses certain methods and
substances and avoids others; it is a farm whose structure is formed in imitation of the
structure of a natural system that has the integrity, the independence and the benign
dependence of an organism"
—Wendell Berry, "The Gift of Good Land"

Soil management

Plants need nitrogen, phosphorus, and potassium as well as micronutrients, but getting
enough nitrogen, and particularly synchronization so that plants get enough nitrogen
at the right time (when plants need it most), is likely the greatest challenge for organic
farmers. Crop rotation and green manure ("cover crops") help to provide nitrogen
through legumes (more precisely, theFabaceae family) which fix nitrogen from the
atmosphere through symbiosis with the bacteria rhizobia. Intercropping, which is
sometimes used for insect and disease control, can also increase soil nutrients, but the
competition between the legume and the crop can be problematic and wider spacing
between crop rows is required. Crop residues can be ploughed back into the soil, and
different plants leave different amounts of nitrogen, potentially aiding
synchronization. Organic farmers also use animal manure(which must be composted),
certain processed fertilizers such as seed meal and various mineral powders such
as rock phosphateand greensand, a naturally occurring form of potash which provides
potassium. Altogether these methods help to control erosion. In some cases pH may

51
need to be amended. Natural pH amendments include lime and sulfur, but in the U.S.
some synthetically compounds such as iron sulfate, aluminum sulfate,magnesium
sulfate, and soluble boron products are allowed in organic farming.

Mixed farms with both livestock and crops can operate as ley farms, whereby the land
gathers fertility through growing nitrogen-fixing forage grasses such as white
clover or alfalfa and grows cash crops or cereals when fertility is established. Farms
without livestock ("stockless") may find it more difficult to maintain fertility, and
may rely more on external inputs such as imported manure as well as grain legumes
and green manures, although grain legumes may fix limited nitrogen because they are
harvested. Horticultural farms growing fruits and vegetables which operate in
protected conditions are often even more reliant upon external inputs.

Weed control

After nutrient supply, weed control is the second priority for farmers. Techniques for
controlling weeds have varying levels of effectiveness and include
handweeding, mulch, corn gluten meal, a natural preemergence herbicide, flame,
garlic and clove oil, borax, pelargonic acid, solarization (which involves spreading
clear plastic across the ground in hot weather for 4–6 weeks), vinegar, and various
other homemade remedies. One recent innovation in rice farming is to introduce
ducks and fish to wet paddy fields, which eat both weeds and insects.

Controlling other organisms

Organisms aside from weeds which cause problems include arthropods (e.g. insects,
mites) and nematodes. Fungi and bacteria can cause disease.

Insect pests are a common problem, and insecticides, both non-organic and organic,
are controversial due to their environmental and health effects. One way to manage
insects is to ignore them and focus on plant health, since plants can survive the loss of
about a third of leaf area before suffering severe growth consequences. To avoid using
insecticides, one can select naturally-resistant plants, put bags around the plants,
remove dying material such as leaves, fruit, and diseased plants, covering plants with

52
a solid barrier ("row cover"), hosing, encouraging and releasing beneficial
organisms and beneficial insects, planting companion plants and polycultures, various
traps, sticky cards (which can also be used to assess insect prevalence), and season
extension. Biological pest control uses natural predators to control pests.
Recommended beneficial insects include minute pirate bugs, big-eyed bugs, and to a
lesser extentladybugs (which tend to fly away), all of which eat a wide range of
pests. Lacewings are also effective, but tend to fly away. Praying mantis tend to move
slower and eat less heavily.Parasitoid wasps tend to be effective for their selected
prey, but like all small insects can be less effective outdoors because the wind
controls their movement. Predatory mites are effective for controlling mites.

Several of pesticides approved for organic use have been called green pesticides such
as spinosad and neem. Generally, but not necessarily, organic pesticides are safer and
more environmentally friendly than synthetic pesticides. The main organic
insecticides used in the US are Bt (a bacterial toxin) and pyrethrum. Surveys have
found that fewer than 10% of organic farmers use these pesticides regularly; one
survey found that only 5.3% of vegetable growers in California use rotenone while
1.7% use pyrethrum (Lotter 2003:26). Rotenone used to be used by some organic
growers in the US, however since 2005 it has not been approved by National Organic
Program guidelines. Nicotine sulfate may also be used; although it breaks down
quickly, it is extremely toxic, nearly as toxic as aldicarb. Less toxic but still effective
organic insecticides include neem, spinosad, soaps, garlic, citrus
oil, capsaicin(repellent), Bacillus popillae, Beauvaria bassiana, and boric
acid. Pesticides should be rotated to minimize pest resistance.

The first disease control strategy involves keeping the area clean by removing
diseased and dying plants and ensure that the plants are healthy by maintaining water
and fertilization. Compost tea is sometimes promoted and can be effective, but there
is concern over whether these are ineffective or even harmful when not made
correctly. Polyculture and crop rotation reduce the ability of disease to spread.
Disease-resistant cultivars can be purchased. Organic fungicides include the bacteria
Bacillus subtilis, Bacillus pumilus, and Trichoderma harzianum which are mainly
effective for diseases affecting roots. Bordeaux mix contains copper, which can be

53
used as an organic fungicide in various forms. Sulfur is effective against fungus as
well as some insects. Lime sulfur is also available, but can damage plants if not used
correctly. Potassium and sodium bicarbonate are also effective against fungus.

Standards

Standards regulate production methods and in some cases final output for organic
agriculture. Standards may be voluntary or legislated. As early as the 1970s organic
producers could be voluntarily certified by private associations. In the 1980s,
governments began to produce organic production guidelines. Beginning in the 1990s,
a trend toward legislation of standards began, most notably with the 1991 EU-Eco-
regulation developed for European Union, which set standards for 12 countries, and a
1993 UK program. The EU's program was followed by a Japan program in 2001, and
in 2002 the United States created the National Organic Program (NOP). As of 2007
over 60 countries have regulations on organic farming (IFOAM 2007:11). In 2005
IFOAM created the Principles of Organic Agriculture, an international guideline for
certification criteria. Typically the agencies do not certify individual farms, but rather
accredit certification groups.

Materials used in organic production and foods are tested independently by

the Organic Materials Review Institute.

Composting

Under USDA organic standards, manure must be subjected to proper thermophilic

composting and allowed to reach a sterilizing temperature. If raw animal manure is
used, 120 days must pass before the crop is harvested if the final product comes into
direct contact with the soil. For products which do not come into direct contact with
soil, 90 days must pass prior to harvest.

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Organic food

Organic food does not 'cost the earth' to grow. It should not also cost consumers 'the
earth' to eat. At the same time however, assuming that the ruling market prices for
conventionally-grown food are fair, it is only correct that an organic farmer should
receive at least a marginally higher price for his produce and his efforts, especially
when consumers are aware that organic food is better than chemically-grown food in
all respects, including taste, flavour and for their own health, besides that of the earth.

Industry Statistics and Projected Growth

Industry Statistics and Projected Growth

The organic industry continues to grow worldwide. Here are some statistics regarding
this burgeoning market.

 Organic food sales are anticipated to increase an average of 18 percent each

year from 2007 to 2010.

 Representing approximately 2.8 percent of overall food and beverage sales in

2006, this continues to be a fast growing sector, growing 20.9 percent in 2006.



Organic non-food sales grew 26 percent in 2006.

 The sales of larger grocery natural food stores combined with smaller
independent natural food stores and chains accounts for 44 percent of organic
food and beverage sales. Mass merchandisers and club stores, food service,
internet/mail order and farmers’ markets represent 8 percent, 4 percent, 2.2
percent, and 2 percent of organic food sales, respectively.

 Nearly 30.4 million hectares were managed organically by more than 700,000

55
 farms in 138 countries in 2006, according to The World of Organic
Agriculture: Statistics & Emerging Trends 2008 report released in February
2008 by the International Federation of Organic Agriculture Movements
(IFOAM), The Foundation Ecology & Agriculture (SÖL), and the Research
Institute of Organic Agriculture (FiBL). That figure represents 0.65 percent of
the total agricultural land of the countries covered by the survey.

 As in previous years, Australia led with the most organic land (12.3 million
hectares), followed by China (2.3 million hectares) and Argentina (2.2 million
hectares). The United States was fourth, with 1.6 million hectares in 2005
(latest available statistics). The ten countries with the most organic land
represented a combined total of nearly 24 million hectares, more than three
quarters of the world’s organic land. Other countries in the top ten were Italy,
Uruguay, Spain, Brazil, Germany, and the United Kingdom. Based on
distribution by continent, Oceania led with 42 percent of organic area,
followed by Europe (24 percent), Latin America (16 percent), Asia (20
percent), North America (7 percent), and Africa (1 percent).

 The proportion of organically managed land to conventionally managed is

highest in countries in Europe.

 Global demand for organic products continues to grow, with sales increasing
by over $5 billion a year, according to The World of Organic Agriculture:
Statistics & Emerging Trends 2008. It cited Organic Monitor estimates that
international sales reached $38.6 billion dollars in 2006, double that in 2000.
The most important import markets for organic products continue to be the
European Union, the United States, and Japan.

 New research from The Natural Marketing Institute (NMI) released in 2008
reveals that consumers are increasingly incorporating organic into their
lifestyles. Total household penetration across six product categories has risen

56
 from 57 percent in 2006 to 59 percent in 2007. The research also showed that
the number of core users has increased from 16 percent in 2006 to 18 percent
in2007

 According to the National Restaurant Association’s 2007 Restaurant Industry

Forecast, chefs ranked organic food as third on a list of the top 20 items for
2007. Also, more than half of fine-dining operators who serve organic food
anticipated these items would represent a larger portion of sales in 2007. In
addition, casual- and family-dining operators expected organic items to
represent a larger proportion of their sales in 2007.

Growth

As of 2001, the estimated total market value of certified organic products was
estimated to be $20 billion. By 2002 this was $23 billion and by 2007 more than $46
billion according toOrganic Monitor (Willer/Kilcher 2009).

In recent years both Europe (2007: 7.8 million hectares/European Union: 7.2 million
hectares) and North America (2007: 2.2 million hectares) have experienced strong
growth in organic farmland. However, this growth has occurred under different
conditions. While the European Union has shifted agricultural subsidies to organic
farmers in recognition of its environmental benefits, the United States has taken a free
market approach. As a result, as of 2007 4 percent of the European Union's farmland
was organically managed compared to just 0.6 percent of United States farmland
(Willer/Kilcher 2009).

IFOAM's most recent edition of The World of Organic Agriculture: Statistics and
Emerging Trends 2009 lists the countries which had the most hectares in 2007. The
country with the most organic land is Australia with more than 12 million hectares,
followed by Argentina, Brasil and the US. In total 32.2 million hectares were under
organic management in 2007. For 1999 11 million hectares of organically managed

57
land are reported (Willer/Kilcher 2009).

In recent years organic agriculture has grown tremendously. Considering this rapid
growth, it is within the nature of organic farming to keep it from becoming a large
scale industrial business as conventional farming has become (Duram 183). Duram,
Leslie. Good Growing. Santa Cruz: Bison Books, 2005.

Economics

The economics of organic farming, a subfield of agricultural economics, encompasses

the entire process and effects of organic farming in terms of human society,
including social costs,opportunity costs, unintended consequences, information
asymmetries, and economies of scale. Although the scope of economics is broad,
agricultural economics tends to focus on maximizing yields and efficiency at the farm
level. Mainstream economics takes an anthropocentric approach to the value of the
natural world: biodiversity, for example, is considered beneficial only to the extent
that it is valued by people and increases profits. Some governments such as the
European Union subsidize organic farming, in large part because these countries
believe in the external benefits of reduced water use, reduced water contamination by
pesticides and nutrients of organic farming, reduced soil erosion, reduced carbon
emissions, increased biodiversity, and assorted other benefits.

Organic farming is labor and knowledge-intensive whereas conventional farming is

capital-intensive, requiring more energy and manufactured inputs. Organic farmers in
California have cited marketing as their greatest obstacle.

Geographic producer distribution

The markets for organic products are strongest in North America and Europe, which
as of 2001 are estimated to have $6 and $8 billion respectively of the $20 billion
market. However, as of 2007 organic farmland is distributed across the
globe. Australasia has 39% of the total organic farmland with Australia's 11.8 million

58
hectares, but 97 percent of this land is sprawling rangeland, which results in total sales
of approximately 5% of US sales. Europe has 23 percent of total organic farmland
(6.9 million hectares), followed by Latin America with 19 percent (5.8 million
hectares). Asia has 9.5 percent while North America has 7.2 percent. Africa has a
mere 3 percent. See also Organic farming by country.

Besides Australia, the countries with the most organic area are Argentina (3.1 million
hectares), China (2.3 million hectares), and the United States (1.6 million hectares).
Much of Argentina's organic farmland is pasture, like that of Australia (2007:42).
Italy, Spain, Germany, Brazil, Uruguay, and the UK follow the United States by the
amount of land managed organically.

CRITICAL ANALYSIS
Organic farming is less productive
Agronomically difficult crops as a challenge
One major criticism of organic agriculture is that productivity is lower compared to
intensive conventional agriculture. Under geoclimatic conditions that allow for a very
high yield, in the case of some crops the relative advantage of organic agriculture in
terms of energy consumption per land area compared to conventional production may
switch to the contrary when calculated on the basis of crop or livestock yield. This is
particularly true in the case of highly demanding crops such as potatoes, grapes fruits
and horticultural crops especially from greenhouse production (Nemecek et al. 2005,
Bos et al 2006, Comrack 2003). Pest, disease and weed management problems
relating to these crops have not yet been resolved satisfactorily. Consequently, the
yield for these crops is too low and the energy input, even though relatively low on a
land area basis, becomes relatively high when applied to a crop unit. With more
research into organic agriculture, however, progress may be expected in this field.

Better technology transfer could improve organic yields

The productivity of organic agriculture is often underestimated by many scientists and
policymakers. Organic agriculture represents a very productive food supply system
that relies on recycling strategies. Badgley et al. (2007) modelled the yields stated in

59
293 on-farm and onstation publications and concluded that, compared to high-input
agriculture in developed countries, the average yields in organic crop and livestock
production are 92% of those in conventional agriculture.

Organic farming performs better under water constraints

Interestingly, yields from organic agriculture under conditions where water is limited
during the growing period, and under subsistence farming, are equal or significantly
higher than those from conventional agriculture. A comparison of 133 studies from
developing countries concluded that organic plant and livestock yields were 80%
higher than their conventional counterparts (for crops only the increase in yield was
by 74%) (Badgley et al., 2007). In temperate climate zones higher yields for maize
and soya were registered in organically managed fields in dry seasons (Hepperly et
al., 2005). The available data indicates that the technique inherent to organic farming
of investing in soil fertility by means of green manure, leguminous intercropping,
composting and recycling of livestock manure could contribute considerably to global
food productivity. Further improvements in manure storage and application
techniques are also required, however, in organic systems in order to reduce nitrous
oxide and methane emissions.

High dependency on nutrients derived from livestock

Some critics are concerned about the dependency of organic cropping upon nutrients
deriving from livestock. This criticism, however, underestimates manure as a valuable
and potentially useful resource. Moreover, this is not a relevant weakness since the
numbers of animals kept in agriculture depends mainly on consumer demand. In order
to reduce greenhouse gas emissions, efficient and direct recycling of manure and
slurry is the best option, since it avoids long-distance transport and consumption of
energy for
synthetic fertilizer production. The combination of crop and livestock production is
currently the most efficient way of bringing organic ‘waste’ from livestock production
back into the carbon stock of the soils and use it as a locally available resource for
crop fertilization and enhancing soil quality. When integrated into arable farming
systems, ruminants exploit leguminous crops and intercrops that are needed to

60
produce nitrogen, provide soil cover and capture soluble nutrients, building up soil
fertility and soil structure. From the point of view of integrating ecology and
sustainable resource use, the combination of organic cropping with livestock
production is undoubtedly a strong point.
More funding is needed for research on organic farming
As 99 % of the world’s public and private research funds have focussed on optimizing
conventional and integrated food and farming systems during the last decades, major
progress and solutions can be expected as a result of agro-ecological and animal
welfare research activities.

Myths and fallacies about organic farming

There are a number of fallacies that surround organic farming, both in favour of and
against. Some of the more common ones are :

Yields in organic farming are lower than chemical farming

Not so. When properly followed, yields in organic farming are, in the long run, far
greater than those obtained by chemical farming. In horticulture crops, the effects are
even better. A look at agriculture in Punjab will tell the full story. The origin of the
"Green Revolution", Punjab's agricultural yields have remained the same for the past
many years while the quantity of agro-chemicals required to maintain these static
yields have steadily increased.

In the case of a chemical farm converting to organic however, there is often a loss in
yield and it takes a few years before yields increase and stabilise at a level often
higher than that achieved under a chemical regime. It is therefore recommended to
convert gradually over a period of three to four years if income from the farm is a key
issue.

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Organic farming is not economical

Again, not so. While certain practices such as composting and mulching do entail
greater costs on account of labour, the overall cost of cultivation is usually lower than
chemical farming. An important point to note here is that the farmer has to be self-
sufficient in his requirement for composts and pest control measures (easily done),
otherwise economics do get skewed. Farms and farmers who would like to make their
own inputs may read "Making your own organic farming inputs".

“You can't supply enough nutrients by using composts”

This is a common argument put to use by all detractors of organic farming, especially
academicians. If one calculates the percentages of nitrogen, potassium and
phosphorous in fertilisers and composts, the difference is indeed vast. Going by these
"scientific" calculations, one may find that in lieu of say 200 kgs. of mixed fertilisers,
one needs over 30 tons of composts, fairly impossible to supply two or three times a
year. In organic farming however, the concept of feeding the plant does not exist. The
attempt here is to feed the soil, keep it healthy and living and keep a PROCESS in
motion. Much of the work is done by the numerous soil organisms and
microorganisms that thrive in "living" soils. The various practices of organic farming
ensure that soil fertility is maintained and this symbiotic relationship is kept alive and
vibrant. The analogy we can think of is meeting your day's entire nutritional
requirements (calculated for you by a dietician) by swallowing a few tablets and
capsules. Your nutritional needs are met, but will you remain healthy?

The non-use of chemical fertilisers and pesticides is organic farming (or the use
of organic manures is organic farming)

The last important myth is that simply avoiding the use of chemical fertilisers and
pesticides is organic farming. That is not so. While organic farming is all about
maintaining soil health ("feeding the soil" rather than "feeding the plant"), it entails
producing the highest yields possible, in a sustainable, eco-friendly manner using a
number of techniques. Indeed, for any agriculture system to succeed, it must take a

62
responsibility towards feeding the earth. Organic farming entails a lot of hard
work and even systems like Do-nothing (or Natural) farming - as propagated by
Fukuoka and used so effectively by Bhaskar Save at his Gujarat farm - entail
tremendous understanding of nature, natural agriculture, the local ecosystem and
require a little hard work even though the name may suggest otherwise! You
may learn about many techniques that can be used by an organic farmer in the section
on organic farming techniques.

External inputs, even if eco-friendly or bio-degradable are ecologically questionable

and commercially unsustainable for an organic farm. Work is hence required on-farm
to produce inputs such as composts and biopesticides. Farms and farmers who would
like to make their own inputs may read "Making your own organic farming inputs".

PROGRESS OF ORGANIC FARMING IN INDIA

The first conference of NGOs on organic farming in India was organized by the
Association for Propagation of Indigenous Genetic Resources (APIGR) in October
1984 at Wardha. Several other meetings on organic farming were held at different
places in the country towards the end of 1980s. Here, mention must be made of the
Bordi Conference in Maharashtra, the state which was the focal point for the organic
farming movement in India. The Rajasthan College of Agriculture with the support of
the state government organized a meeting on organic agriculture in 1992. The United
Planters' Association of South India (UPASl) organised two national level
conferences on organic farming in 1993 and 1995. ARISE (Agricultural Renewal in
India for a Sustainable Environment) is a major organization in the country engaged
in the promotion of organic farming. ARISE was founded in 1995 at a national
conference of organic farming held at Auroville. ARISE comprises of a supporting
network of regional groups aiming at sustainable environment by protecting bio-
diversity and promoting organic agricultural practices. The selection of Auroville for
the conference was apt as it housed the Arabindo Ashram and the pioneering work
under its auspices on building technology, alternative energy research, wasteland
development, afforestation and organic agriculture.
By 1980, three groups of Indians had taken to organic farming. The first one
consisted of urban educated technocrats for peripheral interest, which did not last
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long. Educated farmers consisted of the second group whose farming practices were
based on scientific knowledge. The third group practiced organic farming through
trial and error. The successful organic farmers in India are those who have access to
sufficient natural resources like, water and other organic inputs mostly on their own
farms. These farms produce crops like sugarcane, areca, cocoa, coconut, pepper and
spices. Many of them have shown that switch over to organic farming do not affect
yields and income and more importantly, knowledge/ expertise is available for
successful adoption of organic farming in the country.
The International Federation of Organic Agriculture Movements (IFOAM) estimates
that an area of about 41,000 hectares in India is under organic farming representing
about 0.17 per cent of the world organic acreage. It also reveals that the percentage of
organic area to the total cultivated area comes to only about 0.03 per cent and the
total number of farms comes to about 5,661. But, a comparison of our 41,000 ha to
Australia (10.5 million ha), Argentina (3.19 million ha], Italy (1.83 million ha), and
USA (0.95 million ha) clearly indicates that organic farming in India has to go very
far even to catch up with that of the leading nations of the world.
Non Governmental Organizations (NGOs) are spearheading organic farming in India.
A report in 2002 indicates that about 14,000 tonnes of organic products have been
raised in India. They include tea, coffee, rice, wheat, pulses, fruits, spices and
vegetables. India exports organic agricultural produces to European Union, USA,
Canada, Saudi Arabia, UAE, Japan, Singapore and Australia, among others.
The International Conference on "Indian Organic Products-Global Markets" at the
end of 2002 was the first to be held in India. IFOAM predicts that India and China
have great potential to be organic farm produce exporters in the future. An important
event in the history of the modern nascent organic farming in India was the unveiling
of the National Programme for Organic Production (NPOP) on 8"^ May, 2000 and
the subsequent Accreditation and Certification Programme on P' October, 2001. The
logo "India Organic" was released on 26'*' July 2002 to support the NPOP.

Progress
An important progress towards organic agriculture made by India is the increasing
awareness of the ill effects of the modern farming system, which the country adopted

64
about 35 years ago. The threat poised by the conventional food products to the human
health and the damage done to the ecology are being viewed seriously. Efforts are
made to produce healthy foods and the demand. for them is increasing. The
importance of the marketing of the organic products is highlighted for the promotion
of organic agriculture. Several individuals and associations have taken to organic
farming and organic products are available in the large cities to a very limited extent.

Production and Exports

The aggregate production of organic agriculture came to about 14,000 tonnes during
2002 and the exports amounted to 11,925 tonnes. Details are given in Table 10:

Exports of Organic Products from India

2002.
Products Tonnes

Tea 3000
Rice 2500
Pulses and Vegetables 1800
Cotton 1200
Wheat 1150
Spices 700
Coffee 550
Cashew nut 375
Pulses 300
Herbal products 250
Oil seeds 100
Total 11925

65
Indian organic products are mainly exported to Europe (Netherlands, United
Kingdom, Germany, Belgium, Sweden, Switzerland, France, Italy, Spain, etc.), USA,
Canada, Saudi Arabia, UAE, Japan, Singapore, Australia and South Africa.

Regulations
The most important step towards organic farming taken by the government was to
draw a regulatory framework. It is true that the initiatives by the government to
introduce organic farming by laying down regulations came belatedly as many
countries have already done this kind of basic work decades ago. The implementation
of NPOP is ensured by the formulation of the National Accreditation Policy and
Programme (NAPP). The regulations make it mandatory that all organic certification
bodies should be accredited by an Accreditation Agency. The international
certification agencies operating in India even prior to these regulations will also have
to get accreditation under the new dispensation.
The regulations lay down the institutional arrangements for implementing the
national programme for organic production. The NPOP is administered, monitored
and implemented for the benefit of farmers, processors, traders and consumers. It
envisages a three tiered organisation under the overall guidance of the Union
Government with the Department of Commerce, Ministry of Commerce and Industry
as the nodal agency. Policy making and declaration of the standards for organic
products, recognition of organic standards of other nations, efforts to get our
standards recognized by others and coordination with other arms of the government
for the successful management of the organic agriculture are the major functions
entrusted to the ministry.
The agencies accredited are the Agricultural and Processed Food Products Export
Development Authority (APEDA), Coffee Board, Tea Board and the Spices Board.
The regulations cover exports, imports and the domestic trade of the organic
products. But the government regulations are applicable to only the exports. So, an
organic farm product can be exported only if it is certified by a certification body
accredited for the purpose. The categories of products covered under accreditation are
organic crop production, organic animal production, organic processing operations,
wild products and forestry.

66
A national level steering committee is functioning as the apex advisory body for
assisting the government to promote organic farming in the country. This body
consists of representative's form the Ministries of Agriculture, Food Processing
Industries, Forests and Environment, Science and Technology, Rural Development
and Commerce.
Organic production requires certification after periodic inspections in order to ensure
that all prescribed practices are followed. The inspection and certification are done by
the agencies accredited to the Accrediting Agencies dealing with the commodity.
Inspection and certification agencies can be government departments, NGOs, trade or
consumer or producer organisations. Such agencies should be registered bodies, with
managements in position, declaring the persons who shall be held responsible for any
miscarriage of certification and having proof of adequate field staff to undertake
periodic inspections. The continued accreditation of such bodies is dependent upon
their record of fidelity to the principles of organic production. They are authorised to
award certificates after due satisfaction that practices conformed to those enunciated
by the Accrediting Agency in relation to the item concerned. The charges levied by
the certifying agencies are fixed by the Accrediting Agencies.

PROCEDURE FOR STARTING

STANDARDS
At present, there are no regulations on organic products applicable worldwide.
Attempts have been made by FAO/WHO Codex Alimentarius Commission to
harmonies the laws and to establish an international procedure to develop the
equivalence of organic standards. Two international agencies – IFOAM and Codex
Alimentarius Commission – are the prime players in farming standards. In the EC,
regulation EEC 2092/91 determines the minimum requirements for organic farming in
all the member states. It contains standards for production, processing, imports,
inspection and certification, marketing and labeling of organic products.
In India, the National Program for Organic Production (NPOP) provides an institutional framework for
implementing standards for organic production system. This includes certification of organic farms,
products and processes as per National Standards of Organic Products (NSOP).

67
ACCRIDITATION
As per the national accreditation policy under the National Program for Organic
Production (NPOP) being implemented by the Government of India through the
Ministry of Commerce, all the certifying agencies operating in the country have to
obtain accreditation from anyone for the four accrediting agencies appointed by the
Government of India, viz., Spices Board, Coffee Board, Tea Board and APEDA for
spices, coffee, tea and other agricultural crops.

CERTIFICATION
Certification tracks and controls the flow of products from primary production at farm
level to each stage of manufacturing right to the final product that reaches the
consumer. Broadly, the certification process consists of (a) inspection (control) to
verify that production and handling are carried out in accordance with standards
against which certification is to be done and (b) Certification to confirm that
production and handling conforms to standards. The documents to be maintained
include field map, field history sheet, activity register, input record, output record,
harvest record, storage record, sales record, pest control record, movement record,
equipments cleaning records and labeling records.

Research and Training

A National Institute for Organic Farming has been established to spearhead research
in organic agriculture. The government of India constituted task force had also
recommended the initiation of the postgraduate level courses in organic farming.

Projects and Initiatives

Several projects and initiatives to promote organic farming in the country have begun
at the behest of individuals and institutions. The following are only a few of such
efforts the details which could be available.
A project aided by the World Bank to empower the rural communities in the country
to grow organic products for exports had come up in 2002. The programme aims at
the improvement and promotion of organic production of spices, certification and

68
export of black pepper, white pepper, ginger, turmeric, cardamom, clove, nutmeg and
herbals like rosemary, thyme, oregano and parsley. The implementation of the
progamme is done by the NGOs, and Idukki and Waynad districts of Kerala, Nilgiri
district of Tamil Nadu and Kandhamal district of Orissa are the areas selected for the
purpose. Imparting training to both the JNTGOs and the farmers on organic
production methods, basic standards required, documentation, inspection and
certification is a major objective of the programme. The assistance to NGOs includes
among others computer hardware and software especially for market promotion of
their produces.

PROSPECTS

It is quite natural that a change in the system of agriculture in a country of more than
a billion people should be a well thought out process, which requires utmost care and
caution. There may be several impediments on the way. An understanding of these
problems and prospects will go a long way in decision making.

Indian agriculture should be able not only to maintain but also must strive to increase
the production of foodgrains. It appears that given the availability of organic
infrastructure, minimum efforts for conversion due to the low use of chemical farming
methods and the limit of the public investment, organic farming can be progressively
introduced. The potential areas and crops, which fulfill the above constraints, could be
explored and brought under organic agriculture. The rainfed, tribal, north-east and
hilly regions of India where the traditional farming is more or less practiced could be
considered (Veeresh, 2003). Given below are details of fertilizer consumption in the
north-east and hilly regions of the country.

69
Consumption of Fertilizer in India in 2001-02.
Sr. No. State/Region Quantity (kg/ha)
1 Manipur 105
2 Jammu and Kashmir 65
3 Himachal Pradesh 41
4 Assam 39
5 Tripura 30
6 Meghalaya 17
7 Mizoram 14
8 Sikkim 10
9 Arunachal Pradesh 3
10 Nagaland 2
11 Rainfed Areas 31
All India 90

Agriculture production in these areas is still almost on the traditional eco-friendly

lines and making the farmers aware of the methods of organic farming may not be
very difficult.
A strategy to prevent sudden and substantial yield losses is to convert to organic
production in phases to reduce the risks during the initial years. The question of the
vast requirement of organic matter to the country's farms in order to switch over to
organic agriculture is also answered. Chemical fertilizer is applied only in 30 per cent
of the cultivated area, which is irrigated, and the remaining land is under rainfed
agriculture with almost no fertilizer application. Also the rainfed area under
cultivation accounts for only 40 per cent of the foodgrain production of the country
(Veeresh, 2003). The introduction of organic farming in these areas will allay the
fears of a sudden sharp decline of food production which many fear may drive the
nation to food imports. Thus the demand for biomass for the production of organic
manures can also be controlled in a phased manner. Moreover, the simple
technologies with low input use have been developed for dry farming and they can be
transferred to the farms for organic cultivation. The resulting increases in productivity
and sustain-ability of production will increasingly contribute to the betterment of the

70
economic condition of the dry land faming community, which is one of the poorest in
the country.
An estimate indicates that about 600 to 700 million tonnes of biomass is available to
be converted to manure. Such conversion increases the nutrient value from 0.3-04 to
1-2 per cent. Attempts can also be made to increase the supply of biomass by
allocating a portion of the cultivated area to grow tree manure crops. These plants can
be harvested to be used for making composts. Schemes can be devised to grow green
manure crops in the public lands on the lines of the social forestry programmes.
Several alternatives for supply of organic soil nutrients like vermi-composts and
biofertilizers exist. Technologies have been developed to produce large quantities of
these nutrients. Crop specific biofertilizers for cereals, millets, pulses and oil seeds
are also available. Vermi- composting and bio-fertilizer manufacturing can be
undertaken to increase the supply of organic manure to meet the demand.
The basic rules and regulations for accreditation and certification of organic products
are in place in India.
A Congenial socio-cultural environment prevails in India for the promotion of
organic agriculture. The farmers of India had been practicing eco-friendly agriculture
for centuries till the advent of the 'green revolution' which was based on the
conventional farming methods prevailed in the western countries. Still many small
and marginal farmers, because of many reasons, have not fully adopted the
conventional farming and they follow more or less the traditional environment
friendly system. They use local or own farm derived renewable resources and
manage self-regulated ecological and biological processes. This has become
necessary to cultivate the acceptable levels of crop, livestock and human nutrition
products and above all to protect both the crops and humans from pests and diseases
through the use of bio-chemicals and bio fertilizers. Such a situation is suitable for
making the farming community aware of the organic farming methods to make the
switch over less troublesome.
A country like India can enjoy a number of benefits from the adoption of organic
farming. The price premiums for the products, conservation of the natural resources
in terms of improved soil fertility and water quality, prevention of soil erosion,
preservation of natural and agro-biodiversity are major benefits. Economic and social

71
benefits like generation of rural employment, lower urban migration, improved
household nutrition, local food security and reduced dependence on external inputs
will be large gains in the Indian conditions. The protection of environment and the
consequent increase in the quality of human life will be other contributions of organic
farming.
As said earlier, there is a good demand for organic products in the domestic market,
which is not matched by supplies. The linkages between the two do not exist which in
turn discourage production. The wholesalers/traders play a major role in the
distribution of organic produces as they originate from the small farms (Kumar and
Jain, 2003). Large farmers have access to supermarkets and own stalls for
distribution. Mumbai, Delhi, Kolkota, Chennai, Bangalore and Hyderbad are the
major domestic markets for organic products.
Prospects for organic farming in India can be gauged from the earlier mentioned
experiences of soyabean cultivation initiated in Madhya Pradesh. High premium
prices both in the national and international markets and the lack of supplies in the
latter reveal the opportunities for India. Similarly the case of organic cotton of India
is judged as having bright prospects.

72
CHAPTER FIVE

73
PRESENTATION OF THE BUSINESS PLAN

After the study and critical analysis of organic farming in India I have come to
conclude that it projects a vast scope of progress, welfare and development to the
farmers. However, one very important point to be noted is that it can be a very
troublesome and tedious task for any farmer to switch over from conventional farming
style to organic farming, as it takes at least 2 to 3 years for the soil exploited
through chemicals to adapt to the sustainable and organic methods. Moreover,
the organic produce, though it is very good in nutrients and for the health of a person,
does not finds a market and good price easily. Moreover, the rapid urbanization in the
country has resulted in the declining progress in the agricultural sector due to which
the current agricultural growth is at 4% where as the industrial growth rate is at 12%
.To minimize the gap between the two sectors we need investment in the agricultural
sector. These and various other problems can be tackled only through a pre-planed
process with the tendency to forecast the coming challenges. Through this project we
are planning to do the following things, which will ultimately result in overall growth
of the organic farming sector along with the improvement in the lifestyle of the
economically backward sector of the society.

1. We will take the agricultural lands on lease or some other feasible alternative
by discussing with the owners of the land.
2. We will invest money to build a good agricultural infrastructure viz irrigation,
power, modern equipments etc.
3. We will exploit the local unemployed villagers, train them in organic
farming and make them engage in production process.
4. We will recruit people from various agricultural schools and colleges to
improve this project and train local peoples
5. The production from the agricultural lands will be sold in the local market by
opening various outlets.
6. The project gradually will become “Agricultural Park” which can be a source
of a income by attracting the tourist and this is possible as government is now
more concerned about the rural tourism in India.

74
GENRAL INFORMATION

Name of the Entrepreneur: Mohammad Ali, Shantanu Singh, Rahul Shankar

Proposed Project : Organic Farming

Major Produce/Services : Agricultural Food Products

Proposed Location :

Type of Organization : Product as well as Service Oriented

ENTREPRENEUR PROFILE

Name of the Entrepreneur: MOHAMMAD ALI

Educational Qualifications: MBA- International Business, B.Com

Work Experience (if any): 1 year of farm management at owned farm.

Name of the Entrepreneur: RAHUL SHANKAR

Educational Qualifications: MBA- International Business, B.Com

Work Experience (if any) : 4.5 years in Sales, Marketing & Business Development

Name of the Entrepreneur: SHANTANU SINGH

Educational Qualifications: MBA- International Business, B.A. (English Literature)

Work Experience (if any): 2yrs in K.V.K. as Asst. Manager & Marketing Designer

75
PRODUCTION DETAILS

1.1 LAND AND BUILDING

Sr.no Particular Area Required Total Cost Remarks

1. Land 500000sq.ft 100000 The Land shall

be taken on
lease basis.

Total: 100000

1.2 MACHINERIES/EQUIPMENTS
Sr.No Description Nos. Required Rate(Rs) Total
Value(Rs.)

1. Tractor 10 100000 1000000

2. Pipes 200 1000 200000

3. Water Pump 5 5000 25000

4. Computers/Laptop 5 30000 150000

Total 1375000

76
1.3 MISC. FIXED ASSETS
Sr.No Particulars Nos. Required Rate(Rs) Total
Value(Rs.)

1. Furnitures As required 5000 5000

Total: 5000

1.4 PRELIMINARY AND PRE-OPERATIVE EXPENSES

Sr.No Particulars Amount(Rs.) Remarks

1. Interest During 70000 This may vary

Implementation during the time of
execution.
Establishment
2. 200000
Expenses

Start-up Expenses
3. 250000

Total: 520000

1.5 WORKING CAPITAL

Sr.No Item Rs.

1. Raw-Material 300000

2. Salary/Labor 1344000

3. Rent 24000

4. Interest on Loan 70000

Total: 1738000

77
2. MARKETING POTENTIAL

2.1 Present Demand and Supply of the Product Competition

Sale value per annum = Rs. 3600000

Production Capacity per Annum = 9000 units

2.2 Target Clients:

All classes of Indian Family

2.3 Marketing Strategy:

This type of production of food items is new to the state of PQR(Product Quality
Research). As we have no competitors competing with us at this level of production
there will be not much threat for marketing but at the same time we cannot ignore the
potential threats in the markets so we have to advertise the products to retain the
existing customer base.

3. MANUFACTURING PROCESS

3.1 Step-By-Step Description of the Manufacturing Process

1. Proper tilling of the entire land area.
2. Dividing the entire land area into smaller land areas of equal size.
3. Proper watering of the entire land area.
4. Proper spraying of seeds over the sub areas.
5. Spraying of organic composts and manures.
6. Day to day maintenance of the crops.
7. Control of pests and weeds through organic methods.
8. Harvest at proper time.
9. Process the produced crop.
10. Proper Storage and packaging of the crops.

78
3.2 POLLUTION CONTROL:
The govt. accords utmost importance to control environmental pollution. The small
scale entrepreneurs should have an environmental friendly attitude and adopt
pollution control measures by process modification and technology substitution.
Organic farming plays a major role towards this process.

3.3 ENERGY CONSERVATION:

While the growing energy needs and shortage coupled with rising energy costs, a
greater thrusts in energy efficiency in every sector has been given by the govt. of
India since 1980’s. The following steps shall be taken for conservation of electrical
energy :

1. Adoption of energy conserving technologies, production aids and testing

facilities.
2. Efficient management of process, manufacturing machineries and for yielding
maximum energy conservation.
3. Periodical maintenance of motors etc.
4. Use of renewable energy sources like sun and wind energy.

79
4. PRODUCTION SCHEDULE

4.1 No. of working days per Annum : 25 days/month*12=300 days/annum

4.2 No. of working shifts (8 hrs) per Day : 300*8=2400hrs

4.3 Installed Capacity (Annual) : 9000 units

4.4 Utilized Capacity (%) : Our project is under observation for 1

year

5.1 SALES REVENUE

Sr. No Item(s) Quantity Sold Rate Per Sales
Per Year Unit(Rs) Realization(Rs)

1. Paddy 3000 300 900000

2. Wheat 2000 400 800000

3. Vegetables 1000 1000 1000000

4. Cereals 2000 450 900000

Total: 3600000

80
5.2 RAW MATERIALS
Sr.No Item(s) Quantity Rate(Rs) Total
Value(Rs)

1. High Quality 100 units 500/unit 50000

Seeds

2. Organic 300 units 700/unit 210000

composts

Manures
3. 100 units 200/unit 20000

Total: 280000

5.3 UTILITIES
Sr.No Particulars Annual Remarks
Expenditure(Rs.)

1. Power/Electricity 50000 This depends on

the consumption.
2. Water 1000

Total: 51000

81
5.4 SALARIES/WAGES
Sr.No Particulars No.s Wages/salaries Annual
per Month(Rs.) Expenses(Rs.)

1. Skilled 10 3000 360000

2. Semi-Skilled/ 30 2000 720000

Unskilled

3. Manager/engineer 1 5000 60000

4. Supervisor 4 2500 120000

5. Electrician 1 1000 18000

6. Store-keeper 1 1000 12000

7. Peon/watch-man 2 1000 24000

8. Marketing 1 2500 30000

Executive

Total: 50 1344000

5.5 REPAIRS AND MAINTAINANCE

Sr.No Particulars Amount(Rs.)

1. Electrical equipments 1000

2. Piping network 5000

82
5.6 SELLING AND DISTRIBUTION EXPENSES
Sr.No Particulars Amount(Rs.) Remarks

1. Transportation and 10000 These expenses has

consumables been considered
under pre-operative
Insurance
2. 4000 expenses
Consumable Stores
3. 3000

Total: 17000

5.7 ADMINISTRATIVE EXPENSES

Sr.No Particulars Amount(Rs.) Remarks

1. Stationery & Printing 2000 These expenses

depend on the
2. Post/Telephone/Telegrams 3000
requirements of
3. Entertainment expenses 5000 the customers.

4. Misc. 4000

Total: 14000

5.8 INTREST
Year Outstanding Interest(Rs) Installment Balance(Rs)
Loan (Rs)
Amount(Rs)

I. 1000000 70000 Nil 100000

83
5.9 DEPRECIATION
Sr.No Type of Asset Cost of Asset Expected Life Depreciation

1. Building 240000 1yrs 2400

2. Machinery and 1375000 1yrs 13750

equipment

84
6. TOTAL COST OF THE PROJECT
Sr.No Particulars Total Value(Rs.)

1. Fixed capital 1480000

(Total of Item
no.2.1,2.2,2.3)

Working Capital
2. 1738000
Margin(Total of Item
no.2.5)

Preliminary and Pre-

operative Expenses(Total
3. 520000
of item no 2.4)

Contingencies

4. 10000

Total 3748000

7. MEANS OF FINANCE
Sr.No Particulars Amount(Rs.) Remarks

1. Own investment 1010000 The amount

required for the
Term Loan
entire project was
2. Working Capital 1738000 taken as loan and as
Loan well as personal
3. 1000000
investments.

Total: 3748000

85
8. PROFITABILITY PROJECTIONS
Sr.No Particulars Amount(Rs.)

A. Sale Realization 3600000

B. Cost of :

i) Raw Materials 280000

ii) Utilities 51000

iii) Salaries/wages 1344000

iv) Repairs & Maintenance 6000

v) Selling & Distribution 17000

vi) Administrative Expenses 14000

vii) Interest 70000

viii) Depreciation 16150

ix) Misc. expenses 5000

C. Gross Profit/Loss(A-B) 1796850

D. Income-tax Nil

E. Net Profit/loss 1796850

86
 CHAPTER SIX
CONCLUSION AND RECOMMENDATIONS

87
Conclusions
The ill effects of the conventional farming system are felt in India in terms of the
unsustainablity of agricultural production, environmental degradation, health and
sanitation problems, etc. Organic agriculture is gaining momentum as an alternative
method to the modern system. Many countries have been able to convert 2-10 per
cent of their cultivated areas into organic farming. The demand for organic products
is growing fast (at the rate of 20 per cent per annum in the major developed
countries).
It appears that India is lagging far behind in the adoption of organic farming. So far,
the only achievement seems to be the laying down of the National Standards for
Organic Production (NSOP) and the approval of 4 accreditation agencies (all
government bodies) whose expertise is limited to a few crops. The following are
some of the issues, which require attention at the government policy making levels if
we want to lay the spadework for the spread of organic agriculture in the country.

Substantial financial support by governments (Central, state and lower level

bodies) is absolutely necessary to promote organic farming. A major factor
behind the progress made by the major organic countries has been the very
liberal subsidies provided by the governments. In India, organic farmers do
not receive the benefits of government subsidies as they are targeted at the
conventional cultivation. Given the low risk bearing capacity, the need to
make the organic farming an attractive proposition at least during the initial
period, the likely prospect of loss of productivity for some time, and the non-
existence of marketing channels for organic produces the financial support
must be adequate.

The suggestion to begin the introduction of organic farming in the north-east

region and in the dry farming areas of India is a well thought out proposition.
However, it should be remembered that these regions are inhabited by the
poorest and least advantaged groups whose dependence on agriculture for a
livelihood is total. A programme for organic agriculture in these areas must be
fully supported by the full compensation both in cash and kind to the farmers

88
in the event of the loss of production they would suffer till it reaches the levels
of the days prior to the adoption of organic farming. A fair, quick and efficient
delivery system for such assistance, perhaps by keeping the government
bureaucracy at a distance should also be in place beforehand.

Market development for the organic products is a crucial factor to promote

domestic sales. Supplies do not match the demand for organic products in the
country and the absence of proper links between the two has been pointed out
for the tardy growth of organic farming in the country. An important role of
the government in this direction is giving various supports to the producer and
consumer associations to market the products.

The producer organizations must be encouraged to get accredited for

inspection and certification in accordance with the NSOP. They can also have
own standards and even symbols. This may also reduce the costs of
certification besides the simplification of the process.

A vigorous campaign to highlight the benefits of organic farming against the

conventional system is essential to increase the awareness of the farmers and
consumers.

Identification of crops for cultivation on the organic farms is important. The

examples of soyabean in Madhya Pradesh and cotton in the rainfed areas could
be kept in view in the process.

89
 ANNEXURE

BIBLIOGRAPHY:

Search engines:

www.google.com
www.yahoo.com

Websites:

www.wikipedia.com
www.india-exports.com
www.indianportal.com
exim.indiamart.com
www.indianindustry.com

Books:

Chirunilium P, International Marketing.

News paper:

The economic times (29-12-09)

Times of India (18-01-10)

90
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