Contents

The organic food business is growing tremendously all over the world. The estimated growth of Indian organic food market is over 25% in the coming years. Also, there has been a growth in the organic farming in India. People are now more aware of their health. They know the pros and cons of their health by using it. Hence, the demand for the organic food is increasing day by day. Such trends reveal tremendous growth opportunities for entrepreneurs venturing into the organic food business.

If you want to start the organic food business, then you need to consider certain points.

Areas You Need to Consider For Organic Food Business

1. Market opportunity

It is recommended to keep a check of the background of the business and the industry before entering into any business. Similarly, analyze the trends and needs of the consumer in the market. There are growing instances of organic food adulteration when it comes to the organic food market. Food safety legislation is continuously working to improve safety standards of the organic food. On the other hand, consumers are increasingly willing to pay more for safe and quality organic products.

2. Understanding the target audience

The new generation coming up is educated and smart. There is raising awareness of healthy foods and their benefits among the people. Youth prefers to remain healthy and can spend money on the healthy food rather than on medical bills. Therefore, health has been given priority over prices. So, before entering into this sector, know what your target audience wants from you. However, the challenge is to locate the potential buyer.

3. Labeling

The Food Safety and Standards Authority of India (FSSAI License) has made mandatory to label the organic products. FSSAI issues many rules and regulations that which should be followed by the food companies that are selling organic products. Companies can get a voluntary logo from FSSAI who are dealing in organic produce such that the product is named organic.

The organic food business requires certification by any one of the authorities;

  • National Programme for Organic Production (NPOP)
  • The Participatory Guarantee System for India (PGS-India)

4. Location Selection

Location is one of the most important factors in the success of the business. Health food stores mostly target local customers. Your plan should initiate by collecting information regarding the local community:

  • Types of people live nearby
  • The community has the right demographics which can support your new business
  • Transportation facility available

5. Take a Look at Competitors

Before you open a health food store in your area, it is recommendable to determine what the competition looks like. You need to enter the city, state, and zip code to get a list of health food stores in your nearby locality.

Challenges

The organic food business has to face challenges due to policy changes: There are various aspects to this:

  •  The supply chain is underdeveloped: small and medium-sized farmers are mostly located in hilly areas and tribal belts. It is extremely difficult for them to have access directly to the markets. Further, organic products require separate storage from conventional products to avoid cross-contamination. Shortage of packaging houses and refrigerated vehicles lead to spoilage of products.

  • On one hand, the government is subsidizing farmers under the Participatory Guarantee System (PGS). This is a certification process supported by Pradhan Mantri Kaushal Vikas Yojana (PKVY) scheme. However, these farmers are not allowed to export. The Agricultural and Processed Food Products Export Development Authority (APEDA) mandates third-party certification for exports. This is important because unless farmers in India are allowed to export under PGS, they will not be able to earn a premium price.

  • Their risk of loss of yield when the farmer decides to shift from conventional chemical-based farming to organic farming. This requires the government to offer subsidies to compensate for the loss of yield initially. Currently, there is no such subsidy offered by the Government of India. Also, post-green revolution, a majority of the budget is allocated to chemical-based inputs and high yielding variety of seeds. Some states offer less than two percent of the budget to organic farming.

  • Converting one or some pieces of land to organic farming may not solve the purpose. This is because contamination of yield is possible through air and water sources. Some states like Sikkim, have been declared organic states as they produce only and only organic products. Such government policies encourage farmers to adopt organic farming practices.

  • A serious shortage of good quality organic inputs also increase the risks related to loss of yield. The availability of organic fertilizers is low in quantity. Also, there are not many serious players supplying organic inputs in the market. There is a need for a policy on input standardization. Different varieties of crops grown in different areas face different issues. These issues are crop specific and region specific. It requires more research and development to develop their yields.

  • Lack of necessary equipment to farmers has brought huge losses to farmers. For instance, in 2015 fruit flies in Sikkim have to lead to the destruction of orange yields in the state. Basic equipment includes netting and poly-houses protect crops from insects.

If you want to apply for Food License, you can go with FSSAI Food License.

Related Topic: Kind of Food Business which requires Food License