Mts 01 report @ arvind ltd.

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project work done by Anjaney kumar and Sunil kumar in Arvind Ltd.during 4th July 2011 to 3rd September 2011.

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Mts 01 report @ arvind ltd.

  1. 1. “Market Research for Organic Staple Business in Domestic and Global markets for Arvind Ltd” Submitted to Mr. Mahesh Ramakrishna Head Agribusiness, Arvind Ltd, Ahmadabad“A REPORT SUBMITTED IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR MASTERS IN RURAL MANAGEMENT” Submitted by: Anjaney Kumar Sunil Kumar KIIT SCHOOL OF RURAL MANAGEMENT BHUBNESWAR Management Traineeship Segment (MTS) I
  2. 2. Approval page SCHOOL OF RURAL MANAGEMENT, KIIT UNIVERSITY Bhubaneswar The MTS Report of Anjaney Kumar Sunil Kumar Candidates for the degree of MBA Rural Management Are hereby APPROVED Prof. H.S.GANESAHA Faculty Guide MBA-CoordinatorArvind Ltd KiiT School of Rural Management MTS 01 Page 2
  3. 3. Executive SummaryProject title:Market research for organic staple business in Domestic and Global markets for Arvind LtdHost Organization: Arvind limitedReporting officer: Mr. Pramod AwatadeProject location: Akola District, MaharashtraAuthors: Anjaney Kumar and Sunil KumarProject period: 4th July 2011 to 3rd September, 2011Objective of the project:  Estimation of production potential of organic staple food in Akola district of Maharashtra under ARVIND Ltd.  Current scenario of organic staple business in domestic and global markets.  Strategy formulation for sustainable growth of the businessMethodology:Primary data collection from field and management information system (MIS) officeSecondary data collection from internetArvind Ltd KiiT School of Rural Management MTS 01 Page 3
  4. 4. Major findings:Based on our research we found that 3538 farmers spread over 132 villages of Akola district areregistered under Arvind organic projects and growing organic staple food on 11387.50 acres ofland including pigeon pea, Sorghum, Sunflower, Safflower, Ajwain Etc. under strict internal andexternal inspection agency. In year 2010-11, 80978 quintals of organic food were produced andtheir major markets are metro cities like Mumbai, Delhi, Hyderabad, Pune, etc. At domesticmarket, the major players are Namdhari fresh, Sumintar, Fab India etc. Farmers had formedSHGs for better coordination among them. With course of globalization and healthconsciousness among people there is huge demand of organic food both at domestic as well asglobal level. Market research study shows that US AND EUs country are the major destinationfor our export. In Indian context we can say that Organic farming is as an important livelihoodoption for small, resource-poor farmers with low-input costs and quality food production. Weassumed 10% premium for the business at domestic as well as global markets.Recommendation:We find that organic staple business is in nascent stage in Indian market and consumers areunaware about the organic food but it is increasing rapidly in domestic as well as global markets..it is a good opportunity for the ARVIND Ltd. to promote organic contract farming in terms ofmarket sustainability of the business as well as sustainability of the environment. Even thoughARVIND LTD involved in organic staple business but it is not registered under any companiesacts so registration is important for gaining brand image. ARVIND LTD has vast infrastructure(warehouse, dal mill, and procurement center) as well as skilled human resources so in this pointof time it is very necessary to promote the organic business by different electronic as well asArvind Ltd KiiT School of Rural Management MTS 01 Page 4
  5. 5. print media. Warehouse of ARVIND Ltd. is not registered by government so before full fledgebusiness of organic staple business it is necessary that it should get registration. During our visitto warehouse we found that nearby area of warehouse is not clean sometime there might bechance of insect may infect the stored food. So storing of commodities is pure hygiene conditionis very important. Farmers had formed the SHGs for better coordination among them so it isnecessary that it should be registered.Arvind Ltd KiiT School of Rural Management MTS 01 Page 5
  6. 6. ACKNOWLEDGEMENTIn preparing this report a considerable amount of thinking and informational inputs from variousSources were involved. We express our sincere gratitude to everyone who contributed towardsMaking this report possible.First of all we would like to thank dignitaries of Arvind Limited, Ms. Mili Dash, Manager,Human Resources Learning & Development, for giving us opportunity to work in thisprestigious organization. We would like to thank our reporting officer Mr. Pramod Awatade,senior manager, project for valuable support and feed back for the successful completion of thisreport.We would also like to thank all our respondents for their response without which this study couldnot have been possible.We also take a special mention of faculty guide Prof. H.S.Ganesha and MTS coordinator ofKSRM, Prof. Prasun Kumar Das for his valuable inputs.We extend my sincere gratitude to all other people, my friends and my family and to God, whomade all things possible.Date: September 13th, 2011 Anjaney KumarKSRM, Bhubaneswar Sunil KumarArvind Ltd KiiT School of Rural Management MTS 01 Page 6
  7. 7. Table of contentsCHAPTER -01 .......................................................................................................................... 141. BACKGROUND OF STUDY: .............................................................................................. 141.1 Organization overview: ....................................................................................................... 151.2 ARVIND Ltd: Organgram ................................................................................................... 161.3 Project Overview: ................................................................................................................ 171.4 Objective: ............................................................................................................................ 171.5 Significance of the study: .................................................................................................... 171.6 Methodology: ...................................................................................................................... 182 OBJECTIVE: ......................................................................................................................... 192.1 District overview: AKOLA ................................................................................................. 19 2.1.1 Geographical location and boundaries of Akola district: ................................................ 19 2.1.2 Climatic condition of Akola District: ............................................................................ 19 2.1.3 Type of soil in Akola district (Area in 000 hectors) ....................................................... 20 2.1.4 Land holding pattern in Akola district: .......................................................................... 213 ORGANIC PROJECTS: ARVIND LTD ................................................................................ 223.1 Area under Arvind Ltd ........................................................................................................ 223.2 Distribution of land under different crops: ........................................................................... 233.3 Seasonality of agriculture: ................................................................................................... 233.4 Capacity building of farmers through SHG: ......................................................................... 243.5 Inspection and certification:................................................................................................. 25CHAPTER: 2 ............................................................................................................................ 264 OBJECTIVES: 02 .................................................................................................................. 264.1 Domestic Scenario: India ..................................................................................................... 26Arvind Ltd KiiT School of Rural Management MTS 01 Page 7
  8. 8. 4.2 Domestic market: ................................................................................................................ 274.3 States wise Demand of organic food in India ....................................................................... 294.4 Cities wise demand of organic food in India ........................................................................ 305 INDIA‟S MAJOR PLAYERS: ............................................................................................... 305.1 Namdhari fresh: ................................................................................................................... 305.2 Eco-farms: ........................................................................................................................... 325.3 Fab India: ............................................................................................................................ 345.4 Suminter India organics: ...................................................................................................... 355.5 Moraraka Organic Food Pvt. Ltd: ........................................................................................ 376 LIMITED PENETRATION OF ORGANIC FARMING IN INDIA: ...................................... 387 WORLD SCENARIO OF ORGANIC AGRICULTURE ........................................................ 407.1 Development of organic agriculture land worldwide: ........................................................... 417.2 Top ten countries have more organic certified land: ............................................................. 417.3 Country with highest no of organic producer: ...................................................................... 427.4 Global market trend of organic food: ................................................................................... 427.5 Market forecast: GLOBAL .................................................................................................. 438 EUROPEAN UNION: ............................................................................................................ 438.1 Segmentation....................................................................................................................... 448.2 Market value forecast: European Countries ......................................................................... 459 STATUS OF ORGANIC STAPLE BUSINESS IN USA: ....................................................... 459.1 Segmentation....................................................................................................................... 469.2 Market Forecasts: USA ....................................................................................................... 47Arvind Ltd KiiT School of Rural Management MTS 01 Page 8
  9. 9. CHAPTER: 03 .......................................................................................................................... 48OBJECTIVE: 03 ....................................................................................................................... 4810 VALUE CHAIN: FARMERS TO CONSUMER: ................................................................. 4810.1 MAJOR STEPS ................................................................................................................. 4910.2 Business at domestic level: ................................................................................................ 5010.3 Business at Global level: ................................................................................................... 5110.4 European Regulation for Import from India ....................................................................... 5110.5 USA regulation for import from India................................................................................ 5210.7 warehouse registration ....................................................................................................... 5711 COST ANALYSES .............................................................................................................. 6011.1 Cost Analysis for Domestic Market ................................................................................... 6311.2 Cost Analysis for Global Business ..................................................................................... 65ASSUMPTION FOR COST ANALYSIS:................................................................................. 6712 SWOT ANALYSIS OF ORGANIC BUSINESS .................................................................. 6812.1 Situation Analysis ............................................................................................................. 6912.2 Internal /within us.............................................................................................................. 6913, 4PS MODEL FOR ORGANIC BUSINESS ......................................................................... 70CONCLUSION ......................................................................................................................... 71RECOMMENDATIONS .......................................................................................................... 7214 ANNEXURE........................................................................................................................ 7314.1 Certified organic land (Acre) ............................................................................................. 73Arvind Ltd KiiT School of Rural Management MTS 01 Page 9
  10. 10. 14.2 Distributor of USA ............................................................................................................ 7414.3 Distributor of European Countries ..................................................................................... 7514.4 distributor of India ............................................................................................................. 76BIBLIOGRAPHY ..................................................................................................................... 77Arvind Ltd KiiT School of Rural Management MTS 01 Page 10
  11. 11. List of FiguresFigure 1 Types of Soil (In %) .................................................................................................... 20Figure 2 Cropwise land distribution........................................................................................... 23Figure 3 % of organic Food Production Based on Value in year 2009-10 .................................. 28Figure 4 Development of organic Agriculture Land (1999-2009) .............................................. 41Figure 5 Top ten Countries with Highest certified organic Land ................................................ 41Figure 6 Top countries with highest no of certified producers.................................................... 42Figure 7 Global market trend (Year 2001-2011) ........................................................................ 42Figure 8 EU market (2006-2009)............................................................................................... 43Figure 9 Market Segmentation EU Countries ........................................................................... 44Figure 10 Market Segmentation of EU Countries ...................................................................... 44Figure 11 Market Segmentation US........................................................................................... 46Figure 12 Market Share Of EU And USA Of Organic Business................................................. 46Arvind Ltd KiiT School of Rural Management MTS 01 Page 11
  12. 12. List of TablesTable 1 Land Use Pattern .......................................................................................................... 20Table 2 Types of Soil in Akola District ..................................................................................... 20Table 3 Land Holding Pattern.................................................................................................... 21Table 4 Center Wise Organic Land............................................................................................ 22Table 5 No of Farmers and SHGs Centerwise............................................................................ 24Table 6 Indian organic Status .................................................................................................... 26Table 7 Different types of organic Staple Produced in India ...................................................... 27Table 8 Production of organic food (Year 2009-10)................................................................... 27Table 9 Domestic Market, Present And Forecasted .................................................................... 28Table 10 Stateswise Demand of Organic Present and Forecasted ............................................... 29Table 11 Citywise Demand of Organic Food in India ................................................................ 30Table 12 Overviews of organic status worldwide ...................................................................... 40Table 13 Market Forecast For Global Business (2010-2015) ..................................................... 43Table 14 Market Forecast of EU Countries (2010-2015) ........................................................... 45Table 15 USA Organic Market Status (2006-2010) ................................................................... 45Table 16 USA Organic Market Forecast (2010-2015)................................................................ 47Table 17production of Organic Staple Food Under Arvind Organic Project ............................... 62Table 18 Cost Analysis for Domestic Market ............................................................................ 63Table 19 Cost Analysis For Global Market ................................................................................ 65Table 20 Annexure Organic Certified Land ............................................................................... 73Table 21 Annexure List Of Distributor Of Usa .......................................................................... 74Table 22 List of distributor of European Countries ................................................................... 75Table 23 List of distributors Of India ........................................................................................ 76Arvind Ltd KiiT School of Rural Management MTS 01 Page 12
  13. 13. List of AbbreviationsAPEDA Agricultural & Processed Export Development AuthorityIFOAM International Federation Of Organic Agricutlture MovementCUC Control Union CertificationUSDA United States Departmwent Of AgricultureMAPMC Maharastra Agriculture Produce Market CommitteeNOP National Organic ProgramWTO World Trade OrganisationFAO Food And Agricutlture OrganisationEU European UnionOTA Organic Trade AssociationEIA Export Inspection AgencyICS Internal Control SystemMSP Minimum Support PriceNAFED National Agriculture Co Operative Marketing Federation Of IndiaNAP National Agriculture PolicyNPK Nitrogen Phosphate PotassiumArvind Ltd KiiT School of Rural Management MTS 01 Page 13
  14. 14. Chapter -011. Background of study:Organic foods are foods that are produced using methods that do not involve modern syntheticinputs such as synthetic pesticides and chemical fertilizers, do not contain genetically modifiedorganisms, and are not processed using irradiation, industrial solvents, or chemical foodadditives .Organic farming is being practiced in 100 countries of the world. The ill-effects ofchemicals used in agriculture have changed the mindset of some consumers of different countrieswho are now buying organic with high premium for health. Policy makers are also promotingorganic farming for restoration of soil health and generation of rural economy apart from makingefforts for creating better environment.As demand for organic foods continued to increase, high volume sales through mass outlets suchas supermarkets rapidly replaced the direct farmer connection. Today there is no limit to organicfarm sizes and many large corporate farms currently have an organic division. While organicfood accounts for 1–2% of total food sales worldwide, the organic food market is growingrapidly, far ahead of the rest of the food industry, in both developed and developing nations.The world organic market has been growing by 20% a year since the early 1990s, with futuregrowth estimates ranging from 10%–50% annually depending on the country. The total organicarea in Asia is nearly 2.9 million hectares. This constitutes nine percent of the world‟s organicagricultural land. 230‟000 producers were reported. The leading countries are China (1.6 millionhectares) and India (1 million hectares). According to the Indian Competence Centre for OrganicAgriculture, the global market for organically produced foods is $65billion and is estimated toincrease to $102 billion by 2020.Basmati rice, pulse, tea, spices, soybean, toor dal, Green gram and their added products areproduced organically in India. Apart from the dibble sector, organic cotton fiber, garments,cosmetics and functional food products are also produced.Although organic farming is picking up pace in India, the sector has been jostling with lack ofawareness, knowledge and confidence. Besides, there is a limited expertise in marketing oforganic products and the government should engage NGOs to close linkage with farmers.Arvind Ltd KiiT School of Rural Management MTS 01 Page 14
  15. 15. 1.1 Organization overview:Arvind Mills was established in 1931. It was founded by the three brothers Kasturbhai Lalbhai,Narottambhai Lalbhai and Chimanbhai Lalbhai one of the leading families of Ahmadabad.Arvind Mills, the flagship company of the Lalbhai Group, is one of Indias leading compositemanufacturer of textiles. It manufactures a range of cotton shirting, denim, knits and bottomweights (Khakis) fabrics. It is Indias largest denim manufacturer apart from being world‟sfourth-largest producer and exporter of denim. Today it not only retails its own brands likeFlying Machine, Newport and Excalibur but also licensed international brands like Arrow, Lee,Wrangler and Tommy Hilfiger, through its nationwide retail network. Arvind also runs a valueretail chain, Mega mart, which stocks company brands.The original budget for the company totaled $ 55 thousand, at present it is $ 500 million Arvindfeature is that its enterprises are equipped with highly advanced equipment of a full cycle – frompainting the fiber to the finished product.Arvind is working closely with the farmers of the Vidarbha region in Akola to grow organiccotton and staple food like green gram, Pigeon pea, black gram, soybean, sunflower, sorghum,ajwain etc. This initiative has helped to improve the livelihood of the farmers by dramaticallyincreasing their per-acre income. A direct buying-at-doorstep policy and a seven day paymentcycle, along with an elimination of all forms of exploitation by middlemen, have further helpedimprove the farmer‟s income levels. What started out as a small project now encompasses26395.35 acres of farmland employing nearly 3538 farmers? All the organic cotton produced atthese organic farms is certified by the Control Union Certification, Netherlands.Arvind Ltd KiiT School of Rural Management MTS 01 Page 15
  16. 16. 1.2 ARVIND Ltd: Organgram Senior Project Manager Office team Core Team Logistic Accounts MIS Production Manager Pest and Social Development Disease control Officer Office assistant Manager Assistant DriverAssistant Assistant Assistant Assistant Assistant Extension teamExtension officer Extension officer Extension officer Extension officer Extension officer Extension officerTechnical officer Technical officer Technical officer Technical officer Technical officer Technical officer Extension officerTechnical Technical Technical Technical Technical officer Technical Technical Technical Technical Technical Technical Technical TechnicalAssistant Assistant Assistant Assistant Assistant Assistant Assistant Assistant Assistant Assistant Assistant Assistant Technical Technical Assistant Assistant Technical Technical Technical Technical Technical Technical Assistant Assistant Assistant Assistant Assistant Assistant Technical Assistant Arvind Ltd KiiT School of Rural Management MTS 01 Page 16
  17. 17. 1.3 Project Overview:Pure farm is brought to this region by ARVIND Ltd. Pure farm works with the farmers to helpthem adopt natural, organic method of cultivation. In the region where ARVIND work with thefarmer, these practices are ensuring that farmer gain progressively better crop yields. The land isnot depleted of rich soil, nor poisoned with dangerous pesticides and herbicides.Pure farm then helps farmers reach market all over the country using its extensive marketingnetwork.1.4 Objective:The study was focused to these assigned activities:  Estimation of production potential of organic staple food in Akola district of Maharashtra under ARVIND Ltd.  Current scenario of organic staple business in domestic and global markets.  Strategy formulation for this sustainable growth the business1.5 Significance of the study:The significance of the study is to find the suitable market for organic food and to make strategicformulation for the business of organic food so that marketing of the organic food can run in asustainable manner and producer can get better return through the business.Arvind Ltd KiiT School of Rural Management MTS 01 Page 17
  18. 18. 1.6 Methodology: Our research work was divided in 3 phases. In every phase we worked on objectives assigned to us. During last phase of study we completed our draft and report writing. Methodology Phases Phase 1 Phase 2 Phase 3 Phase 4 Objective 1 Objective 2 Objective 3Literature review Secondary Data Data interpretation Draft writingPrimary data collection from Internet Strategy formulation Report writingMIS Arvind Ltd KiiT School of Rural Management MTS 01 Page 18
  19. 19. 2 Objective: 01: Estimation of production potential of organic staple food in Akola district of Maharashtra under ARVIND Ltd.2.1 District overview: AKOLA1st July 1998 Akola district was divided into two separate districts as - Akola & Washim in newAkola district there are 7 blocks that are divided into two sub divisions for agriculturedepartment as Sub Division Akola includes 3 blocks as Akola, Barshitakli & Murtizapur & SubDivision Akot includes 4 blocks as Akot, Telhara, Balapur, and Patur.Akola District is a one of the major cotton producer district of Maharashtra. Nearly 69%population of the district is depends on agriculture. Geographical area of the Akola district is5417 sq. Km. and the density of population is 300. The district consists of seven talukas. As per2011 census the total population of Akola district is 1818617 l. The male population is 51.40%and female population is 48.60 %, there was change of 11.60% in the population as per census2001. The average literacy rate of the district is 87.55 % compare to 81.42% of 2001 and therural literacy rate is 78.80%. The working population of the district in the age group of 15 to 59is 43.27 %. And the child population of the district in the age group of 8 to 14 is 33.26%. Therewere 3,413 out of school children in 2007-08 according to Sarva Shiksha Abhiyan.2.1.1 Geographical location and boundaries of Akola district:Akola district is situated at latitude 20.7° north and longitude 77.07° east. Melghat Hills andforest region surround the Akola district. Akola is blessed by numerous water bodies like MornaRiver, Purna River, Vaan River, Aas River, and Shahnur River etc. There are several dams in thedistrict. Akola has encountered three floods since 1978. The portion covered by forests in Akolastretches to an area of 467 square kilometers. Akola is surrounded by Amravati district in thenorth, Washim district in the south, Amravati and Washim districts in the east and Buldhanadistrict in the west2.1.2 Climatic condition of Akola District:District falls in assured rain fall zone hence receives monsoon rains during June to October. TheAvrage annual rain fall of the district is 714.1m.m.spread over 47 rainy days in normal condition.The district characterized by warm & humid climate in June to October and later on there isgradual decline in temperature from November onwards. Cool & dry climate is observed duringArvind Ltd KiiT School of Rural Management MTS 01 Page 19
  20. 20. Nov to Jan. March, April, May is the hottest months The Average- Max & Min Temp of theDistrict is 47.9 & 12 degree Celsius. Table: 1, land use pattern Geographical Area 5.42 lakh hact. Total area under cultivation 4.96 lakh hact. Average area under fallow land 0.18 lakh hact. Number of total cultivator 290165 Average Area under Rabi crops 0.46 lakh hact. Average area under kharip crops 4.82 lakh hact. Average area under summer crops 0.02 lakh hact. Source: District Superintendent of Agricultural Office, AKOLA2.1.3 Type of soil in Akola district (Area in 000 hectors)Table: 2 types of soil in Akola districtTypes of soil In Ha(000)Light soil 87Medium soil 149Heavy soil 255Figure 1 types of soil (in %) Light soil 18% Heavy soil 52% Medium soil 30%Source: District Superintendent of Agricultural Office, AKOLAArvind Ltd KiiT School of Rural Management MTS 01 Page 20
  21. 21. 2.1.4 Land holding pattern in Akola district:Table: 3, Land holding pattern Sr. No Description Size of holding No. of Area In ha. Remarks hectors Holders 1 Marginal < 1. 00 55979 38944 2 Small 1.00 --1.99 97618 142925 Ava. Size of holdings is 2.83 3 Semi 2.00 -- 3.99 76775 212486 ha. medium 4 Medium 4.00 -- 9.99 50802 304353 5 Large > 10.00 8991 123711 Source: District Superintendent of Agricultural Office, AKOLAArvind Ltd KiiT School of Rural Management MTS 01 Page 21
  22. 22. 3 Organic projects: ARVIND LtdModern organic farming has made up only a fraction of total agricultural output from itsbeginning until today. Increasing environmental awareness in the general population hastransformed the originally supply-driven movement to a demand-driven one. Premium prices andsome government subsidies attracted farmers .There are different factor motivating the farmersfor the production of organic staple food in the Akola district, Discussed in following category:3.1 Area under Arvind LtdFor the cordination and promotion of organic farming there are six center working across thedistrict.136 village comes under these center.this helps the bidirection flow of information fromARVIND LTD to the each and evry farmer registred under this project. Table 4 center wise organic land Sr.No Name of the No of village No of Area under organic center farmer farming[Acre ] 1 akharwada 28 591 4134.75 2 Chohotta 39 623 5022.9 3 Nimba 20 470 3314.50 4 Mazod 33 619 4697.9 5 Paras 30 610 4490.8 6 Ramgon 22 625 4734.5 Source: MIS, Arvind LtdAbove table show that there are 3538 farmer reistered under ARVIND for oranic farming in sixdifferent center across the district of akola covering 26395.35 Acre of land.out of all organic land11387.5 Acre of land used by cultivation of staple food other than Cotton cultivation.Arvind Ltd KiiT School of Rural Management MTS 01 Page 22
  23. 23. 3.2 Distribution of land under different crops: Following figure explain the distribution of land under different organic production Figure: 2. Crop Wise land Distribution 11 1962.52 34.45 69.3 205.5 Moong Pigeon pea BlackGram 2429.6 7730.06 Soyabean Sunflower Seasame 1123.15 2867.9 Safflower Sorghum Ajwain Moong is cultivated in 7730.06 Acre of the land followed by pigeon pea in 2867.9 Acre of the land.safflower is cultivated in only 11 Acre of land 3.3 Seasonality of agriculture: There are 3538 farmer registered under the ARVIND LTD COMPANY for the organic staple production in the district covering 11388 acre of landSr.No Name of the Scientific name Sowing Harvesting Production[qt] Average crop period period yield/Acre.1 Green gram Vinga Radiata July August – Sept 36201.39 4.68322 Pigeon pea Cajanus Cajan June -july Dec - Jan 11593.4 4.04253 Black gram Vigna Mungo July –Aug October 5417.85 2.82384 Soyabean Glycine max June -July Sept – Oct 14951.03 6.15375 Sunflower Helianthus annuus May -June Sept –Oct 962.05 4.68156 Sesame Sesamum indicum July October 333.8 4.81677 Safflower Carthamus June – july Sept -Oct 47.64 4.3307 tinctorius8 Sorghum Sorghum bicolor Feb- march April -may 11309.22 5.76269 Ajwain Trachyspermum June -july Sept - Oct 162.02 4.7031 Copticum Source: MIS, Arvind Ltd Arvind Ltd KiiT School of Rural Management MTS 01 Page 23
  24. 24. production /Acre q 7 u 6 i 5 6.16 5.77 n 4 4.68 4.83 4.7 4.82 4.7 4.04 4.33 t 3 a 2 l 1 0 Moong Pigeon peaBlackGram Soyabean Sunflower Seasame Safflower Sorghum Ajwain staple food Source: MIS, Arvind Ltd3.4 Capacity building of farmers through SHG:Organic farming production is based on contract farming model where there is agreementbetween ARVIND LTD COMPANY and producer.in turns ARVIND committed to providesupport through supplying farm inputs, land preparation, providing technical advice andarranging transport of produce to the ginning mills.All this activities are carried out by the SHG [self help group] formation.SHG activities not onlysupport in agriculture activities but also promote saving habit among group member, sanitationin the communities‟ .Each SHG member select their president, secretary for smooth running ofactivitiesFollowing table explain the no of SHG formed under different extension center. Table: 5. No of farmers and SHGs center wise Sr.No Name of extension center No of SHG No of farmers 1 Akhatwada 36 591 2 Mazod 36 619 3 Nimba 30 470 4 Chohotta 45 623 5 Paras 37 610 6 Ramgon 32 625 Source: MIS, Arvind LtdArvind Ltd KiiT School of Rural Management MTS 01 Page 24
  25. 25. 3.5 Inspection and certification:In order to faciliatate the farmers in the certification process and to reduce the costs, farmersgroup had been organised by ARVIND within internal control system.for this each farmer hadsigned a contract with the ARVIND in which they had declare their rediness to follow theorganic staanderds.the organic ectension worker of the project advice the farmer in organic cropproduction technique and support them in necessory record keeping.Internal inspector inspect thefarmer at least once a year and an internal certification committee decide about the sanctionagainst defaulting farmers.In year 2009-10, Out of 3538 organic staple producing farmer 2156 farmers were in secondphase of certification are under in conversion year 2 and rest 1362 farmer are organiccertified.But in year 2010-11 all farmers are completelty certified by “control unioncertification.’’through Agricultural and Processed Food Products Export DevelopmentAuthority [APEDA]Organic internal control system structure PROMOTERS EXTENSION SERVICE CONTROL UNION CERTIFICATION (CUC) INTERNAL CONTROL SYSTEM FARMERS FARMERS FARMERSArvind Ltd KiiT School of Rural Management MTS 01 Page 25
  26. 26. Chapter: 24 Objectives: 02Current scenario of organic staple business in domestic and global marketsOverview of domestic market and Global marketThe demand for organic foods in India is estimated to be $8,423.8 million in 2010. Thedistribution of the latent demand (or potential industry earnings) in India, however, is not evenlydistributed across regions. Maharashtra is the largest market with $1,145.3 million or 13.60percent, followed by Uttar Pradesh with $976.9 million or 11.60 percent, and then Gujarat with$693.0 million or 8.23 percent of the latent demand in India. In essence, if firms target these top3 regions, they cover some 33.43 percent of the latent demand for organic foods in India.The demand for organic foods is estimated to be $113.0 billion in 2006. The distribution of theworld latent demand (or potential industry earnings), however, is not evenly distributed acrossregions. Asia is the largest market with $35.8 billion or 31.68 percent, followed by Africa,Europe & the Middle East with $37.2 billion or 32.92 percent, and then North America & the4.1 Domestic Scenario: IndiaAccording to organic trade association in year 2009 there are 2.5 million Ha of land was organicallycertified. 115238 tons organic products as certified. There was 158 processing unit was in India. 35products exported to the foreign countries. Table: 6, Indian Organic Status Sr. No Particulars 1 Area under certified 2.5 million Ha 2 Total certified products 115238 ton 3 Total project certified 332 4 No of processing unit 158 5 Accredited and certifying agencies 11 6 No of product exported 35Arvind Ltd KiiT School of Rural Management MTS 01 Page 26
  27. 27. Source: organic trade associationFollowing table shows the organic staple food produced in the country .it is categorized in spices,pulses, fruits, vegetable, and oil seeds.Table 7, different types of organic staple produced in IndiaSr.No. Types of staple Name of the staple1 Commodity Tea, Coffee, Rice, Wheat ,sorghum , ajwain2 spices Cardamom, Black pepper, White pepper, Ginger, Turmeric, Vanilla, Tamarind, Clove, Cinnamon, Nutmeg, Mace, Chili3 pulse Red gram, Black gram, pigeon pea4 fruits Mango, Banana, Pineapple, Passion fruit, Sugarcane, Orange, Cashew nut, Walnut5 Vegetable Okra, Urinal, Garlic, Onion, Tomato, Potato6 Oilseeds Mustard,Sesame,Castor, Sunflower ,safflower7 Others cotton, Herbal extracts, soybean Source: APEDAProduction of organic food in India in year 2009-10Table 8 production of organic food (year 2009-10) Sr.No. crop Quantity produced in MT(2009-10) 1 Cotton 837293 2 Rice 17762 3 Wheat 113570 4 Other cereals and millets 271042 5 Pulses 53227 6 Oil seeds and soybean 315067 7 Tea /coffee 40614 8 Spices 168507 9 Fruits and vegetable 889844 10 Herbal and medicine 189193 11 other 24661 Source: APEDA4.2 Domestic market:Consumption of organic food in India is not very much comparing to other EUs countries and USA.Following table show the market of organic food in India from year 2004 to 2011.forcastedmarket size of organic food in India in year 2012 to 2014 is 10,129.539 , 11,111.761 ,12,192.130 US $ million. The organic products available in the Indian domestic market are rice,Arvind Ltd KiiT School of Rural Management MTS 01 Page 27
  28. 28. tea, coffee, pulse and vegetable .these products also exported as organic cashew nuts, cotton,oilseeds, various fruit ,medicinal herbs but the majority of total organic production in India isexported (75%-80%) with the balance consume or sold locally. Below pie chart shows the % oforganic agriculture production in India which is based on total production value.Figure: 3, % of organic food production based on value in year 2009-10 tea rice 23% 24% coffee 4% fruit & vegetable wheat 17% 10% nuts,oilseeds,puls cotton spices es& herbs 8% 5% 9%Present and forecasted domestic market:Present market size of Indian organic staple is 9236.32US $ million and forecasted to reach12192.123in year 2014.Table 9 Domestic Market, Present and ForecastedYear India Market US $ mln2004 4,768.5922005 5,242.7642006 5,765.9652007 6,343.4752008 6,981.1612009 7,680.6812010 8,423.8432011 9,236.3222012 10,129.5392013 11,111.761 Forecasted2014 12,192.130 Source: www.icongrouponline.comArvind Ltd KiiT School of Rural Management MTS 01 Page 28
  29. 29. 4.3 States wise Demand of organic food in India State wise demand of organic food in India in year 2009 and 2010 and forecasted demand in year 2014 Maharashtra had highest demand of organic food in India in year 2010 Table 10 states wise demand of organic present and forecastedStates Demand 2010 9US $ Demand 2011 US $ Demand Mln Mln 2014(forecasted)Andaman & Nicobar Islands 4.315 4.701 6.077Andhra Pradesh 612.199 666.899 862.110Arunachal Pradesh 7.764 8.513 11.223Assam 130.344 141.521 181.138Bihar 147.770 156.747 187.084Chandigarh 25.427 28.152 38.211Chhattisgarh 171.610 193.061 274.886Dadra & Nagar Haveli 1.096 1.186 1.503Daman & Diu 1.276 1.380 1.750Delhi 296.925 324.509 423.612Goa 29.355 31.872 40.794Gujarat 692.952 777.146 1,096.227Haryana 261.681 286.934 378.275Himachal Pradesh 60.218 65.598 84.800Jammu & Kashmir 51.120 54.773 67.372Jharkhand 137.826 176.409Karnataka 432.577 469.671 601.151Kerala 276.190 297.899 373.809Lakshadweep 0.783 0.848 1.074Madhya Pradesh 483.059 543.441 773.767Maharashtra 1,145.331 1,251.732 1,634.003Manipur 12.940 14.050 17.983Meghalaya 15.324 16.584 21.019Mizoram 9.396 10.336 13.759Nagaland 19.150 20.929 27.321Orissa 244.508 275.071 391.655Pondicherry 22.259 24.486 32.595Punjab 242.477 261.536 328.180Rajasthan 390.890 439.752 626.131Sikkim 1.683 1.816 2.279Tamil Nadu 788.881 850.887 1,067.710Tripura 15.422 16.579 20.599 Arvind Ltd KiiT School of Rural Management MTS 01 Page 29
  30. 30. Uttar Pradesh 976.935 1,064.224 1,375.736Uttaranchal 67.195 71.997 88.558West Bengal 657.850 723.668 963.333 Source: www.icongrouponline.com 4.4 Cities wise demand of organic food in India Following table shows that demand of organic food in metro cities in year 2010 .greater Mumbai had highest demand of organic food followed by Delhi Municipal Corporation, Ahmadabad, Kolkata, and Chennai. Table 11 city wise demand of organic food in India City States Rank US $ mln % of India Greater Mumbai Maharashtra 1 335.318 3.98 Delhi Municipal Delhi 2 227.386 2.70 Corporation Ahmadabad Gujarat 3 142.283 1.69 Kolkata WB 4 135.642 1.61 Chennai Tamilnadu 5 123.637 1.47 Hyderabad M. Corp Andhra Pradesh 6 106.921 1.27 Bangalore Karnataka 7 105.733 1.26 Surat Gujarat 8 98.506 1.17 Kanpur UP 9 74.165 .88 Pune Maharashtra 10 71.487 0.85 Source: www.icongrouponline.com 5 India’s Major players: 5.1 Namdhari fresh: Namdharis Fresh handles more than thousand tons of fresh vegetables and fruits at domestic and International market. it produces are mainly destined to Europe, Australia and the Middle East. Namdharis Fresh is Indias first company to receive the GLOBAL-GAP (European Retailers Certified Vegetable Growing and Exporting Firm) certificate, which is an assurance for our high quality standards. Namdhari Seeds has made a mark with itself in the Seed Industry widely as one of the largest distributors of vegetable seeds in India. Namdhari Seeds is also a leading Exporter of Vegetable and Flower seeds to Europe, Japan, U.S.A, Western Asia and South East Asia. Companies are also a proud recipient of Best Exporter Award from Govt. of Karnataka & Govt. of India and are designated as an "Export House". Arvind Ltd KiiT School of Rural Management MTS 01 Page 30
  31. 31. After the success in seed world, Namdhari have diversified into the production, distribution andexport of fresh vegetables & fruits under the name "Namdharis fresh".Namdharis Fresh is alsoinvolved in natural farming to produce and supply Organic Vegetables and Fruits in theInternational market. At present the EC directive is being followed and the produce is grown inan Environmentally Friendly way. The natural gift of suitable climate, availability of sufficientinfrastructure, technical manpower and the applications of advanced technology in Production,Processing, Grading, Packing, storage, Transportation, Communication and with dedicatedskilled laborers enables this company to produce and sell one of the best quality vegetables andfruits for Fresh Market to meet the International Standards.Uninterrupted Cold Chain:To ensure the freshness of the vegetables till it reaches the consumer, the company is having acontinuous cold chain network right from the produce is harvested. The harvested vegetables aretransported in refrigerated trucks, which also help in the removal of field heat. From therefrigerated trucks, the vegetables are transferred to the pre-cooling room.Then the vegetables are transferred to the grading hall, which is also air conditioned and packedunder cool climate. The packed vegetables are stored in the cold rooms before being air lifted tothe destinations and during the transit in the air also, the product is stored in reducedtemperature. Thus the uninterrupted cold chain network makes Namdharis Fresh to deliver thequality vegetables with optimum freshness.Quality Assurance:The quality control systems are such that the products are checked and rechecked right from thefield, grading and packing and during shipment, which makes it possible to meet the high qualitystandards of Europe and other developed nations. If required, Dutch KCB quality standard willbe applied and will be possible for us to deliver the quality produce on a daily basis. Namdharialso performs shelf life test of the produce under different temperature conditions, whose resultswill be used to improve the shelf life of the produce. The packing section is being geared up to ahygienic handling so that the consumers receive a clean, hygienic product.Certifications:it is also working on a certification from Dutch accredited certifying agency SKAL, whichArvind Ltd KiiT School of Rural Management MTS 01 Page 31
  32. 32. certifies the quality of organic vegetables, with a symbol EKO which is recognized in most ofEEC and North America.Namdharis Fresh is a certified ORGANIC PRODUCER. It has become Indias first vegetablesgrowing and exporting firm, which has received EUREP-GAP Certificate. The pack house isunder implementation of BRC and HACCP, however all the norms, essential for the same arepracticed. Ethical trading is its corporate philosophy and implementation of SA 8000 is part of itscommitment.Retailing: Our backward integration has enabled us to produce and supply quality produce to ourend customers. We are pioneers in providing international ambience and quality in freshvegetables and fruits retailing. Majority of the vegetables and fruits are grown by us, ensuringoptimum freshness and quality of the produce. Presently we are operating in Bangalore and weare planning to open our outlets in other metros very shortly.Wholesale:Apart from the export and retailing, we are also supplying fresh vegetables and fruits toInstitutional customers like star Hotels and retail chains. Presently we are catering to Indiasoldest and largest five star Hotel group across the country. Our produce is also sending to otherretailers through our channel partners. We have also started channel development across thecountry.Export:Namdhari Fresh takes pride to be Indias first EUREP-GAP compliant company. It is one amongfew who are in the business of fresh vegetables from India to Europe. Produces are destinated todifferent countries across the globe. This has been possible by using efficient Cold ChainManagement. It also export different kind of fruits among them few is organic.5.2 Eco-farms:EcoFarms (India)ltd was the founded in 1995 with a goal to develop and promote organicmethods of sustainable farming. The project over the year spread to the neighboring district ofAmravati ,jalgaon,and wardha.Arvind Ltd KiiT School of Rural Management MTS 01 Page 32
  33. 33. Looking at the dedication and commitment towards the promotion of organic farming, in 2004the government of Orissa invited the company the company to start a similar project in Orissa.Today the project has spread across the district of Kalahandi, Bolangir,and Ganjam.Today 20000 growers ,who in addition to cotton, raise 40 different crops in 60000 Ha ,are part ofour ever –growing family. Apart from the common cash and food crops, today It market healthy,ready to eat snacks.Not only that ,guided solely, by customers, company have launched Earth conscious „a brand oforganic clothing that includes shirt, undergarments, baby cloths ,bed linen and the like in itsproduct fold.Ecofarm initiative:1.Mainstreaming of organic consumption by sustaining the supply of a very large number ofprovisions in a vast network of retail outlets that cater to diverse consumer segments2. Designing farming production to meet consumption needs.3. Reaching out to the common man4. Growers are business partners earning bonus as per company performance.Certification:Farm certification:Fair Trade Certification - by FLO-Cert.NPOP (National Programe for Organic Production) - by Ecocert and MO Control.NOP (National Organic Program) - by Ecocert and IMO ControlRegulation (EEC) No. 2092/91 - by Ecocert and IMO Control.Product certification:Textiles - GOTS (Global Organic Textile Standards) - by Control Union CertificationsFood Products - ISO 22000 - under process.Product and service:Fair trade ,organic &biodynamic spices (black pepper ,white pepper,Nutmeg,Turmeric,Chilly,Ginger,Clove) grains(cereals, pulse)edible oils, cashenuts..Distribution setup:Arvind Ltd KiiT School of Rural Management MTS 01 Page 33
  34. 34. EcoFarms sustains a supply chain that carries a very large number of provisions to a vastnetwork of retail outlets that cater to diverse segments of organic consumers. The food productsare sold by the company under its brand name Reconfirms in the domestic retail market. Atpresent it is supplying to around 300 stores all over India. It has tied up with all the majorretailers such as Big Bazaar, Reliance, Aditya Birla (More), Shoprite, Le Marche, Piramyds (TruMart), Apna Bazaar, Metro Cash and Carry etc. to market the products under its own brandname.5.3 Fab India:Fabindia is Indias largest private platform for products that are made from traditionaltechniques, skills and hand-based processes. Fabindia links over 40,000 craft based ruralproducers to modern urban markets, thereby creating a base for skilled, sustainable ruralemployment, and preserving Indias traditional handicrafts in the process .Fabindia promotesinclusive capitalism, through its unique COC (community owned companies) model. The COCmodel consists of companies, which act as value adding intermediaries, between rural producersand Fabindia. These are owned, as the name suggests, by the communities they operate from; aminimum 26% shareholding of these companies is that of craft persons. Fab indias products arenatural, craft based, contemporary, and affordableProducts:Organic Food Products (introduced in July 2004). Fabindia is Retail Company having a pan –India presence with 128 stores across the country. the range includes certified organic foodproducts like tea, coffee, flours, grains, rice, pulse, sweeteners like honey, jiggery, spices, oil,pickles, concentrates, pastas, seeds, herbs etc.Organic Certification:Products displaying Green logo are Fully Certified Organic. All processes, from growing topreparing to packing have been done according to National and International standards, verifiedby accredited agencies.Arvind Ltd KiiT School of Rural Management MTS 01 Page 34
  35. 35. Products displaying our Blue logo are In Conversion. This means that the farmer is using purelyorganic techniques, and has registered and is complying with set standards. Farmland must bemanaged organically for about 3 years before it can be fully certified.Products displaying our Yellow logo are Natural. This category contains products produced bysmall farmers who use purely organic techniques, but who have decided to not yet register forcertification. It also includes some processed foods, which do not contain any syntheticpreservatives, colours, flavours or additives.5.4 Suminter India organics:Suminter India Organics, a Mumbai-based company, was founded in 2003 on the notion thatorganic farming contracted out to small farmers in India would not only help to fulfil theworldwide growing demand for organic produce but also lead the participating farmers to greatereconomic stability.Although it started out as a small trading company with the aim of helping local farmers, therapid growth and technological advances. Suminter has experienced in such a short time span istruly impressive. Suminter opened a base in the Netherlands in a bid to supply the entireEuropean market with greater efficiency and we can now supply products to our Europeancustomers almost immediately. Now a leading exporter of organic produce from India with aunique organizational structure, Suminter aims to stay at the cutting edge of technologicaladvances in food safety, processing and preservation and has recently installed an organicfumigation system (Eco2) and a dry steam sterilization facility (SteamLab) in Central India(Indore). It is the first certified organic food processors in India to provide dry steam sterilizedproducts.All of the farms where it work are certified to international standards, ensuring not only qualityproduce but also fair labour and distribution practices. In fact, Suminter is only the thirdcompany in India to be Fair Trade certified for cotton and is one of the only companies in Indiato be exporting Fair Trade goods to the international market.Despite its rapid development, whereby Suminter now works with over 7,500 farmers andrepresents over 38,900 acres of farmland that has been or is in the process of being converted toArvind Ltd KiiT School of Rural Management MTS 01 Page 35
  36. 36. organic, the company has continued to bring about social, economic and environmental benefitsfor its workers and consumers. Integrating certification, training, farming, monitoring,processing and distribution as Suminter has, assures of a high-quality organic supply chain andguarantees the farmers a market for their crops.Suminter firmly believes that organic farming is a strong alternative for small and marginalfarmers in India and aims to expand its farmland to 100,000 acres within two years as well asfurther develop its product range. With a business model that emphasizes the well-being offarmers, high quality products and the environmental benefits of organic farming practices,Suminter will play a more and more prominent role in the organic food and textile industry, bothin India and abroad.Products:Grower and processor of certified organic food ingredients and fiber from india .working withapproximately 13000farmers across india for organic farming which further gets processed inhouse with state of art technology in central India.Oilseeds CerealsFiber (organic cotton) ,Spices(Ajwain) ,Ready to eat products(rajmamasala,palak ,veg pulav ,Paneer butter masala)Certification:All products are certified through control union cerfification, Neatherland.Operation:Suminter is an integrated company that aims to involve itself in each step from training farmers,growing the produce and then processing and packaging these goods.One of Suminters greatest advantages is the extensive network of over 13,000 organic farmerswith whom we currently work. Suminters primary supply of organic products comes directlyfrom its farm projects in 6 states in India: Gujarat, Maharashtra, Uttaranchal, Orissa, Kerala andRajasthan. Having such a broad and diverse supply chain ensures that Suminter always providesits customers with the best quality products.Arvind Ltd KiiT School of Rural Management MTS 01 Page 36
  37. 37. In all of its projects, Suminter promotes organic agriculture through training and certification. Itencourage the concept of zero-cost farming by providing seeds to farmers and training them touse various bio-manures, bio-pesticides, and composting methods. This platform relieves thefarmers of the upfront cost of seeds and other inputs, and also ensures a high-quality, certifiedorganic product.Impact: To the farmers with whom it work, Suminter pays a premium for the farmers organiccrops, the quality and consistency of which Suminter monitors throughout the growing period.Prices for organic goods average 10-15% higher than those for conventional goods and soSuminter guarantees to its farmers purchase of each crop at the organic market price, allowingthem to earn a profit on their production. By guaranteeing a premium price to the farmers,Suminter is helping these farmers to gain economic stability.5.5 Moraraka Organic Food Pvt. Ltd:A non- profit voluntary organization, The Morarka Foundation was set up by Mr. KamalMorarka in 1993.the Morarka Foundation promoted small entrepreneurial initiatives in organicagri-businesses, it also facilitated linkages between organic producers and traders. In the year2006-07 it set up its marketing arm, Morarka Organic Foods Pvt. Ltd., to facilitate direct linkagebetween the consumer and producers. Beginning with just about 500 farmers about 10 years ago,today there are now over 1,00,000 farmers spread all over India cultivating over 2,50,000 acresland under organic management. These farmers are producing over 300 different crops, out ofwhich over 100 crops have already been brought under the organic value chain management.Retail brand:From being in the back end of the value chain for over 10 years, Morarka Organic has now gotinto the front end, i.e., retailing of certified organic products under its own brand name ?Down toEarth?. While this initiative is expected to provide direct linkages to the thousands of certifiedorganic producers, it will also enable quality conscious consumers to access the very best qualityof food deserved by them at reasonable pricesCertification:Arvind Ltd KiiT School of Rural Management MTS 01 Page 37
  38. 38. All Down to Earth products undergo the strictest quality standard checks and are certified by themost stringent certification agencies in the world. Down To Earth is certified by OneCert AsiaAgri. Certification Pvt. Ltd. (a subsidiary of One Cert Inc. USA) as per NOP (USDA), NPOP(Government of India) and EU Standards for Organic Certification.Products: Cereals, Pulse& beans, Spices, Fruits, Nuts, Oil seed6 Limited penetration of organic farming in India:There are different problem associated with the penetration of organic farming and business inIndia. Low level of market information, time lag from conversion from conventional to organicstatus, limited positive government interventions, underdeveloped infrastructure and lack ofproper marketing channel are the main problems associated with the organic farming in India.Arvind Ltd KiiT School of Rural Management MTS 01 Page 38
  39. 39. Limited penetration of organic farming in India Conventional Agri-Inputs Limited positive government Under developed Low levels of Market Time lag & high costs of infrastructure & information considered more effective Conversion of Conventional interventions & high negative than Bio-inputs subsidies marketing to organic farming channels for green outputsNo designated agency at Central State & Low Quality of Non-availability Relatively longtime Subsistence High Costs involved local levels which bio-inputs of bio-inputs period needed farming by large certification &reaches farmers with For bio inputs to be number farmers Limited no. of certifying information effective agencies Limited financial No strategic attention Subsidies to for greening commercial inputs outlays for Bio- inputs by agriculture & No No Quality Monitoring Existence of spurious & low government coordinated effort at Control Systems in place quality brands in market Centre & State Level Price premiums reach more for No & limited Storage facilities No easy quality Limited Shelf life of Limited R & D efforts & Intermediaries than producers assurance bio-inputs Investments on Bio inputs mechanisms Small farm holdings Low levels of networking Formal associations of among traders, farmers & others Farmers and other are stakeholders Not paying adequate attention Mostly geographically dispersed organic farmers; Small numbers with organic produces Arvind Ltd KiiT School of Rural Management MTS 01 Page 39
  40. 40. 7 World Scenario of Organic Agriculture According to the latest survey on organic agriculture (published in The World of 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. The main results of the most recent global survey on certified organic farming (data end 2007) 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. The area for wild harvested products accounts for 30.7 million hectares. Table: 12 Overviews of organic status world wideIndicator Global total Leading countryCountry with certified 160[2008,154;2000:86organic agricultureOrganic agriculture land 37.2 million .ha Australia(12 million .ha) Argentina (4.4),US(1.9)Country with 24 Falkland35.7%, Liechtenstein (26.9), Australia (18.5%)>5%organic agri land (2008:22)Producer 2009 1.8 million India(677257)Uganda(187893)Mexico(128826) 2008:31 millionOrganic market size 54.9bn USD US(25.5USD),Germany(8.3 USD),France(4.3 USD) (2008:50.9),(1999:15.2)Organic per capita 8 Bn. USD Denmark(190 mil USD),Switzerland(180),Australia(76)consumption per yearCountry with organic 74regulations 2008:73Organic certifier 523 Japan(59),US(57),South Korea(33) (2008:489)No of IFOAM affiliates 2010:757 Germany (98),US(45),India(44) (2008:734) Source: FiBL The regions with the largest areas of organically managed agricultural land are Oceania, Europe and Latin America as well as North America. Australia, Argentina and Brazil are the countries with the largest organically managed land areas Arvind Ltd KiiT School of Rural Management MTS 01 Page 40
  41. 41. 7.1 Development of organic agriculture land worldwide:Survey of FiBL reveals that from last 10 year land under organic farming has increased from11M.Ha. In 1999 to the 37.2 M.Ha. In 2009.during2004-05 land under organic cultivation hasdecreased.Figure: 4.Development of organic agriculture land (1999-2009) L 40 37.2 35.2 a 35 30.5 32.1 29.7 28.9 n 30 25.5 d 25 19.7 20 17.3 14.8 M 15 11 . 10 H 5 a 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year Source: IFOAM7.2 Top ten countries have more organic certified land:Australia has 12.04 M Ha of organic land; India has 1.02 M ha of organic landFigure 5 Top ten countries with highest certified organic land germany 0.91 uruguay 0.93 Italy 0.99 india 1.02 spain 1.13 Brazil 1.77 USA 1.82 china 1.85 argentina 4.01 Australia 12.02 0 2 4 6 8 10 12 14 M.Ha Source: IFOAMArvind Ltd KiiT School of Rural Management MTS 01 Page 41
  42. 42. 7.3 Country with highest no of organic producer:India has highest no of organic certified producer 677257 worldwide, followed by Uganda,Mexico Ethiopia Tanzania. Figure 6 Top countries with highest No of certified producers Spain 25291 c burkina F. 27748 Turky 35565 o Italy 43029 u Peru 54904 n Tanzania 85366 t Ethiopia 101578 r Mexico 128862 y Uganda 187893 India 677257 No of producer Source: FiBL7.4 Global market trend of organic food:Global trend of organic food is increasing continuously. In year 2001 market size was 80660.25US $ million .in year 2006 it increased to 113026.80 US $ million and in year 2011 forecastedmarket size is 166172.22US $ million. Figure 7 Global Market trend (year 2001-2011) US $ mln 200,000.00 166,172.22 150,000.00 113,026.80 100,000.00 80,660.25 US $ mln 50,000.00 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Philip M. Parker, INSEAD, www.icongrouponline.comArvind Ltd KiiT School of Rural Management MTS 01 Page 42
  43. 43. 7.5 Market forecast: GLOBALIn 2015, the global organic food market is forecast to have a value of $88,069.3 million, anincrease of 48.4% since 2010. The compound annual growth rate of the market in the period2010–15 is predicted to be 8.2%.Table 13 Market forecast for Global Business (2010-2015) Year $ million % Growth 2010 59,341.2 12.4% 2011 64,959.5 9.5% 2012 70,641.3 8.7% 2013 76,416.4 8.2% 2014 82,197.6 7.6% 2015 88,069.3 7.1% Source: Philip M. Parker, INSEAD, www.icongrouponline.com8 European Union:The European organic food market grew by 9.9% in 2010 to reach a value of $25,040.3 million.In 2015, the European organic food market is forecast to have a value of $36,382 million, anincrease of 45.3% since 2010.CAGR 2006-10 is 9.9%.Figure 8 EU Market (2006-2009) U S $ mln 30,000.00 25,040.30 25,000.00 20,000.00 17,141.10 15,000.00 U S $ mln 10,000.00 5,000.00 0.00 2006 2007 2008 2009 2009 Source: Philip M. Parker, INSEAD, www.icongrouponline.com.Arvind Ltd KiiT School of Rural Management MTS 01 Page 43
  44. 44. 8.1 SegmentationMarket Segmentation I: % share, by value,2010Dairy covers 22% of the European market followed by Fruits and vegetable 21% marketsFigure: 9 Market Segmentation EU countries 13.30% 22.10% Dairy 9.90% Fruit & Vegetable Prepared food and others 13.90% Grains & Bread 21.60% Beverage meet fish and poultry 19.20% Source: Philip M. Parker, INSEAD, www.icongrouponline.comMarket Segmentation II: % Share, by value,2010Germany accounts for 36.6% of the European organic food market value.France accounts for a further 18.3% of the European market followed by Italy 18.30%.Figure: 10 market segmentation of EU countries Germany 18.20% 2.50% France 36.60% Italy 11.90% United kingdom 12.60% Spain 18.30% Rest of Europe Source: Philip M. Parker, INSEAD, www.icongrouponline.comArvind Ltd KiiT School of Rural Management MTS 01 Page 44
  45. 45. 8.2 Market value forecast: European CountriesIn 2015, the European organic food market is forecast to have a value of $36,382 million, anincrease of 45.3% since 2010. The compound annual growth rate of the market in the period2010–15 is predicted to be 7.8%.Table 14 Market forecast of EU countries (2010-2015)Year $ million % growth2010 25,040.3 9.9%2011 27,207.4 8.7%2012 29,416.1 8.1%2013 31,679.6 7.7%2014 33,988.7 7.3%2015 36,382.0 7.0% Source: Philip M. Parker, INSEAD, www.icongrouponline.com9 Status of organic staple business in USA:The United States organic food market grew by 15% in 2010 to reach a value of $28,513.1million. The compound annual growth rate of the market in the period 2006–10 was 13.4%.Table 15 US Organic Market Status (2006-2010)Year $ mln % growth2006 17,221.02007 20,410.0 18.52008 23,607.0 15.72009 24,803.0 15.12010 28,513.1 15CAGR 2006-10 13.4% Source: Philip M. Parker, INSEAD, www.icongrouponline.comArvind Ltd KiiT School of Rural Management MTS 01 Page 45
  46. 46. 9.1 SegmentationMarket Segmentation I: % Share, by valueOrganic food and vegetable has 38% share followed by prepared food and others.Figure 11 market segmentation US 2.00% 11.00% fruit & vegetable prepared food and others 13% 38% dairy beverage 15% bread and grains 21.00% meat fish and poultryMarket Segmentation II: % Share, by valueThe United States accounts for 48% of the global organic food market value.The Europe accounts for a further 42.2% of the global market.Figure 12 Market share of EU and US of Organic business united states 6.10% 3.60% europe 48.10% 42.20% asia pacific rest of the worldSource: Philip M. Parker, INSEAD, www.icongrouponline.comArvind Ltd KiiT School of Rural Management MTS 01 Page 46
  47. 47. 9.2 Market Forecasts: USAIn 2015, the United States organic food market is forecast to have a value of $42,531.8 million,an increase of 49.2% since 2010.The compound annual growth rate of the market in the period 2010–15 is predicted to be 8.3%.Table 16 US Organic market forecast (2010-2015) Year $ million % growth2010 28,513.1 15.0%2011 31,316.7 9.8%2012 34,113.4 8.9%2013 36,923.6 8.2%2014 39,730.3 7.6%2015 42,531.8 7.1% Source: Philip M. Parker, INSEAD, www.icongrouponline.comArvind Ltd KiiT School of Rural Management MTS 01 Page 47
  48. 48. Chapter: 03 Objective: 03 strategy formulation for the organic business for Arvind Ltd From procurement to selling strategy: at domestic as well as global level. First farmer harvested their Agri-produce and collect in their home and then used to sell after knowing the market price. We collected their produce at procurement center on market price and then and for value addition cleaning, Grading and sorting carried out. after cleaning, grading and sorting packaging (50 kg) process would started after packaging the produce, starching and labeling process will started and then we would store at warehouse and then we will sell it domestic as well as Global market according to the purchase order from the clients. 10 Value chain: Farmers to consumer: Harvesting Storing Selling at farm Procuring /collectingStretching/ Labeling Stretching /Labeling Packaging Cleaning, Grading and Storing Distributor /wholesaler Domestic Organic Retail outlet /Mall Selling Global Exporter/Export For the business at domestic and global level following strategy will be taken for Distribution channel for the organic staple business. For domestic level we will procure from the farmer and collect it at center and precede it processing center for cleaning, grading and sorting and then we can directly supply to distributor/ supplier and organic retail outlet or mall and other way we can store it in warehouse and then supply according to the demand. And for export market also we can either store in warehouse or directly supply from the processing unit to exporter or export market. Arvind Ltd KiiT School of Rural Management MTS 01 Page 48

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