Resources Research

Culture and systems of knowledge, cultivation and food, population and consumption

Posts Tagged ‘beverage

The organic foods divide in India

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The recently-held Biofach India 2013 in Bengaluru – which is an annual meeting about and exhibition of organic producers and products – has helped confirm three disturbing trends concerning Indian organic produce.

These are:
(1) that the urban market for organic products is growing at a rapid pace and a ‘junior’ food retail system (junior as compared with established, large-scale food retail as a consumer goods sub-sector) devoted to these products is aggressively rounding up consumer interest and budgets;
(2) that under central government programmes to encourage and promote cultivation based on organic principles (like the Rashtriya Jaivik Kheti Pariyojana, or National Project on Organic Farming) state governments have administrative and budget capacities (even though small) to develop organic produce but these efforts are evolving into parallel, local-specific knowledge and practice networks; [update in response to the valuable comment below: the networks coming about is a good thing for the long term, but there is apparently less and less connection between the produce from these networks (if there is a surplus townspeople can buy) and the retail frontrunners in the organic foods business. If this separation continues along this path, organic foods and beverages will be an upper middle class consumable that bears no relation with the human-scale cultivation these networks locally are fostering.]
(3) that the connection between the organic farming family in the rural district and the consumer is being exploited in a sophisticated manner by a growing roster of new companies whose profit margins do not lead to higher or necessarily more secure incomes for the cultivating household. [Read the full article at Infochange India.]

A simple poster in Kannada about organic farming methods

A simple poster in Kannada about organic farming methods

The real destiny of most organic foods grown in India, processed and packaged by *Indian organic food traders (under third-party certification), and promoted abroad (particularly in Europe and North America) is as exports. The Agricultural and Processed Food Products Export Development Authority (APEDA), which is responsible for promoting food exports, said that India exported almost 70,000 tons of organic products, valued at around US$ 130 million (around Rs 715 crore) in 2010-11. This rose to 115,000 tons worth over US$ 360 million (around Rs 2,090 crore) for 2011-12. An APEDA statement quoted in the business press attributed the financial assistance it has given the organic foods export sector (about Rs 210 crore) as being responsible for this growth. Furthermore, APEDA has forecast that exports of organic foods and beverages from India could double by 2014.

At Biofach India 2013 (held during 2013 November 14 to 16), the pavilions of the major organic foods and beverages retailers – such as Phalada, Organic Tattva, 24 Mantra, Sanjeevani Organics, Amira Organic, Mother India Farms, Ecolife Organic and Morarka Organic – resembled those to be seen at a conventional food and agriculture industry exposition (like those routinely organised by major industry associations such as CII, FICCI and ASSOCHAM). In contrast were the tables and small kiosks (at times no more than a pair of posters, a desk and two stools) of the state government-supported organic cultivation agencies – yet these were the ones that had brought cultivators to the fair, who were wandering the air-conditioned aisles astonished by the prices they read printed on the packets of the organic foods on display.


India’s food price inflation in high gear

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There has been no shortage since November of news reports and analyses about the food inflation. The 19% annual rise in fact masks widespread individual urban centres’ price shocks and individual food item trends. I have tried to unpack the year-on-year ‘national’ food inflation number using data from the Ministry Of Consumer Affairs, Food and Public Distribution – Department Of Consumer Affairs (Price Monitoring Cell). My guess is that this data is an under-estimate but is useful for spotting trends.

I collected prices for the 36 cities tracked by the PM Cell, monthly from 2007 December. Based on a small basket of staples (rice, wheat, atta, tur dal, sugar, gud, tea, milk, potato, onion, salt) a crude index shows that in 33 out of 36 cities, the 24 month (07 Dec to 09 Dec) rise in prices of items in this basket is more than 24%, and that in 23 cities it is more than 50%.

Food inflation 2009 over 2007 in Indian cities

Food inflation 2009 over 2007 in Indian cities

About price increases in rural settlements I can find no organised information at all, although direct experience in western Maharashtra, Karnataka and Goa tells me that a staples basket can cost up to 2-3% more than in urban areas. (Agmarknet collects and maintains detailed mandi prices for farm produce but there is no comparable effort for rural retail food staples.)

The National Sample Survey 61st Round (2004 July-2005 June) on ‘Household Consumer Expenditure in India’ put down the finding that out of every rupee that the average rural Indian spent on household consumption, 55 paise was spent on food and mainly:
18 paise was spent on cereals
8 paise on milk & milk products
6 paise on vegetables
5 paise on sugar, salt & spices
5 paise on beverages, refreshments, processed food, purchased cooked meals, etc

Of the non-food expenditure 10 paise was spent on fuel for cooking and lighting.

I have tried to maintain this weightage in my calculation, but it is really no more than a crude reckoning because I haven’t been able to spend the time to clean up the publicly available data – querying the website database of Dacnet (Dept of Agriculture and Cooperation) or FCAMin returns report formats that are terribly messy, even though they contain useful data. (Although I think there may be differences even between these for the same foods and same date ranges.)

Based on what I have seen and heard on the field in Karnataka, Goa and western Maharashtra (and learnt about Gujarat and eastern UP from others) the available food basket seems to be shrinking (the so-called ‘coarse’ cereal group is conspicuously less), and where families have young and teenaged children there is pressure to buy processed and packaged snack foods (which is really a blight in our small rural markets). There are all sorts of oddities about the form that food takes in these markets – the price of a 50 gram pack of biscuits for example (Parle Glucose is the standard) has hardly moved in the last 3-4 years yet at the same point-of-purchase end, look at the way the prices of ground wheat have moved.

Then there’s fuel and transport to account for, more about which you’ll find here. This question needs much more work in 2010 to strengthen some of the reliable data we have with updates, and to try to build in what we see and hear and sense from conversations with those who live and work in all those tahsils and talukas and blocks and mandals. I feel very strongly that we are lacking in our data the presence and impact of the many linkages that connect and influence the rural farming/labour household. Many of the measures we have have served us well but I think need to be supplemented – how to integrate the lessons and findings from the comprehensive National Family Health Survey, the Sarva Shiksha Abhiyan, the many studies into the income-providing measures of NREGA.

Even though we worry about what the rural/urban poor household must spend on, the attraction to buy mobile phones amazes me. I have met young men who earn around Rs 4,000 a month but who have bought Samsung mobile phones costing Rs 5,000! Imagine spending more than a month’s income on a phone, I asked them, but they saw nothing worrying about their expenditure. Retailers who sell mobile phones used to keep the low cost and hardy Nokia phones which 3 years ago cost around Rs 1,700-1,800 (mine is still working), but not any longer, or they work at discouraging those who ask for the relatively cheaper phones. Much more than the hundred-dollar laptop we need the thousand-rupee mobile phone.

The image is of a chart I made for the project group I work with (part of the National Agricultural Innovation Project, it’s called Agropedia and you can read more about it here). This chart helps point to some patterns (you can download the hi-res image here). I’m curious for example about Gujarat, whose grain and commodity traders have a long and murky history of hoarding. The North-Eastern cities could be insulated to some extent from the regional transport subsidy (road and rail). Cities in the Deccan are relatively better off than North Indian cities. The big difference between Chandigarh and Mandi is puzzling.

In his hugely interesting paper, ‘India And The Great Divergence: Assessing The Efficiency Of Grain Markets In 18th and 19th Century India‘, Roman Studer (University of Oxford, Discussion Papers in Economic and Social History, Number 68, November 2007) has written: “Prior to the mid-nineteenth century, the grain trade in India was essentially local, while more distant markets remained fragmented. This is not to say that no grain was traded over longer distances, but the extent was very limited, as the prices from some 36 cities all over India still exhibited various characteristics of isolated markets.”

“First, annual price fluctuations were extremely high. Second, differences in price levels between markets were very pronounced and persisted until well into the nineteenth century. Third, apart from neighbouring villages or cities, price series from different markets did not show comovements at all.” Studer looked at century-old data, but we still have 36 cities to tell us about staple food retail prices! Also, the three characteristics he mentions can be seen today too.

Happy New Year!