An Overview

• World over fragmentation of land holding on one hand and consolidation by global input supply and food retail chains has tilted the balance in favor of larger farmers.

• Increasing concerns expressed for the quality of food, contamination due to chemicals, serious health hazards and environmental issues have given rise to new consumer demands for "Safe and Healthy Food". This new demand has forced almost all large, medium and small retail chains to create new sections now popularly known as Organic Food Section. With the enactment of laws and legislations by most of the countries, organic food has acquired new status and is now also being labeled as "Value Added Products" as compared to normal and conventionally produced food products.

• The Organic Philosophy, Standards and Practices while on one hand restricts the use of chemicals and external inputs, on other hand it requires on-farm input production, recycling, diversity of activities, micro level management and above all very high levels of record maintenance of farm activities for any product to qualify as Certified Organic Produce. The small farmers in this endeavor enjoy definite competitive advantages, especially in less agriculturally developed regions and countries. As compared to about 10-12 man-days of work per acre per year on highly mechanized farms, 30-40 man-days of work on partially mechanized farms, organic production methods require an average of 70-100 man-days of work. Restrictions imposed on use of external inputs can reduce investments (INR 2,000.00 3,000.00 per acre per year) by the small holders, which is not even readily available and accessible to them. With the result a fairly large proportion of total certified organic outputs in the World are therefore coming from Small, Marginal and Poor Farmers only.

• In the earlier era and for conventionally produced food, the entire supply chain evolved to serve the large global supply and retail chains had favored large producers and wholesale markets. While Organic Standards on one hand has introduced new production practices and norms, on other hand it also prescribes norms for post production handling, processing, packaging, supply chain management, retail, etc. Since the production itself is coming from small holders, spread over large geographical areas, the entire value chain now also offers the scope for the viability and sustainability of small agri-business enterprises.

• The support for organic production by small holders has come mostly from NGOs and Voluntary Organizations. With many barriers, both real and imaginary for healthy relationships between NGOs and global chains, there is a need to evolve new agri-business models. "Morarka Foundation", a leading NGO sponsored by a Corporate had taken the lead to evolve a Public-Private Partnership Model of Collaborative Farming. In this model (for back-end operations), in addition to Producers and Buyers, the role for Government, NGOs and Private Service Providers have also been defined and established through large number of successful experiments making it to be a multi-stakeholder initiative.

• For front-end, since consumption of certified organic produce is presently restricted to a very small number and special class of consumers, massive efforts are also required for reaching out to large number of customers. Once again, the small size of this market segment has restricted the use of mass media and marketing for increasing consumption. Presently, many initiatives mostly for home delivery of organic produce are being pursued, giving rise to a new opportunity for front-end agri-businesses.

• In the collaborative model of Organic Agri-business Value Chain, the product and services that are mostly being delivered by NGOs and voluntary organizations comes under the category of Pre-Production and Production Activities. Small entrepreneurs in rural areas supported by private sector and NGOs can easily set up agri-business enterprises to expand the organic production in new areas.

• The conventional supply chain and marketing services can be replaced by the second category i.e. Logistics and Supply Chain Management Activities, once again by local semi-urban entrepreneurs. In this procurement, collection point management, small quantities transport, primary processing, packaging, storage, distribution management, etc. can be taken up under collaborative mode between all the stakeholders.

• In the third category of activity i.e. Processing, Value Addition and Marketing, this can also be similarly taken up by urban entrepreneurs. Niche markets for certified organic produce definitely offer many competitive advantages to these entrepreneurs.

• This approach while on one hand can easily increase the sustainability of economic benefits due to full cost accounting by all these small business enterprises, while on other hand since the complete value chain is independent of present structures, it can progress towards independence from financial subsidies normally routed through conventional channels and for conventional production systems.

• In the new Organic Agri-business Value Chain, small scale of operations offering competitive advantages to small stakeholders, will also address the issues of employment generation. A large majority of it will be the conversion of partial employment presently available to small holders to fulltime employment. Additional incomes generated by the family will help improve the status of women, children and aged.

• Introduction and success of Organic Agri-business Value Chain is primarily an outcome of disadvantages suffered by small holders. Lack of investments in the past and denied access to information and knowledge had deprived them from adopting so-called modern agricultural technologies. It is therefore, relatively much easier for them to take up certified organic production. The small holders primarily dependent on poor quality of resource, both natural and anthropogenic, now have a new opportunity to come in the forefront of production of "Safe and Healthy Food".