How to Start Organic farming business

Overview

Another goldmine and the backbone of our Indian economy is its fertile soil condition, land availability  and the agricultural and farming population of this country

 If you seem to have these crossed off your profitable business opportunity list then you’ve got one.

The possession of these factors are likely to open your gate to the organic farming business which is booming more than ever now.

Whose market is expected to be worth ₹10,000 – ₹12000 crore by the end of 2020 contributing to its demand by both local as well as global consumers

The reason behind the growth of this organic farming business is

• its benefit to health, benefit to the environment,
• improved agricultural cycle,
• reduced imports of pesticides and other foreign fertilisers and
•  increased employment generation

Which made the Indian government impose a GST percentage of 18% which was previously just taxed at 5-6%  to promote the larger sector of India and foster domestic production

As well as ensure quality in food to improve the standard of living, making the organic produce a little pricey than the regular.

Market potential and uses

Organic farming involves testing of animals and cultivation of plants in a natural way thereby avoiding any sort of artificial and chemically infused fertiliser to maintain them.

It includes all variety of oils, seeds, cereals, mill, cotton, vegetable, tea, coffee, dairy etc which are organically maintained through organic wastes of crop, animal, farm and aquatic

The market potential of organic farming is vast as specified by the following facts.

• Firstly, around 3.56 million hectare are is registered for the organic farming process
• Secondly, the driving consumption of consumers from regular to organic produce because of health benefits
• Large availability of livestock, labours and farmers is bringing in local as well as a global demand
• Increased government assistance

Further, the market potential of this organic farming can be defined through its benefits

• Organic farming incurs less cost of production due to a sense of use of fertilisers and pesticides
• The crops and produce from organic farming is less prone to rainfall and drought conditions
• These are huge in demand because it nutrient content which is not jeopardised by fertilisers
• Plant diseases, weeds and pests are repelled because of natural crop rotation

On the basis of type of organic farming

• Organic dairy farm
• Organic produce farm
• Organic livestock farming
• Organic fish farming
• Organic herb growing

License required

The licenses required to run an organic farming business is

• Organic farming certification by NPOP
• FSSAI registration/state/central license
• GST registration
• MSME registration

Methods of organic farming

• Biodynamics
• Homa farming
• Weed and pest management
• Poly cropping and crop diversity
• Microbe culturing
• Vermicomposting
• Soil conservation with water harvesting

Investment required

The investment required to start with an organic farming business is ₹5 lakhs- ₹10 lakhs

Government assistance available:

• Capital investment subsidy offered by National centre for organic farming under NABARD
• Subsidy amount of 25% for biological fertilisers and pesticide units ( max limit 40 lakhs per unit)
• Subsidy amount of 33% for fruits and vegetables (max limit ₹60 lakhs per unit)
• Credit linked and back ended subsidies are also made available

Profits made

The profits one can earn through this business is ₹30 lakhs per month through efficient produce, distribution and marketing

Target consumers

The target consumers for your organic farming business are

Farmer’s market: The farmer’s market is the larger target customer for your organic produce in terms of fruits, vegetables, herbs, fishes, dairy and livestock because of the large household demand for farm fresh and healthy produce

 Restaurants and hotels: Many restaurants and hotels also require the organic produce to meet the consumption habits and trends of their diet and health conscious consumers also to expand their menu options

Retail grocery stores: The retail grocery stores are also large target customers for organically produced crops like wheat, millets etc to meet the fibre and diet needs of the health conscious customers

Coffee house and cafés: These are massive target customers because they require organically produced herbs like tea and organic seeds like coffee to give their customers an organic experience

Dairy markets: The dairy markets like retail dairy stores and plants could also make use of the organically produced milk through natural means to meet such needs of the consumers

Online grocery stores: Online grocery stores are another largest target consumers to meet the online shopping consumer’s needs of organically produced fruits, vegetables, grains etc.

Area required

The area required to set up an organic farming business is

• With two cows – 6-10 acres of land
• With one cow- 5 acres of land

Raw materials required

The raw materials required for organic farming business are

• Manure
• Cow urine
• Ghee
• Neem seed extract
• Neem oil
• Fish powder
• Honey
• Milk
• Ground water

Machinery required

The machinery required for organic farming business is

• Automatic combined cultivators
• Cultivators with rotating knives
• Tractors
• Cows

Manpower required

The manpower required for this business is

• 2 skilled workers
• 5 unskilled workers

Moreover, ample training in terms of the following must also be provided with

• Equipment usage
• Machine handling
• Safety and precautions

Business model and growth

The business model of an organic farming business can be defined using these four variants

Value proposition: The value which this business is likely to provide to you is

• Low maintenance than the regular farming in terms of drought and rain conditions
• Government assistance
• Increased GST on organically produced products
• Large customer target

Target consumers: The target consumers or this business are

• Restaurants and hotels
• Coffee houses
• Farmers market
• Retail grocery stores
• Supermarket etc

Competitor review: Few key competitors to you in this busines are

• Organic India
• Natureland organic
• Samrudhi organic farm
• Farm2kitchen
• Organic tatwa

Marketing strategy: The marketing strategy that can be implemented by your organic farming business is

• Advertising: Through tv commercials, brand endorsements
• Tie ups with restaurants and online and offline grocery stores

Growth

The organic farming business has witnessed and has the potential for the following growth prospects

• India was ranked 9th in terms of the world’s largest organic farming land and 1st in terms of worlds largest organically produce country catering to both global and domestic demand
• The total Indian organic food export was accounted for ₹3458.48 crore in 2017-2018
• It is seen to be growing at a CAGR of 25% by the end of 2020

Profit margin

The profit margin which this business is likely to yield to you is 22%-35%

Suggestions

It’s time to make India Organic again both in terms of production and consumption while you make some bucks for you. So here are few more reasons why you should take up this business opportunity

• Firstly, it is low in terms of investment and comes with ample government assistance in terms of subsidies
• Secondly, being rich in nutrition it is also rich in terms of price so it is likely to provide massive middle and higher income demand
• Lastly, it also gives you an opportunity to capture the global market for organic product.