CHALLENGES FACED BY MSMEs IN PRODUCING AND DISTRIBUTING ORGANIC AGRICULTURE PRODUCTS

Small businesses play a crucial role in supporting the organic agriculture industry. Today, more people want to consume organic food products as these are considered healthy options since they are free from chemicals; plus, these are also considered to be environmentally friendly. The demand for these products is increasing. Therefore, there is a need to support organic agriculture. If organic farming is to grow and be undertaken in a sustainable manner, then there is a need for support from business teams in producing, packaging, and distributing organic agricultural produce. Several small-scale enterprises have mushroomed to support organic farming; some of them are suppliers of organic fertilizers, facilitators in packing organic products, and distribution and selling of organic products. However, these small-scale enterprises encounter a unique set of challenges that can hinder their ability to survive in the competitive market. In this article, we will explore some of the key challenges faced by small businesses in producing and distributing organic agriculture products.

Many small business owners often face challenges related to their lack of knowledge and expertise in organic agriculture practices. Organic farming requires specialized skills and an understanding of sustainable farming methods, soil management, pest control, and crop rotation techniques. Lack of access to formal training and education, as well as limited exposure to industry best practices, can hinder micro-businesses from maximizing their productivity and maintaining high-quality organic standards. Often, these business teams are not fully knowledgeable about the requirements of organic farmers. For example, a Tirunelveli-based firm located in Tamil Nadu produces biofertilizers containing fish amino acids. This is a natural fertilizer for plants that can be used throughout its lifecycle and can never expire. It is an excellent source of crop nutrition and helps the soil be fertile. However, the firm faces several problems while manufacturing this fertilizer. This product requires approximately three months’ time to prepare, and it uses ingredients like fish waste, ghee, brown sugar, etc. The price of these ingredients is high, making this product expensive; thus, only very few organic farmers buy this fertilizer. Secondly, manufacturing this fertilizer requires all these ingredients to be stirred daily, and then, the liquid fertilizer (fish amino acid) is squeezed after three months. Since this ingredient contains fish thorns, there are chances of labour’s hand getting hurt when the liquid fertilizer is extracted. The firm is unable to mechanize the production process due to a lack of technical knowledge and funds. Another challenge in using this fertilizer is its foul smell when applied in the fields. People from nearby areas can smell it, and nobody can enter that area; therefore, many farmers refrain from using this fertilizer. The producer of this fertilizer does not have the knowledge and capability to produce them as a user-friendly product, plus being cost-efficient.

Business firms associated with packaging the produce made by organic farmers face another challenge; they are unable to manufacture cost-effective packaging material. Generally, the belief is that organic products should be packed using organic and sustainable packaging materials rather than using plastic bags. But producing such organic packaging material at a low cost is a challenge for several small businesses. M/s Child and Youth Development Foundation in Tirunelveli produces organic millet milk, which is used as a health drink. There is a good demand for this product, and the firm wants to scale up its production so that they can sell it to outstation markets. Selling outside requires special packaging. This firm is looking for eco-friendly packaging without using plastic. However, this firm is unable to do eco-friendly packaging in a cost-effective way. Therefore, they are not scaling up their production.

Micro- and small -businesses often operate with limited financial and human resources. The costs associated with supporting organic farming practices, such as obtaining organic certifications, purchasing organic seeds, and implementing sustainable production methods, can be significant. These financial constraints make it difficult for micro-businesses to invest in the necessary resources to scale up their operations, leading to limited production capacity.

Effective marketing and distribution channels are crucial for small businesses to reach a broader consumer base and establish a sustainable market presence. However, limited financial resources and a lack of marketing expertise can make it challenging for small businesses to create brand awareness and promote their organic products effectively. Additionally, accessing distribution networks and reaching retail outlets or establishing direct-to-consumer channels may pose logistical and financial challenges for these small enterprises. Largely, these firms are co-located with the farmland. Therefore, logistics and supply chain are a challenge to make their product reach the urban market.

Micro-businesses in the organic agriculture sector often face stiff competition from larger, well-established organic farming businesses. These larger players have greater access to resources, economies of scale, and established distribution networks. As a result, micro-businesses struggle to compete on price, volume, and market reach. Overcoming this challenge requires differentiation through unique product offerings, emphasizing local or specialized production, and building strong relationships with niche markets or community-supported agriculture initiatives.

While micro-businesses contribute significantly to the production and distribution of organic agriculture products, they face numerous challenges that can hinder their growth and sustainability. Addressing these challenges requires supportive policies, access to resources, training, and networking opportunities tailored to the specific needs of small businesses. Collaboration among industry stakeholders, government agencies, and non-profit organizations can help overcome these obstacles and create an environment where small businesses in the organic agriculture sector can thrive, contributing to a more sustainable and resilient food system.