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How to Conduct a Preliminary study to set-up an Organic Fertilizer Business in India
In India, in recent years, there has been a significant rise in the popularity of organic foods. Indian households are now realizing the long-term benefits of going natural and organic. The recent pandemic has also triggered the demand for chemical-free natural food substances.
The present organic food market in India is sized at USD 1.3 billion. It has a small share in the global organic food market, which is valued at USD 227 billion. However, the market is growing at a CAGR of 16.6% and is expected to reach USD 2.8 billion in the next 5 years, as per research by The India Watch.
Consequently, the demand for organic fertilizers is also soaring. In the past, there has been overuse of synthetic and chemical fertilizers, which has resulted in higher nitrate contents and lower antioxidants in our food products. Nevertheless, now things are altering and from fertilizers to our food supplies, we are going the organic way. This makes organic fertilizer manufacturing a very lucrative business in India.
The Government of India (GOI) also offers lucrative subsidy schemes in the form of credit-linked subsidies and back-ended capital subsidies. In the case biofertilizer unit, one can get a subsidy of 25% (maximum up to INR 40 lacs). In the case of fruits and vegetables compost units, one can get a subsidy of 33%.
Besides catering to local agriculture, horticulture, plantation requirements; Indian biofertilizer manufacturers are also eyeing the global market. Increasingly ports in Navi Mumbai, Baroda, TN are used to supply biofertilizers to Germany, the USA, etc. Income from exports can give an additional revenue stream to local businesses.
How to Set an Organic Farming Business in India
There are numerous kinds of organic fertilizers popular in India. This includes sewage sludge-based fertilizers, animal manure (cow dung, goat excreta, etc), compost (made from the compost of agricultural wastes, fruits and vegetable wastes, etc), chicken litter (chicken manure and sawdust), etc. Other sources include a bone meal (made from slaughterhouses wastes such as bones etc) and natural phosphate rocks.
To set up a biofertilizer plant in India requires ample knowledge and understanding of the market, mandatory licenses, basic technical know-how to set up the plant, viable raw materials sources, and marketing strategy. A solid foundational base of knowledge can help budding entrepreneurs and investors to make informed decisions and effectively mitigate risks.
In the following part, we will discuss how to set up an organic fertilizer manufacturing business in India. The analysis will help investors and new entrepreneurs to learn more about the business.
Market Research to Understand Farmer’s Requirements
Staring an organic fertilizer manufacturing company is not exactly a cakewalk that can be started without proper research of the farmer’s requirements (the main customer segment). So investors will need to conduct proper research and study of the industry. They should conduct market research to know about the farmers' problems, major crops grown in the location, the demand for types of fertilizers in the location, and the type of fertilizers that will cater to the requirements. Knowing the answers to these questions in their market research study will help investors to start and set up the right kind of organic fertilizer business in India. Detailed research of the fertilizer market will help budding investors in knowing how to set up a fertilizer manufacturing company, leverage existing market demand, and capture market share quickly.
Prepare your Business Plan
Investors/ businesses planning to start an organic fertilizer manufacturing company should be ready with the business plan, which is a written document comprising all essential details, numbers, and information about the business. The business plan also contains strategies that will help in successfully running the business, from forecasting market demands to financial planning to manpower hiring strategy. In other words, it can be said that a business plan is a blueprint of the entire business setup and operation and is a roadmap to achieve success.
- Market Demand: Current market growth assessment/ Future demand/ Customer profiling
- Financial Planning: Cost of project analysis/ Funding evaluation/ Projected returns
- Manpower planning- Scientists, junior scientists, lab assistants, etc/ Support functions/ Finance/ Marketing
- Competitive Strategy: Positioning strategy/ Marketing strategy/ CSR/ Pricing Strategy
Techno Analysis of manufacturing unit
A business should have some prior basic technical know-how of how to run and operate an organic fertilizer plant. Mentioned below in the diagram are the various steps in the organic fertilizer production process.
Licensing and Registration of Business
Organic fertilizer manufacturing is a regulated business in India, hence one cannot start fertilizer manufacturing without, registering the company and obtaining essential approval from the regulating authority. The discerning investor/ business will first need to register the company. In addition, they will also need to obtain the following essential documents:
- Trade License
- GST Registration
- MSME or SSI registration
- Register with a Trademark
- EPF & ESI Registration
- IEC Code is mandatory if the business plans to export to other countries
Find a Suitable Location
The business will require to choose an apt location for setting up an organic fertilizer manufacturing unit, and then need to check with the nearest planning and zoning services office to make sure that their chosen location will be approved or not. An organic fertilizer manufacturing unit should be set up in a place that is ideal for farming because it will be easier to access the immediate market. Similarly, it will also help in procuring raw materials cohesively. As a result, it is generally advisable to set up the plant in city/ town suburbs. In case the objective of the business is to export as well, then a location close to ports should be preferred
Find Raw Material Sources
Businesses engaged in manufacturing organic fertilizer will also need to procure suitable raw materials. There are plenty of raw materials available such as animal waste, kitchen waste, agriculture waste, municipal sewage, industrial waste (vinegar waste, sugar waste, etc). However, businesses should ensure a smooth supply of the raw material to operate effectively.
Businesses can consult with the management of nearby abattoirs to collect animal matters, consult with poultry farmers to get bird's waste, or negotiate with agribusiness industries to get the waste. They can also consult with sewage management authority to collect sewage sludge. Business needs to maintain a steady flow of raw material to ensure uninterrupted manufacturing of the fertilizer.
Packaging, Distribution, and Marketing
In today’s highly competitive market manufacturers of biofertilizers have to pay a lot of attention to the packaging of the products because attractive packaging makes it easier to sell. Besides, organic fertilizer has a foul smell that can be taken care of with proper packaging. Better and proper packaging of the organic fertilizer will also make sure that individuals can sell the fertilizers in different states and regions.
Besides, businesses should also have an extensive t distribution/ dealership channel to make sure that the product is available all over the market. They have to implement an effective sales force/ distribution channel orientation and training program.
Packaging and distribution need to be backed with a strong marketing and promotional strategy. Marketing is needed to make the organic fertilizer brand popular among farmers. In India, the farmers still heavily rely on chemical fertilizers. Businesses will have to go the extra mile to educate farmers about the benefits and cost advantages of switching to organic fertilizers.
Individual needs to promote the benefits of organic fertilizer through both online and offline marketing so that farmers are mentally prepared to switch to organic fertilizers in their farms. They can also use other mass communication channels such as radio, farm magazines, etc.
Today many farmers are practicing organic farming and hence they lookout for quality organic fertilizers for their crops. Businesses should try to reach out to such farmers by attending organic farming-related expos/ events/ programs, etc.
How The India Watch can Help
The India Watch is an India-centric market research and business intelligence advisory with strong knowledge of India’s agribusiness, food processing, fertilizer sectors.
- We can help in conducting preliminary analysis, pre-feasibility, and feasibility studies for new manufacturing units/businesses.
- We can offer tailor-made consultations to new companies on the registration process, licensing, etc.
- For existing businesses, we can offer our research and consulting services comprising valuable insights, data, and trend analysis.
- We can conduct market surveys of farmers to understand their requirements and needs, buying behaviors, key challenges.
- For exporters planning to supply to international markets, we can offer specific research such as international potential market assessment, data on trade, and export-related regulatory insights.
- We can work as a research partner to offer valuable data and insights on industry sizing, consumer behaviors, market segments, distribution networks, retail networks, regulatory policies, etc.
- For further information, feel free to drop us a mail at Info@theindiawatch.com
Other Related Links
https://www.theindiawatch.com/retail/how-to-set-up-an-organic-food-business-in-india-in-2022
https://www.theindiawatch.com/economy-and-policy/private-limited-company-registration-in-india
https://www.theindiawatch.com/manufacturing-and-b2b/can-india-become-the-seed-bowl-of-the-world
