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(Business Today, 2009, p. 81). However the ITC’s system does not support organic products, yet. Although it covers the procurement of soya beans, coffee, wheat, rice, pulses and shrimp (Vachani & Craig-Smith, 2008, p. 60), some of which are produced by organic farming (GTZ Sus- tainet, 2006, p. 22), the majority of ITC’s produce is still harvested from conventional farms. ITC’s lack of interest in procuring organic produce may be the result of certain difficulties, which India’s organic farming sector currently must cope with. As for one, one of the biggest challenges is the creation of bio-fertilizers and organic manures. Although cheap or even free of charge in its production, the knowhow for creating those supporting agents is still absent in most rural areas. This has the effect that by measuring the input costs for creating organic fertilizers; it is often cheaper to acquire chemical fertilizers. Furthermore, many commercially available organic manures lack the required quality standards, which means that soil quality suffers tremendously. An- other difficulty is that most seeds in circulation for farming purposes are hybrid seeds, which are designed to be most efficient with chemical fertilizers and pesticides. The remaining difficulties lie with the Indian government and the lack of supporting infrastructure for sustainable agriculture. Up to the year 2002, there were only four agen- cies for accreditation purposes and all of them charged a yearly fee for each farm that had to be certified as an organic goods producer. Furthermore, until this point there is no proper promotion for organic goods in India through agricultural policies (Narayanan, 2005, pp. 57- 62). 5. Consumer Market This section of the paper examines which MNEs offer goods and services to India’s rural BoP that compliment and support organic farming. There are two MNEs that offer large quantities of products for consumption to India’s rural BoP. One of them is again ITC. After ITC introduced its e-choupal system it went on to create ITC Mini-Malls which are small shop- ping malls located near ITC’s produce procurement cen- tres. These malls offer a variety of products, including packaged consumer goods, white goods, fuel and agricultural inputs, as well as various services, such as insurance 6 and banking. The e-choupal system in addition also offers the farmers the option of ordering products from the malls, which then later will be delivered by another farmer visiting the mall. Concerning the prices of these products, some of them are 30-40 per cent less expensive than comparable products in large cities (Vachani & Craig- Smith, 2008, pp. 63-64). The other MNE offering such goods and services is Hin- dustan Lever through its project Shakti by Unilever. The company hires women who sell Unilever products in their villages. One Shakti entrepreneur covers around 4,000 potential customers in three to eight villages. These en- trepreneurs invest a total of 220-330 US Dollars in goods through microloans and then resell those items in the villages with making a monthly profit around 15-22 US Dollars. Items being sold include packaged consumer goods, health products and agricultural inputs, etc. Through an IT system similar to the e-choupal, the villag- ers can also inform themselves, amongst other things, on fertilizer usage as well as pest control (Unilever, 2005, pp. 2-3). Furthermore Unilever, together with the Indian government, is funding irrigation projects in order to increase water supply for farms producing tea. This however can be regarded as self-interest, as Unilever, with its brand Lipton, produces around 12 per cent of the world- wide volume for black tea (Unilever, 2009, pp. 19-20). Both companies offer agricultural inputs in the form of goods and services to the farmers. However, it remains unknown as to how specific some of these inputs are towards organic farming. It can be speculated that agricultural inputs are merely a by-product of offering packaged consumer goods to the farmers as they are products, which in their production cost are rather inexpensive. 6. Conclusion The author of this term paper concludes that with regards to the case of sustainable agriculture in India, the MNEs have until today not tapped the business potentials of this sector, as he expects that the risks of moving into this market are still too uncertain in India. In the case of the BoP as a consumer for products being supplementary to sustainable agriculture, is it unknown which kinds of agricultural goods and services are being
offered to the farmers. It can however be speculated that the agricultural inputs that are being offered are a matter of chemical fertilizers and pesticides. Moreover, it can also be speculated that services containing knowhow and recommendations for using farmland more effectively are also on the basis of non-organic agricultural input, as the majority of the farmers still use this kind of input in order to enhance their harvest. In the case of the BoP as a producer for MNEs in the organic farming sector, it can be said that until today no MNE has made any investments directly targeting sustainable agriculture. Although ITC has started a program which fosters the farmers as producers, directly producing for the company, the company has refrained itself from directly promoting organic farming. This however is connected to the difficulties that this sector still experi- ences, which in return are largely matters that have to be addressed on a the state level. Yet, this might be subject to change in the near future as there are currently many 7 NGOs, which are carrying out preparatory work in this sector. The author recommends to the industry that although the current situation concerning organic farming seems dire in India, the market for using the BoP, both as producers and consumers, could be a promising business potential, due to the fact that organic farming gains in popularity and it is more effective in the long-run than other meth- ods of farming. However, in order for this to be viable it requires the government of India to take an explicit posi- tion towards promoting the idea of sustainable agriculture, even though it may in the short-run abut with the profitability of conventional farming. Yet, seen from a long-term perspective the shift towards the strong promotion of organic farming could lead to higher profitability for MNEs conducting business in the agricultural sector and as well alleviate poverty in India’s rural BoP.
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