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Business Opportunity: Organic Fertilizers

Organic fertilizer is a mixture of decayed organic matter. It is usually made by gathering plant material such as leaves, grass clippings, and vegetable peels and animal waste into a pile or bin and letting it decompose with the help of earthworms, fungi or bacteria. Organic compost contains essential macro and micro nutrients for plants, often absent in synthetic fertilizers. Compost releases nutrients slowly over the cultivation period, which helps plants soak those nutrients better and make a healthy food in our plates.

The demand for organic fertilizers is rising in India as well as internationally due to increasing awareness of organic farming and sustainable agricultural practices. The market size for organic fertilizers in India stands at 2547 lakh metric tonnes as of FY 2015-16.[1]

The major consumers of organic fertilizers are horticulture farmers, farmers of export oriented crops, farmers of crops such as ginger and turmeric and urban households that use compost for their home gardens.

What are different types of organic Fertilizers?

As per the Fertiliser Control order, 1985, the organic fertilisers can be divided into three categories:

Vermin compost: Most popular form of organic fertiliser, made by decomposing the organic material with the help of Vermi, FCO has specified guideline in terms of nutrient percentage, moisture levels etc

City compost: The compost made from city waste, including household waste, municipal waste etc.

Organic manure: Compost made from animal and plant waste (including the vermi and city compost). Manure typically has higher organic content vis a vis other organic fertilisers.

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What is the market?

The market has two segments:

Horticulture farmers: Farmers growing fruits and vegetable crops use compost to reduce chemicals residue from their crops. Further, these crops are relatively more profitable vis a vis traditional field crops such as paddy, cotton and hence can afford to purchase organic compost. This segment is dominated by large fertiliser companies who have the dealer network and sales force required to reach the farmers. Below are the large players in Andhra Pradesh and Telangana.

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Nurseries: This segment has a lot of small and medium enterprises. Here the product packaging is important. Some of the players in this segment also sell only through online network.

How to get started with manufacturing of organic compost?

One needs to have a detailed understanding of the processes involved in manufacturing, marketing and selling the compost.

It’s not a very capital intensive business and hence capital requirements are not very large. One does not need many plants and equipment’s except for pits /wilgrows to dump the waste, shredder and a palletising machine. The main cost of establishing will be land and labour. A unit of capacity to process 20-30 tonnes of waste per day can be set up within a budget of INR 50 Lakhs.

The compost is also made as a by-product of a biogas plant. The biogas plant converts the organic waste into bio gas through anaerobic digestion and produces a slurry, which can be dried and used as compost.

Government incentives

There are a number of incentives available to manufacturers and farmers. It can broadly be categorized as incentives for farmers and incentives for entrepreneurs as given below.

Farmers are offered organic fertilizers at a subsidized cost

Entrepreneurs are offered incentives to set up compost manufacturing facility. For example, under National Program for organic farming, manufacturers of compost from vegetable waste are offered a subsidy of 33% of the cost of project.

Challenges
  • The market is still in its formative stage and awareness of the benefits of organic compost has just begun to spread across farmers and farmer groups.
  • Reliable Data on organic input market is not present.
  • Organic system of farming is far more expensive than doing farming using chemical fertilisers
  • The economics depend on the waste procurement cost, so those have to be tightly controlled

How can we help?

We can help you set up a compost manufacturing unit through a number of services including

  • Market viability assessment
  • Technical consultation and
  • Project execution support.

[1] Source: National Centre for Organic Farming

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