Initiatives and Issues in Fresh Fruit and

Vegetable Supply Chains in India

Meeta Punjabi
Vijay Sardana

FAO & MoA

New Delhi, India

International Symposium on Fresh Fruits and Vegetables

Supply Chain Management, Chiang Mai, Dec 6-10, 2006
Outline of the Presentation

Background of the study

Current situation of F&V marketing in India under which the
modern chains are emerging – Overview of the traditional
markets

Emerging models of backward and forward linkages

Issues in developing supply chains

Areas of intervention by Govt. agencies/donor groups
Background

Because of the supermarket led initiatives, organized retailing
in F&V is quite advanced in many developing countries -
Kenya, China, Latin American countries

India is a later starter in the area of organized retailing in

Fresh F &V:
 Opportunity to learn from experiences of other countries
 FDI in retailing is not permitted which kept out the
international chains
 Indian retailers were not very active until recently
Background

Marketing of F&V in India is changing dramatically at clockwork
speed

Entry of big retail names – Reliance, ITC, Aditya Birla Group,
Godrej, Bharti Group, Adani Group

Retail and wholesale stores for F&V by these chains:
 Reliance Fresh, Choupal Fresh, Namdhari’s Fresh

FAO and MoA undertook the current study to understand the
ground situation
 Emerging models for backward and forward linkages
 Issues in setting up the chains
 Understand the role of the govt., NGOs in donor agencies
Current Situation of F&V Marketing
Typical of a developing country environment

Non-existent infrastructure at the wholesale markets

 packing, grading, sorting, cold storges

Large amount of wastage (20-40%)

Fragmented production, leading to fragmented chains

No rewards for quality

Traders dominate the chain

No transparency in pricing (farmer end)

Consumer end: vegetables sold on small stores on the road

side – weighing, bargaining, quality issues
Traditional Wholesale Market
Cleanliness
Traditional Wholesale Market
Loading
Traditional Wholesale Market
Unloading
Traditional Wholesale Market
Grading and Sorting
Traditional Wholesale Market
Auction
Emerging Models
Different from the other countries because of domestic
investment

Marketing of F&V by Farmers Co-operatives

HOPCOMS, Karnataka; Mother Dairy, Delhi
 Oldest model in India
 Objective is disintermediation
 Minimal investment in collection centers
 Outlets throughout the city in Bangalore and Delhi
 Advantages to consumer – fixed price, quantity, shopping
convenience
Emerging Models
Farm to Fork Complete Chain – Godrej,
Reliance, Aditya Birla Group
 Investment at all levels in the chain

 Rural hubs: as procurement centers, also sell FMCGs to

the farmers, extension advice to farmers
 Distribution Center: Grading, packing sorting, cold
storages
 Front end: all models, including fresh stores,
supermarkets, supermarkets
Emerging Models
Wholesaling – Adani Fresh, ITC, Metro

 Investing in creating back end linkages with farmers,

procurement, storage and supplying to retailers
 ITC pilot project is selling to retailers
 Adani Fresh currently specializes in procuring apples and
storage, so they can supply year round – buyers will
largely be supermarkets
Emerging Models

Front end Convenience Stores – Food Bazaar, 3Cs

 Not much investment in back end operations
 Procuring from traditional markets and traders for their
stores

Exports with EUREPGAP Certification – Namdhari Fresh,
Bharti Airtel
 Tight Chain
 Heavy investment in infrastructure, cold chain
Issues in Developing Supply Chains --
Policy Environment

Agriculture is a state subject in India, thus policy of the state
is very important – Real estate and APMC Act

APMC Act (Agriculture Produce Marketing Committee)
 Restrictions on who can conduct market transactions
(licensed)
 Restrictions on exchange outside the market-yard
 Paper work
 Wastage of time and handling of produce – (loading,
unloading and reloading)
 Implications – Minor frustrations to actually stopping
companies from conducting transaction in specific states
Impact of APMC -Unused Packing
House
Issues in Developing Supply Chains
Step 1: Developing linkages with farmers
 Investment in visiting the areas they want to procure from
 Developing relationship with farmers
 Easier for Godrej (input supplier for years)
 USAID has been involved with ITC to develop linkages
with farmers
Issues in Developing Supply Chains
Step 2: Providing extension Advice through agri-graduates
 Soil testing
 Use of Inputs
 Production Technology
 Information on harvesting (time and method)
 Post harvest management – pre-cooling, grading, sorting,
packaging, storing on farm
Issues in Developing Supply Chains
Step 3: Procuring from farmers
 Farmer loyalty – Jack pot mentality
 Some “mushroom buyers” emerge overnight and buy the
entire crop
 Buy only graded produce from the farmers hence farmers
have to continue dealing with traders.
 They also get a lower than average price for the produce
not purchased by the companies.
Issues in Developing Supply Chains
Step 5: Post Harvest Technology, Manpower

Learning about post harvest technology is new for the
company – tie ups with technology providing companies
(ITC – Ingersoll Rand)

Post Harvest Man-power shortages: High turnover of
manpower
Infrastructure

Setting up Distribution Centers (Packing, grading, sorting and
cold storages)

All chains are not cold chain
Issues in Developing Supply Chains
Step 6: Ensuring quantity and quality of supply at the stores
 Procurement from several sources including traditional
wholesale markets
 Logistics – how many times to service the stores
 Technology at the store – not all stores have refrigeration
at the stores
Examples of supply chains with low investment and high
investment
Low Investment Chain
Packing House
Low Investment Chain
Transportation
Low Investment Chain
Retail Outlet
High Investment Chain
Packing House
High Investment Chain
Cold Storage
High Investment Chain
Retail Outlet
Role of Govt. NGOs and Donor Groups

Create an enabling policy environment that promotes
mutually beneficial partnerships between farmers and
organized sector

To give credibility to the project (low faith/fear) in dealing
with corporations

Develop linkages with small farmers

Training to farmers regarding post-harvest issues

Investment in Infrastructure: To give a level playing field to
the smaller firms, govt. investment in cold storages and
packing houses will be useful.

Investment in transportation infrastructure – refer trucks,
(import taxes subsidy)

Air-port infrastructure for shipping, cold-storages,
Thought…….

After 5 years, with the most optimistic estimate (also based
on experience of other developing countries), the organized
retailing sector will still not handle more than 20% of the
produce.

Most of the fresh produce will still be going to fresh market

Importance of traditional markets and the efforts to upgrade
the traditional market cannot be ignored

Need to avoid dichotomy in the agriculture sector – those
selling to modern chains and others caught up in the low
value traditional chains