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Fruits and Vegetables (F&V) Supply Chains in

India: Emerging Models and Issues

Meeta PunjabiVijay Sardana

FAO & MoANew Delhi, India

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Outline

Background of the Study

Literature Review: Situation in other Developing Countries

Emerging Models

Requirements for setting up Supply Chains

Issues in Setting up the Chain

Areas of Intervention by Govt. agencies/donor groups

Examples: Co-ordination between different players in settingup the chain (Role of Govt, NGO, Credit, supermarket chains)

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Background of the Study

The marketing of F&V in India is changing dramatically

Change from the traditional markets to modern formats

Entry of big retail namesReliance, ITC, Aditya Birla Group,

Godrej, Bharti Airtel, Adani Group Initiation of organized retailing and wholesaling of F&V:

Reliance Fresh, Chopal Fresh, Namdharis 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

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Literature Review

The perception of retail chains being a phenomena of the

developed countries has changed significantly

Significant presence in developing countriesLatin America,

Asia, Africa What does retail chains have to do with development?

Development perspective: farmers involved in modern value chains

earn much higher by bypassing the traders

Large and medium farmers have the resources to meet the requirementsof the chains, easier to co-ordinate

Development efforts: linking small farmers to these chains

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Emerging Models

Co-operative (HOPCOMS, Karnataka; Mother Dairy, Delhi)

Exports with EUREPGAP Certification (Namdhari Fresh,

Bharti Airtel)

Farm to Fork -- Complete Chain (Godrej, Reliance, ITC)

Wholesaling(Adani Fresh, Metro)

Front endConvenience Stores (Food Bazaar, 3Cs)

Economy Stores (Subhiksha)

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Requirements for Setting Up the Chain

Infrastructure (Back end to front end)

Collection center

Soil-testing Laboratory

Packing House/Distribution Center Packing infrastructure -- tables

Cold-Storages

TransportationRefer trucks

Retail outlets

Real estate

Investment in refrigeration facilities at the stores

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Requirements for Setting Up the Chain

Knowledge Inputs Extension advice to farmers:

use of different varieties

production techniques

harvesting (time of harvesting, harvesting techniques)

grading/sorting, packaging

Setting up Grades and Standards for purchase by the company

Training staff at packing centers (grading, sorting, packing)

Post-harvest experts (handling and storing needs of differentF&V)

Cold Storage Technology (?)

Packaging Technology for Fresh

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Requirements for Setting Up the Chain

Co-ordination

Developing linkages with farmers

Inputs for farmers (Credit, seed, fertilizers, pesticides,

harvesting tools, packaging materials)

Information flow

Communication regarding the quantity and quality needs in the

company Communicating the requirements to the farmers

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Issues in setting up the chains

Developing linkages with farmers

Post-harvest manpower

Commitment from farmers

Infrastructure (level of operation, not everyone needs to investor can invest in packing house)

APMC Act (paper work, operational hindrance, time involved,grading, sorting, packaging)

Farmers training in pre-cooling, storing, grading, sorting,packaging

Packaging technology for fresh

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Areas of Intervention by Govt/Donor Groups

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

To give credibility to the project (low faith/fear) in dealing withcorporations,

Develop linkages with small farmers

Training to farmers regarding post-harvest issues

Investment in Infrastructure: Not all firms dealing in fresh fruits andvegetables have the level of operations to set up cold stores and packinghouses. To give a level playing field to the smaller firms, govt. investmentin cold storages and packing houses will be useful.

Investment in transportation infrastructurerefer trucks, (import taxes?subsidy?)

Air-port infrastructure for shipping, cold-storages,

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Example (USAID)

USAID/Michigan State University Partnerships in Food IndustryDevelopment in Nicaragua, (Weatherspoon and Membreo, 2004).

US university facilitates the market connections for smallfarmer organisations with the local supermarket chains,

NGOs (Technoserve) provide technical assistance

Supermarket chains -- CSU and La Colonia provide theguaranteed market

Donor funds from USAID provide the financing.

The project has a graduation policy whereby the small farmerorganisations progressively take over the needed investmentsand then maintain the market link themselves

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Example

Governments, NGOs, and donors can facilitate tri- or quadri-partite relationships that facilitate smaller farmerparticipation.

Example, melons in Indonesia, Reardon (2004)

Small farmer organisation (Makar Buah), Supermarket chain (Carrefour),

Seed/chemical company (Syngenta),

Government extension programme,

Specialised/dedicated wholesaler (Bimandiri)

Carrefour provided guaranteed market, Syngenta thefinancing, and the wholesaler the intermediation andcoordination