Fruits and Vegetables (F&V) Supply Chains in Fruits and Vegetables (F&V) Supply Chains in India: Emerging Models and IssuesIndia: Emerging Models and Issues

Meeta Punjabi Meeta Punjabi Vijay SardanaVijay Sardana

FAO & MoAFAO & MoA New Delhi, IndiaNew Delhi, India

OutlineOutline Background of the StudyBackground of the Study Literature Review: Situation in other Developing CountriesLiterature Review: Situation in other Developing Countries Emerging ModelsEmerging Models Requirements for setting up Supply ChainsRequirements for setting up Supply Chains Issues in Setting up the ChainIssues in Setting up the Chain Areas of Intervention by Govt. agencies/donor groupsAreas of Intervention by Govt. agencies/donor groups Examples: Co-ordination between different players in setting Examples: Co-ordination between different players in setting

up the chain (Role of Govt, NGO, Credit, supermarket chains)up the chain (Role of Govt, NGO, Credit, supermarket chains)

Background of the StudyBackground of the Study

The marketing of F&V in India is changing dramaticallyThe marketing of F&V in India is changing dramatically Change from the traditional markets to modern formatsChange from the traditional markets to modern formats Entry of big retail names – Reliance, ITC, Aditya Birla Group, Entry of big retail names – Reliance, ITC, Aditya Birla Group,

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

Reliance Fresh, Chopal Fresh, Namdhari’s FreshReliance Fresh, Chopal Fresh, Namdhari’s Fresh FAO and MoA undertook the current study to understand the FAO and MoA undertook the current study to understand the

ground situationground situation Emerging models for backward and forward linkagesEmerging models for backward and forward linkages Issues in setting up the chainsIssues in setting up the chains

Literature ReviewLiterature Review

The perception of retail chains being a phenomena of the The perception of retail chains being a phenomena of the developed countries has changed significantlydeveloped countries has changed significantly

Significant presence in developing countries – Latin America, Significant presence in developing countries – Latin America, Asia, AfricaAsia, Africa

What does retail chains have to do with development?What does retail chains have to do with development? Development perspective: farmers involved in modern value chains Development perspective: farmers involved in modern value chains

earn much higher by bypassing the tradersearn much higher by bypassing the traders Large and medium farmers have the resources to meet the requirements Large and medium farmers have the resources to meet the requirements

of the chains, easier to co-ordinateof the chains, easier to co-ordinate Development efforts: linking small farmers to these chainsDevelopment efforts: linking small farmers to these chains

Emerging ModelsEmerging Models

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

Exports with EUREPGAP Certification (Namdhari Fresh, Exports with EUREPGAP Certification (Namdhari Fresh, Bharti Airtel)Bharti Airtel)

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

Wholesaling – (Adani Fresh, Metro)Wholesaling – (Adani Fresh, Metro)

Front end – Convenience Stores (Food Bazaar, 3Cs)Front end – Convenience Stores (Food Bazaar, 3Cs)

Economy Stores (Subhiksha)Economy Stores (Subhiksha)

Requirements for Setting Up the ChainRequirements for Setting Up the Chain

Infrastructure (Back end to front end)Infrastructure (Back end to front end) Collection center Collection center Soil-testing Laboratory Soil-testing Laboratory Packing House/Distribution Center Packing House/Distribution Center

Packing infrastructure -- tablesPacking infrastructure -- tables Cold-StoragesCold-Storages

Transportation – Transportation – Refer trucksRefer trucks Retail outlets Retail outlets

Real estateReal estate Investment in refrigeration facilities at the storesInvestment in refrigeration facilities at the stores

Requirements for Setting Up the ChainRequirements for Setting Up the ChainKnowledge InputsKnowledge Inputs Extension advice to farmers:Extension advice to farmers:

use of different varietiesuse of different varieties production techniquesproduction techniques harvesting (time of harvesting, harvesting techniques)harvesting (time of harvesting, harvesting techniques) grading/sorting, packaginggrading/sorting, packaging

Setting up Grades and Standards for purchase by the companySetting up Grades and Standards for purchase by the company Training staff at packing centers (grading, sorting, packing)Training staff at packing centers (grading, sorting, packing) Post-harvest experts (handling and storing needs of different Post-harvest experts (handling and storing needs of different

F&V)F&V) Cold Storage Technology (?)Cold Storage Technology (?) Packaging Technology for FreshPackaging Technology for Fresh

Requirements for Setting Up the ChainRequirements for Setting Up the Chain

Co-ordinationCo-ordination Developing linkages with farmersDeveloping linkages with farmers Inputs for farmers (Credit, seed, fertilizers, pesticides, Inputs for farmers (Credit, seed, fertilizers, pesticides,

harvesting tools, packaging materials)harvesting tools, packaging materials)

Information flowInformation flow Communication regarding the quantity and quality needs in Communication regarding the quantity and quality needs in

the companythe company Communicating the requirements to the farmersCommunicating the requirements to the farmers

Issues in setting up the chainsIssues in setting up the chains

Developing linkages with farmersDeveloping linkages with farmers Post-harvest manpowerPost-harvest manpower Commitment from farmersCommitment from farmers Infrastructure (level of operation, not everyone needs to invest Infrastructure (level of operation, not everyone needs to invest

or can invest in packing house)or can invest in packing house) APMC Act (paper work, operational hindrance, time involved, APMC Act (paper work, operational hindrance, time involved,

grading, sorting, packaging)grading, sorting, packaging) Farmer’s training in pre-cooling, storing, grading, sorting, Farmer’s training in pre-cooling, storing, grading, sorting,

packagingpackaging Packaging technology for freshPackaging technology for fresh

Areas of Intervention by Govt/Donor GroupsAreas of Intervention by Govt/Donor Groups

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

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

Develop linkages with small farmers Develop linkages with small farmers Training to farmers regarding post-harvest issuesTraining to farmers regarding post-harvest issues Investment in Infrastructure: Not all firms dealing in fresh fruits and Investment in Infrastructure: Not all firms dealing in fresh fruits and

vegetables have the level of operations to set up cold stores and packing vegetables have the level of operations to set up cold stores and packing houses. To give a level playing field to the smaller firms, govt. investment houses. To give a level playing field to the smaller firms, govt. investment in cold storages and packing houses will be useful.in cold storages and packing houses will be useful.

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

Air-port infrastructure for shipping, cold-storages,Air-port infrastructure for shipping, cold-storages,

Example (USAID)Example (USAID)

USAID/Michigan State University Partnerships in Food Industry USAID/Michigan State University Partnerships in Food Industry Development in Nicaragua, Development in Nicaragua, (Weatherspoon and Membreño, 2004). (Weatherspoon and Membreño, 2004).

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

NGOs (Technoserve) provide technical assistanceNGOs (Technoserve) provide technical assistance Supermarket chains -- CSU and La Colonia provide the Supermarket chains -- CSU and La Colonia provide the

guaranteed market guaranteed market Donor funds from USAID provide the financing. Donor funds from USAID provide the financing. The project has a graduation policy whereby the small farmer The project has a graduation policy whereby the small farmer

organisations progressively take over the needed investments organisations progressively take over the needed investments and then maintain the market link themselvesand then maintain the market link themselves

ExampleExampleGovernments, NGOs, and donors can facilitate tri- or quadri-Governments, NGOs, and donors can facilitate tri- or quadri-

partite relationships that facilitate smaller farmer partite relationships that facilitate smaller farmer participation.participation.

Example, melons in Indonesia, Reardon (2004)Example, melons in Indonesia, Reardon (2004)

Small farmer organisation (Makar Buah), Small farmer organisation (Makar Buah), Supermarket chain (Carrefour), Supermarket chain (Carrefour), Seed/chemical company (Syngenta), Seed/chemical company (Syngenta), Government extension programme, Government extension programme, Specialised/dedicated wholesaler (Bimandiri) Specialised/dedicated wholesaler (Bimandiri)

Carrefour provided guaranteed market, Syngenta the Carrefour provided guaranteed market, Syngenta the financing, and the wholesaler the intermediation and financing, and the wholesaler the intermediation and coordination coordination