The concept is catching up fast with customers because of advantage in terms of fixed price, quantity and shopping convenience.
Because of the supermarket piloted schemes, organised retailing in F&V is a trend in many developing countries like Kenya, China and Latin American countries. India is a slow starter in the area of organised retailing in Fresh F &V as it learned of the opportunity from experiences of other countries, restricted FDI kept out the international chains, Indian retailers were not very active until recently and entry of big retails like Reliance Fresh, Choupal Fresh, Namdhari’s Fresh, Safal etc.
Recent scenerio and issues
Lack of infrastructure at the wholesale markets, packing, grading, sorting, cold storages, large amount of wastage (20-40%), fragmented production, fragmented chains, rein of chain with traders, no lucidity in pricing (farmer end), consumer end, vegetables sold on small stores on the road side, weighing, bargaining and quality are some issues restricting the trade.
With facility of investment at all levels in the chain, procurement from rural areas, sale of FMCGs to the farmers, advice to farmers, distribution centers to simplify grading, packing sorting and cold storages, foreign cold storage chains in India, the business is budding. Front end retailing, fresh stores and supermarkets are big opportunity points.
Issues in developing supply chains
Govt. policies, (centre and state) real estate and APMC Act, APMC Act (Agriculture Produce Marketing Committee), licences, restrictions on exchange outside the market-yard, paper work , wastage of time and handling of produce – (loading, unloading and reloading), implications, restrictions to companies from conducting transaction in specific states are some issues in developing supply chain.
1: Developing linkages with farmers, developing relationship with farmers, easier for Godrej (input supplier for years), USAID has been involved with ITC to develop linkages with farmers.
2: Providing advice to farmers, in soil testing, use of inputs, production technology, harvest management , information on harvesting (time and method), post harvest management – pre-cooling, grading, sorting, packaging, storing on farm.
3: While procuring from farmers there is issue of graded produce, lower than average price for the produce(farmer’s woes).
4: Post harvest, technology, manpower, setting up distribution centers (packing, grading, sorting and cold storages)
5: Ensuring quantity and quality of supply at the stores
Cold storage story
Sensing the large gap in production and waste, Finance Minister Pranab Mukherjee announced a number of schemes to attract investment in this sector as he wants to bring down “difference between the farm gate prices, wholesale prices and retail prices”. He also said that, “External Commercial Borrowings will henceforth be available for cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat”.
And to further ease the problem, he has exempted customs duty on crucial refrigeration units needed to produce refrigerated vehicles. He also allows extending of hiring private warehouses by state run Food Corp to seven years from five years to meet the storage deficit.
Saurabh Goyal of Thinklink services that specialises in investment advisory, consulting and project management in the supply chain and logistics sector including cold chains, informs that, “The potential for cold chain development in India is huge, rate of food processing in India is low and is growing, waste in the perishable F&B category is a key point that needs to be addressed, and there are a number of other sectors apart from food which also rely on reliable cold chain development, expected market size for cold chain services in India is expected to reach US$ 10 billion in the next 5 years”.
Sensing huge profits in this Industry, Kishore Biyani-led Future Value Retail plans to open standalone ‘farm fresh’ stores selling only fruits and vegetables in neighbourhood locations of Delhi on similar lines.
India is buoyant, and with expectations of some more retails next year, this business is poised to soar. No wonder, eat green and fresh, the message for a healthy living is catching up fast.