Tata-Total Produce JV for retail back-end

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New Delhi, Feb1: Tata Chemicals, which operates in the chemicals, food additives and agriculture space, has announced a 50:50 joint venture with Europe’s largest fresh produce company, the $2.5 billion Total Produce. The JV is for a retail back-end operation, aimed at sourcing and supplying farm produce like fruits and vegetables to a growing number of supermarkets, besides wholesalers. The joint venture would create distribution facilities across the country targeting the high growth organised retail industry, including western-style food retail joints.

Tata Chemicals is only the second player in this space with a foreign partner. Before announcing its tie-up with the world's largest retailer Wal-Mart, Bharti Enterprises too entered into a similar partnership with UK-based Rothschild for efficient procurement of farm produce. Reliance Retail, the newest player in domestic retail, has set up its own supply chain for farm produce as part of its farm-to-fork project, but also imports some products from abroad.

India is the world's second largest producer of fruits and vegetables, however, 40% of the produce is wasted due to poor infrastructure. The fresh produce business is estimated to be worth Rs 1,00,000 crore in India. Total Produce would lend its expertise in procurement. The new venture is expected to help farmers realise better returns on their produce, besides cut wastage of perishable farm products.

Homi Khushrokhan, managing director, Tata Chemicals, ruled out the possibility of the company venturing into retail. "We will supply to any customer who comes to us," he said, when asked if the JV would engage in business with Reliance Retail's fresh foods stores—Reliance Fresh. He said sourcing and distribution functions needed attention and focus on farm produce.