The company will use the model to procure potatoes from farmers in Uttar Pradesh where the quantity and quality of the produce is predetermined. The company decides the price after the harvest to give maximum benefit to the farmer.
Of the 8,000 stock keeping units available across the stores, 10% constitute the farm fresh segment, while the international standard is around 12%. The company wants to push the former to 15% in the next three years.
In Maharashtra, the company has started procuring Alphonso mangoes from farmers. It has tied up with the Maharashtra State Agricultural Marketing Board (MSAMB) to buy directly from the farmers. The farmer and the retailer fix the price jointly.
The Kishore Biyani-run retail major, Pantaloon, is awaiting amendments in the Agriculture Produce Marketing Committee (APMC) Act in different states to source its produce directly from the farmers.
"Ideally, we should source the entire produce directly from the farmers but the APMC Act is coming in the way. We want to source half of our procurement directly from the farmers by next year," said Arvind Chaudhary, chief executive officer of the food business.
According to him, "Almost 20% of the cost is saved if the produce is procured directly from the farmers." The company is planning to source bananas and oranges from the state. "We are also planning to source pineapples and potatoes from West Bengal," said Chaudhary.
Pantaloon Retail (India) Ltd is India's leading retailer with gross sales of Rs 2,019 crore in the financial year to June 2006.
It has planned to increase its presence in West Bengal by doubling the number of stores by the end of 2007. At present, Food Bazaar has eight stores in the state, with three stand-alone ones in Kolkata. The floor area for the stores will range from 5,000 sqft to 20,000 sqft.
"We would decide on the format of the store depending upon the kind of location and catchment area available," said Chaudhary.