Organised retail trying hand at partnership with cooperatives

Written by Nanda Kasabe | Pune | Updated: Jan 28 2008, 06:04am hrs
When they first came to India, nobody believed they could enable a small farmer to produce for supermarkets. The general perception was you cannot work with small farmers or small farmers cannot be brought into organised supply chains. It was then that Growth Oriented Micro Enterprise Development Program (GMED), a project sponsored by the US Agency for International Development (USAID) realised that the road ahead would not be easy in India. Although the expanding organised retail food sector presented a huge opportunity, the question was how to link small farmers with the supply chain.

GMED began talking to major retail players in the organised retail chains. While all of them asked for help in improving their downstream supply chains, there was general skepticism about small farmers as reliable suppliers. ITC finally agreed to partner with GMED in a small farmer supply chain pilot programme. GMED helped ITC set up three farmer clusters, one at Malerkotla in Punjab, one near Pune and another in Hyderabad. Through this project, over 500 vegetable farmers began working with ITC. Simple practices were put to use to improve yield and quality of the produce, Donald Taylor, India GMED programme manager, said.

This experiment is now being attempted on a larger scale in Sangli in Maharashtra. An attempt is being made to bring 5,400 farmers into the loop through a partnership between Nandini Co-operative and Radhakrishna Foodland. The partnership marks the entry of the organised retailer in the cooperative sector for the first time. Nandini and Foodland were brought together by GMED.

There are two procurement models in the country as far as organised retail is concerned, In the short term, ITCs direct buyer- to-farmer model may predominate. However, organised retailers would not prefer to work directly with farmers since this is not their core competency area. They would prefer to work with an intermediary to link the farmers with retailers, Taylor said.

This is where Radhakrishna Foodland comes into the picture. Foodland brings to this arrangement its entire supply chain and processing expertise which will ensure that farmers gain access to higher value markets. Foodland will help in creating systems for better quality produce through adoption of better quality farm practices, offer extension services and establish a proper supply chain infrastructure to ensure compliance with global norms of food safety, Rajesh Sinha, general manager, Fresh Food, Radhakrishna Foodland said.

Appaso Dada Bhagate, founder chairman, Nandini Co-operative says the cooperative would supply 50 tonne of vegetables everyday to Foodland. This agreement will help our farmers become a part of the larger retail boom in India, he said.

Our goal is to bring Nandini farmers up to a level where they are selling a branded product so that if a crate of vegetables is marked Nandini, the buyer knows he is getting quantity and quality, Taylor said.

GMED is also in discussions with Metro Cash & Carry, Reliance, Aditya Birla group, FieldFresh group, a joint venture between Bharti Enterprises and UK finance group Rothschild and is ready to organise farmer production bases and integrating these into the retailers fresh produce supply chain. ITC is ready to scale up by the year end and will have 5,000 farmers in its chain. Other retailers are showing interest and there is a growing interest in exports of fresh and processed fruits and vegetables from India, he said.

It seems, what Amul did for milk in India, GMED is attempting for farming. If this project succeeds, the small farmer could well become a part of the bigger retail story in India.