Even though the Mamata Banerjee government passed a resolution in the West Bengal Assembly last week saying it will not allow retail stores with foreign ownership to set up shop, farmers supplying their produce to private players in the state, including Pepsico and German wholesale retailer Metro, are getting better prices.

Private players have helped in minimising losses and indirect costs, resulting in 10-15% better margins for farmers, claim both farmers and buyers. In the farm-to-table segment, the Keventer Group, one of the largest private players in the state, procures directly from farmers to supply to large retail chains like Big Bazaar and Reliance Retail. It also supplies fruits to Metro Cash&Carry ? the only foreign player in the wholesale segment in West Bengal.

Keventer fresh business CEO Avinash Gupta said: ?Keeping all the benefits provided by private players in mind, it translates to 10-12% better margins for farmers if they sell to us directly.?

In Bengal, which is yet to amend the APMC Act, farmers take their produce to mandis and sell it to middlemen. Apart from transportation costs, they have to pay about 5% tax at the mandis.

?Farmers benefit mainly on two fronts by selling to private players. While they get payments instantly, ensuring steady flow of working capital, they also benefit on indirect costs too,? added Gupta.

Vegetable production in West Bengal has increased from 13,026 lakh tonne in 2008-09 to 13,334 lakh tonne in 2010-11. Area under cultivation for vegetable has also increased from 922 lakh hactre in 2008-09 to 943 lakh hactre in 2010-11.

According to estimates, more than 30% of the produce is wasted every year. Going by industry estimates more than 45,000 tonne vegetable was wasted in 2010-11. A Metro Cash & Carry spokesperson said: ?Our partnership with farmers ensures they find a wider market for their fresh produce, through collection centres located close to their farms. Farmers benefit from reduced transportation costs, extensive training opportunities and a reliable and transparent electronic payment system.? According to him, customers also benefit from an efficient supply chain that delivers fresher produce at lower cost.

Although quality conscious retailers do not procure the entire produce, they offer 10-15% better price to farmers. The farmers sell rest of the produce in mandis.

Pepsico has been procuring potato from farmers for its wafers plant in West Bengal. Last year, it bought 60,000 tonne of potatoes from farmers in the state. The farmers told FE that Pepsico has been offering a better price than the market price. Pepsico procures ?process grade? or Atlanta variety potato. In 2009, when the market price for potato was R3 per kg, Pepsico procured that at R5.75 per kg. It offered R6 per kg to farmers in 2010 and 2011 when the market price ranged between R3.80 and R5 per kg.

Pepsico procures through the collaborative farming model as contract farming is not allowed by the state government. The existing model is also known as pre-agreed-price farming.

Pepsico?s procurement from Bengal has increased substantially over the last few years, from 10,500 kg in 2008 to 11,700 kg in 2009 and 40,000 kg in 2011. The number of farmers engaged in pre-agreed-price farming of potatoes with PepsiCo in the state has increased from 1,800 in 2008 to 10,000 in 2011. The total area under cultivation was about 5,500 acres in 2011. This is expected to increase to 7,000 acres in 2012.

According to Ramprasad Ghosal, a farmer in Burdwan, his cost of cultivation for the process grade potato is R45,000 per acre. While he can grow 12 tonne of potatoes on an acre, he recovers the cost even with 7.5 tonne output. ?This year I have produced corn which is sold at R12 per kg in the urban markets. But I haven?t been able to sell at Rs 5 per kg at the mandis,? he said.

Mohit Kampani, chief of merchandising and operation of Sanjiv Goenka-controlled Spencers? Retail, said farmers benefit on cost and their average realisation is almost 15% higher.

Most of the mandis in the state charge 5% tax from the farmers while the delay in procurement forces the farmers to go for distress sales. The Kolkata collection centre of Spencers? procures almost 50% of the requirement for the stores in the state.

Introduction of new vegetables have also increased earnings for the farmers. ?We have also taught them to grow vegetables like broccoli, which was not grown in West Bengal previously. That has also added to their earnings,? Kampani said.

Companies like Parle, Pogo and Pailan have also started collaborative or pre-agreed-price farming in the state recently.