MUKESHPANDEY KSUDHIR RAMANAHUJA DEEPALITEWARI* *Mukesh Pandey is a Fulbright Scholar at Michigan State University, Michigan.

. Prof K Sudhir is Professor of Marketing at Yale University, Connecticut. Raman Ahuja is the Business HeadFresh Foods at FieldFresh Foods, India.DeepaliTewariisaHorticultureExtensionSpecialistatGBPUAT,Pantnagar,India. In one of those pleasant cold mornings in February 2010, Sanjay Nandrajog, the Chief Executive Officer of FieldFreshFoodsPrivateLimitedponderedthefuture.HehadjustreturnedtoDelhifromtheirAgriCentreof Excellence (ACE), a stateoftheart farm cultivating baby corn, sweet corn, bell peppers, snow peas and seedlesscucumbers,locatednearLudhiana,inthestateofPunjab,aftercelebratingtheirachievementwith teammembersandpartneringfarmersfordispatchof500MToffreshbabycornfromtheiroperationsthere. He reflected on how his team had experimented, made mistakes and learnt the hard way to navigate the choppywatersindevelopingabusinessmodelforIndiasfreshbabycornexports.Sittinginhisoffice,taking considerable satisfaction in what had been accomplished by their dedicated team, Sanjay was now consideringoptionsabouthowtogrowFieldFreshtobecomeIndiaspremierfruitandvegetablecompany, bothgloballyanddomestically. HorticulturefarminginIndia Indiaisalandofsmallfarms,ofpeasantscultivatingtheirancestrallandsmainlybyfamilylaboranddespite thespreadoftractorsinthe1990s,bypairsofbullocks.MajorityoffarmersinIndiaaremarginalwithless than one hectare of land (Exhibit 1). Although nearly 700 million Indians depend on agriculture for their livelihood, agriculture sector accounts for just 18 per cent of the GDP and has been struggling to grow consistently.Infact,agriculture'spatchygrowthisonereasonwhytheIndianeconomyhasn'tbeenableto achievethetargetedGDPgrowthrateof10percent. India got independence in 1947 and in over sixty years post its independence has emerged from famine riddencolonialtimestoafaminefreeRepublic.However,theGreenRevolutionthatusheredthisgreateraof selfreliance has thrown up its own set of problems. The use of HYVS (High yielding varieties of Seeds), fertilizers and pesticides no doubt ushered in the Green Revolution but prolonged use of chemicals also depletedthesoilfertilityandpoisonedtheenvironment.Theoncethriftyfarmerhasnowbecomeaprofligate user of power and water. Also because this form of agriculture is capital intensive, it is mostly the large farmerswhobenefittedfromit.TheprofitsoftheGreenRevolutionhavenotspreadevenlyinsocietyandthe poorhavelittlemeanstobuy.Worstofallyieldsarebeginningtofall. Horticulture, which is peopleintensive, is being put forward as an option for marginal farmers by various government agencies and private sector companies. Farm incomes rise by as much as 3040 per cent by growing fruits and vegetables as against traditional crops of wheat and rice. In India, family labor is a significant resource in smallholder farming systems, hence vegetable production and processing provides opportunities to use surplus labor productively. Such an agrodiversification can lead to a second Green RevolutionandprovidethemuchneededimpetustothegrowthofIndianagriculturalsectorthathasbeen finding itdifficultto manage the problems involvedwith thetransitionof agriculture froma supplydriven value chain to a demandled market oriented supply chain (Viswanadham, 2006). However, diversification largely depends upon the opportunities and responsiveness of farmers to technological breakthrough, consumer demand, government policy, trade arrangements and development of irrigation, roads and other infrastructure (Kumar and Mittal, 2003). Some of these issues get accentuated where small and marginal farmers are concerned, as they have limited investment capabilities and low cushions against loss. Major constraints in productionand marketing of fresh fruits and vegetables in Indiaare nonavailability of good

FIELDFRESHFOODS:LINKINGINDIANFIELDSTOTHEWORLD September2010

quality of seeds, inadequate irrigation, lack of soil testing facilities and extension staff, inefficiency in pest management, lack of availability of adequate and timely credit, high cost of production, lack of market information,hugepostharvestlosses,lackofroads,coldstorage,inadequatespaceandhightransportation cost (Kumar et al 2004).AlthoughIndiaisamongtheworld'slargestproducersoffruitsandvegetables,itis alsoamongthemostinefficient.Anestimated2540percentoffarmproduceworth$12billion(Rs50,400 crore)rotseveryyearevenbeforeitreachesconsumers,therebysqueezingbothendsofthechainnamely, thefarmerandtheretailconsumer (Dagar, 2007).FruitsandvegetableprocessinginIndiaisamere1.7%of productionascomparedto6070%inUSA(Blatt,2008). In2009,Indiagrew1975.43millionMToffruitsandvegetablesinanareaof14.08millionhectares (Exhibit 2and3).Indiaslonggrowingseason,diversesoilandclimaticconditionscomprisingseveralagroecological regionsprovideampleopportunitytogrowavarietyofhorticulturecrops (Exhibit 4 and 5).AlthoughIndia hasbecomethesecondlargestproduceroffruitsandvegetablesintheworldnextonlytoChina,itstilllags behindinactualexportsoftheseproduce (Exhibit 6, 7, 8, 9, 10, and 11).Forexample,Indiaproduces65per centand11percentofworldsmangoandbananarespectively, rankingfirstintheproductionofboththe crops yet Indias exports of the two crops are nearly negligible of the total agricultural exports from India (Exhibit12and13). RegulatoryEnvironmentinIndia: India'scurrentfooddistributionsystemisalegacyofthe1940sand'50s,whenchronicfoodshortagesled thegovernmenttocrackdownonthehoardingofproducebyunscrupulouscartels.Thegovernmentsofthe dayintroducedtheconceptofMinimumSupportPrices(MSP)thatassuredthefarmersaguaranteedpricein casetheygrewthreecropsviz.rice,wheatandsugarcane.Thisinthelongrunactedasastrongdisincentive forcropdiversification.Ontheproductionside,ifpricingofcerealsinIndiaislefttothemarketforces,land will be released from riceand wheat cultivation to meet the growing demand for noncereal crops such as oilseeds,fruitsandvegetablesinaccordancewiththediversificationinconsumptionpattern(Mittal,2006). Given Indias federal structure, there are certain sectors of the economy that are the domain of each state. Marketingofagriculturalproductsisastatesubject,andisgovernedbyrespectivestateAPMC(Agricultural ProductsMarketingCommittee)Acts.TheIndianAPMCActof1960requiresallagriculturalproductstobe soldonlyingovernmentregulatedmarkets(mandispronouncedasmundees).Thishasresultedincreationof marketing monopolies, detrimental to the growth of agriculture and farmers. APMC markets impose substantialtaxesonbuyers,inadditiontocommissionsandfeestakenbymiddlemen,buttypicallyprovide littleserviceinareassuchaspricediscovery,gradingorinspection.Farmersalsoareunabletolegallyenter into contracts with buyers that leave no incentive for farmers to upgrade and inhibit private and foreign investments in the food processing sector (CII Meet, 2009). The law, aimed to give farmers a fair and consistentprice,wasinitiallydonewithagoodpurpose.Overtheyearsitgrewintoamonster,gaininglayer uponlayerofintermediaries,noneofwhomaddedanyvaluetothefruitsandvegetablestheytradedevenas theyaddedontheirownmargins.Theresult:agrosslyinefficientsysteminwhichfarmersaredivorcedfrom market feedback and often must wait months to be paid. Many farmers routinely go into debt to the very traders who buy their produce and then sell them seeds and fertilizers for the next crop. Customers, meantime,havelittlechoicebuttoacceptfoodofunevenqualityandunreliablesupply.Somethingthatwas designedtoprotectfarmersandconsumersendeduphurtingthem. Commentingonthelongchainofintermediariesbetweenfarmersandconsumers,Dr.ManmohanSingh,the Honble Prime Minister of India in his address at the Conference of Chief Ministers on Prices of Essential Commodities in February 2010 said, The Government has on many occasions drawn attention to the wide difference between the retail and the farm gate prices and there is the evidence that retail prices have shot up more than wholesale prices. We need therefore greater competition and therefore need to take a firm view on openinguptheretailtrade. . TheMinistryofAgricultureinIndiaformulatedamodelAPMCActin2003,andadvisedstatestoimplement the act. This Model Act is quite comprehensive and if adopted, will help in improving the efficiency of the marketingsystemandinencouragingprivatesectorinvestmentinthefieldofagriculturalmarketing.Under thenewActamendment,privateplayersareallowedtoopenandoperateagriculturemarkets,wherefarmers

canselltheirproduce.Thereisnocompulsiononthefarmerstobringtheirproducetothedesignatedmarket yardastheynowhavetheoptionofsellingtheirproducedirectlytoprivateparties,foodchainsandretailers. Contractfarminghasbeenallowedsothatthefoodprocessingandretailindustrycangetdesiredquantity and quality of the produce, without any need to route it through the notified markets. The amendment is expectedtoendthestatemonopoliesandresultincompetitivepricingforthefarmers. By 2007, some of the states have however modified their APMC rules and accepted reforms (Exhibit 14). However,whethertheamendmenthasbeenadoptedwholeheartedlyornotandwhetheranyrealimpactis evidentneedstobestudied. ConsumermarketinIndia India has a large and growing population of over 1 billion people of whom, around 300 million are categorized as middle class consumers, who have significant purchasing power. The country also offers a relatively young market with 54 percent of the population below 25 years of age. This sector of the populationearnsmore,spendsmoreanddemandsmorefromthemarket,makingIndiaadynamicsociety. Indias long history of vegetarianism is a strong influence on its food consumption pattern. Meals typically include pulses (e.g. daal), wheatbased flatbreads or rice, with vegetable dishes and accompaniments including curd (yoghurt), chutney and raita; nonvegetarian meat or fish dishes have Mughal influences (Wikipedia, 2007e). In 2006, an estimated 31% of Indians were vegetarian (341 million), with the lowest proportioninthecoastalareasofKerala(2%),WestBengal(3%),AndhraPradesh(4%),TamilNadu(8%), andOrissa(8%).Theinlandstatesinthenorthandwesthavethehighestproportionofvegetarianfamilies: UttarPradesh(33%),MadhyaPradesh(35%),Gujarat(45%),Punjab(48%),Haryana(62%),andRajasthan (63%)(YadavandKumar,2006). In the affluent and middle Indian class, the percentage share of food expenditure visvis other products/categoriesisgoingdownwhereasthetotalexpenditureonfoodhasincreasedacrossallclasses.In the 1970s, the food expenditure was concentrated around basic food items like food grains, vegetable oils andsugar;thereisnowaninclusionoffruits&vegetables,eggs,meat,beveragesandprocessedfoodinthe consumersrepertoire,contributedbothbyincreasedavailabilityandaffordability.Thischangeishappening courtesy rapid urbanization, higher disposable incomes, increasing number of nuclear families, less time available for cooking, mobility and exposure to global markets (Exhibit 15). The demand for readytocook andreadytoeatconveniencefoodsisalsorising. Demonstration effectthroughexplosionininformationand communicationtechnologiesiscreatinganewdemandforvalueaddedfoods. Indiasretailsectoriscurrentlydominatedbymorethan12millionmomandpopstores,mostofthemtiny, dustyandofferingasmallandunreliableselectionofgoods.ButnowsomeofIndia'sbiggestcompanieshave begun opening the first of what they say will be thousands of flashy new retail stores in different formats acrossthecountry.Atthesametime,foreignretailchainssuchasWalMarthaveenteredthemarketthrough joint ventures for CashnCarry and wholesale (nonretail) business. The opportunities are immense. The McKinseyGlobalInstitute,athinktank,estimatesIndia'sretailmarketwillbeworth$1.52trillionby2025,up from $370 billion in 2005. Though the relative importance of comestibles will shrink as people earn more disposableincome,McKinseyestimatesthefoodandbeveragecategorywillstillaccountfor25%ofallretail spendingin20years.Buildingshinynewstorestomeetthedemandforfoodandbeverageisrelativelyeasy. Thehardpartissupplyingthemwithfresh,cleanandsafevegetablesandfruitsthroughawelloiledsupply chainthatlinksfarmsandconsumers,countryandcitiesthatseemssodifficultgiventhefactthatIndiahasan extremelyfragmentedproducesupplychain. Consumers in India consider a wide range of criteria and have different priorities attached to them while choosing a Fresh Food store (Exhibit 16). Fresh fruits and vegetables are the most crucial category in communicatingfreshnessandarethemostimportantfreshfoodcategoryoverall.Thebrightcolorsandfirm texture make a positive impression and image for the whole store. Relationships with retailers are also importanttoconsumerswhentheymakethedecisiononwheretoshop.Inthisarea,traditionalwetmarkets have the advantage over modern retailers. The traditional retailer has the advantage of oneonone relationshipswithhiscustomers,builtupovermanyyears.Heunderstandstheirneedsandpreferencesand

is often happy to barter with them on price. The experience with modern retailers is more impersonal. However, their bigger scale gives operators the ability to build up brand values that, when effectively communicatedtoconsumers,caninspiretrustandloyalty.(CocaColaAccenturereport) BhartiEnterprisesandFieldFreshFoods:TheParentandtheChild BhartiEnterprisesisoneofIndiasleadingbusinessgroupswithoperationsinover21countriesacrossthe globewithinterestsintelecom,financialservices,retail,fresh&processedfoodsandrealestate.AtBharti, thereisoneunderlyingphilosophytocreatebusinessesthataretransformationalandhaveadeepimpact onsociety.Itwasfoundedin1976bySunilBhartiMittal,oneofthemostrespectedanddynamicbusinessmen of India. Bharti started its telecom services business by launching mobile services in Delhi (India) in 1995. SincethentherehasbeennolookingbackandBhartiAirtel,thegroup'sflagshipcompany,hasemergedas oneofthetoptelecomcompaniesintheworldandisamongstthetopfivewirelessoperatorsintheworld. Overthepastfewyears,thegrouphasdiversifiedintoemergingbusinessareasinthefastexpandingIndian economy. With a vision to build India's finest conglomerate by 2020 the group has forayed into the retail sectorbyopeningretailstoresinmultipleformatssmallandmediumaswellestablishinglargescalecash &carrystorestoserveinstitutionalcustomersandotherretailers.Thegroupoffersacompleteportfolioof financialserviceslifeinsurance,generalinsuranceandassetmanagementtocustomersacrossIndia.Bharti also serves customers through its fresh and processed foods business. The group has growing interests in other areas such as telecom software, real estate, training and capacity building, and distribution of telecom/IT products. WhatsetsBhartiapartfromtherestisitsabilitytoforgestrongpartnerships.Overtheyearssomeofbiggest namesininternationalbusinesshavepartneredBharti.Currently,Singtel,IBM,Ericsson,NokiaSiemensand AlcatelLucentarekeypartnersintelecom.WalMartisBharti'spartnerforitsCash&Carryandwholesale businessventure.AXAGroupisthepartnerforthefinancialservicesbusinessandDelMontePacificLimited forthefoodsbusiness. AtBharti,thereisastrongbeliefingivingbacktosocietydogoodandmakegood.BhartiFoundationisthe philanthropicarmoftheBhartiEnterprisesandwassetupin2000withavision"Tohelpunderprivileged childrenandyouthofourcountryrealizetheirpotential".BhartiFoundationimplementseducationprograms in the fields of both primary and higher education through the use of technology. Besides its initiatives in the area of higher education and research, Bharti Foundation is currently running 237 Satya Bharti Primary schools in Punjab, Rajasthan, Haryana, Uttar Pradesh and Tamil Nadu. These schoolswithover1216teachersprovidefreequalityeducationtoover30,000students.Focussingonthegirl child and the weaker sections of society, the program is the largest privately funded program in primary educationinthecountry. FieldFreshFoodsPvt.Ltd.(www.fieldfreshfoods.in),incorporatedin2004,offersFieldFreshbrandedfruits& vegetablesacrossIndianandinternationalmarketsandDelMontebrandedprocessedfoods&beveragesto theIndianconsumer. Sanjaya graduate of India's elite Indian Institute of Technology, Delhi and Indian Institute ofManagement, Calcutta, with rich experience of overtwo decades indiverse industries like telecom, beverages, cosmetics, paints and fertilizers and a successful manager working at leadership role in the mobile division of Bharti AIRTELwastappedasCEOtodeliveronthegrandvisionofFieldFreshFoodsi.e.To be the mosttrusted and innovative provider of branded fresh fruits & vegetables and processed food products and to take it to a turnoverof$250millionby2015. FreshproducesupplychaininIndia A typical Indian fresh fruit and vegetables supply chain under traditional marketing through government regulatedAPMCmarketisasfollows:

Farmers Consolidators/LocalTraders Commissionagents Retailers Consumers In India, there exists a long chain of intermediaries between the horticulture producer and the final consumer. The existing traditional system of fresh produce value chain includes a local trader (village merchant, itinerant trader, preharvest contractor) and an APMC wholesale market where a commission agentprocurestheproducebroughtbythefarmerrightathisdoorstep.Thecommissionagentthendeducts hischargesandthensellstheproduceinthewholesalemarkettotradersandretailers.Manyatimes,there are more than one commission agents in the chain. These middlemen charge exorbitant margins in an arbitrarymannerfortheservicestheyrender.Thismarkethastheproblemsofunorganizedsmallfarmers who lack market power and have a low share in the final consumer price. The commission agents who distribute the produce have no incentive for quality. Moreover, the wholesale markets are poorly designed andcongested(Coulter,2004). The fresh produce retailers in India include roadside/neighborhood stalls/kiosks and doorstep delivery by hand carts. The last link in the chain is the consumer. In a supply driven market he has no choice but to consumewhatisavailable.Thereisinconsistencyinsupplyintermsofquality,quantity,specificationsand yield.Ifacustomer(foodprocessororendcustomer)wantsaparticularqualityoffreshproduce,hefindsit extremelydifficulttogetit (Pandey and Tewari, 2010).Marketingthroughtraditionalmeansischaracterized byverylittleattentiontograding,sortingandstorage,weak institutionsandpoorhandlingduringloading, unloading and transport. The high percent of postharvest damage can largely be explained by such poor handlingoftheproduce. Industryexpertsestimatemorethan3040%ofallfreshproduceislostorspoilsbeforeitreachesthemarket (Singh et al, 2002).Onanaverage,goodspassthroughsixorsevenmiddlemenbeforeaconsumercanbuyit, resulting in tortuous journeys, big markups and poor quality. Modern retailing, which is emerging through thegrowthofsupermarkets,conveniencestoresandtheirsupportingsupplycenters,offersaconduitforthe introductionoftechnologiesforimprovedvegetablehandlingandstorage. FieldFreshFoodsInitiative Corporate India had traditionally not seen agriculture as a big business opportunity. The intention behind Bharti Enterprises initial foray into the agribusiness was to set up another pioneering project like the telecomventure,thusimpactingmillionsoflivesintheprocess.Forthepromotersi.e.theMittals,thechoice of Punjab in general and Ludhiana in particular, was equally emotional as Punjab is their home state and Ludhiana the city of their birth. The journey began in 2004 when Bharti decided to join hands with the RothschildfamilytoestablishFieldFreshFoodsPvtLtd.Soonthereafter,itmadeaninvestmentindeveloping aoneofitskind300acreR&DfarminLadhowal,Ludhiana,takenonleasefromthePunjabGovernmentand rechristeneditasAgriCentreofExcellence(ACE).AtACE,theFieldFreshFoodsteamstartedexperimenting with open farming and protected cultivation of exotic vegetables like snow peas, cherry tomatoes, bell peppers,sugarsnapandsnowpeasdestinedfortheEuropeanmarket.ACEhasanaddedbenefitinthatitis adjoining the famous Punjab Agriculture University (PAU) in Ludhiana, Punjab, and thereby providing continuousaccesstoveryhighcalibertalent.TheteamatACE hadastrongbeliefthattheprojecthadreal transformationcapabilitiesandifsuccessful,itcouldtransformIndia'sruralheartland. Says Sunil Bharti Mittal, Chairman, Bharti Enterprises, , The underlying philosophy behind our FieldFresh operations is to link Indian farms to the world by creating Indias first global outsourcing opportunity in fresh produce. WhenFieldFreshstartedoperations,theproductpromisewasthatitsfruitsandvegetableswouldconformto internationalqualitystandards.TherationalewassimpleIndiaproduceslargequantityandvarietyoffruits and vegetables and given the right inputs by way of capital, knowhow & market access, Indian farmers shouldbeabletomeetthestringentinternationalstandards.FieldFreshthentookadecisiontofocusonniche international markets that demand specific fruits and vegetables from India and kept grains, oils, seeds or otherfarmcommoditiesoutoftheproductportfolio.

Rightattheoutset,itwasdecidedthatFieldFreshwouldtargettheoverseasmarkets.Internalresearchand variousvisitsacrossEuropeandUSAledtotherealizationthatagricultureisabigbusinessinthedeveloped worldandinvolveshugevaluecreation,beforetheproductsreachretailshelves.Theycalculatedthatinsheer potential,Indiacouldbecomethefoodbaskettotheworldasupplierofhighvaluefoodproductsthatfetch revenuesrunningintobillions.Moreover,mostofthebuildingblocksneededforthefreshproducebusiness wereinplace:Indiahasallthecultivablelandrequired(52%ofthetotallandisundercultivationcompared totheglobalaverageof11%),abundanceoflaborandplentifulsunshine.Yettheyieldlevelsarepoorwhen benchmarkedagainstinternationalstandards (Exhibit 17 and 18).Whatwasmissingwasthingslikeefficient extensionservices,coldchainincludingperishablecentersandfreightinfrastructure(Exhibit19).Further,the globalization of trade along with the rising need of most food retailers in the country for highspeed transportationmeanttheemergenceofahugemarketforcompaniesthatspecializeinsupplylogistics. SaysRakeshBhartiMittal,ViceChairmanBhartiEnterprises&ChairmanFieldFreshFoods, India presents a great opportunity in horticulture. The opportunity lies in rapidly enhancing farmer incomes through productivity increases, supply chain infrastructure and collaboration with state and nonstate players. FieldFresh Foods will concentrate on techniques of growing, increasing our efficiencies while producing high valueproductsandeventuallygetintoprocessing.Thiswillbealogicalinvestment. Intheinitialphase,BhartistieupwiththeRothschildfamily,largelyperceivedasaninvestmentbank,witha strong British base, helped FieldFresh Foods to leverage their clout in the European market to open up marketaccesswithleadingretailers.ThismadethemarketingofastartupventurelikeFieldFreshalittle easier. LadyLynnForesterdeRothschild,aDirectorofFieldFreshFoodsin2004summedupthewinwinbusiness model for fresh produce and said, If Indian farmers became more efficient, their farms would be far more profitable. Every 60th person in the world is an Indian farmer, but he produces 1.8 tonnes a hectare, while an Americanfarmerproduces8tonnes.Chinahas60percentofIndiasarablelandinuse,buthas40percentmore agriculturalproduce.Thereareimmenseopportunitieshere BusinesschallengesencounteredbyFieldFresh Thefirstexportshipmentin2005madebyFieldFreshturnedouttobeacompletedisaster.Bythetimethe airfreightedconsignmentofmushroomandokrareachedtheMiddleEast,muchoftheproducehadrotted. Over time, FieldFresh learnt all the logistics issues handson especially the unique and significant logistical challengesinIndia.Forexample,whentheirvegetableswouldreachairports,thedoorsofthetruckswould have to be opened. The insides have an airconditioned environment of 02 degree Celsius and when the doors were opened, hot air would enter the chamber. In just a couple of hours, this thermal shock would deteriorate the vegetables. After that, the vegetables would go to a cold storage at the airport perishable producthandlingcenter.Priortothedepartureoftheflight,thevegetableswouldbetakentothetarmac,an openarea,wheretheywouldsufferfurtherthermalshock,thatcouldsometimeslastforafewhours.Ontop ofthis,sincepassengerbagsarepriority,therewouldbenoguaranteeofFieldFreshproducebeingloadedon totheunderbellyoftheaircraft.TheFieldFreshteamhadtoquicklylearnhowtohandlethechallengesinthe coldchaininanextremelyunpredictableoperatingenvironment! One of the most important keys to FieldFreshs plans is contract farming. Instead of owning the land and takingontheassociatedrisk(corporateownershipofagriculturelandisnotallowedanddependingonthe state law individuals cannot own more than 1922 acres of cultivable land), the company has struck pacts withlocalfarmersbyassuringthemofsustainedsupportintheentirevaluechainoffarmingbeginningwith the latest soil management techniques, better seeds and implements and ultimately assured prices for the produce. The team of extension workers at FieldFresh comprises of trained agricultural experts who regularlygointothefieldsandsharethebestfarmingpracticesandtechniques.Thisresultsinderiskingthe farmerasFieldFreshisnotonlyassuringthemafixedreturnbutisalsopromisingtobuyupalltheirproduce atpredeterminedprices. SaysAnubhavMisra,HeadFreshDomestic,By moving in and taking over the supply chain in fresh fruits and vegetables,FieldFreshisalsobreakingthestrangleholdofmiddlemenandloansharkswhonotonlyexploitedthe

farmers,butalsoroutinelymarkeduppricesbyasmuchas60%withoutactuallyaddinganyvalue.Themodern distribution channels, warehousing and cold storage facilities also ensure that the produce remains fresh and reaches retail outlets faster. Over the years, the wastages that have for long plagued the procurement system in Indiacanbeminimized. Bharti'sexpertiseincollaboratingwiththegovernmentcameinhandythough.Knowingwellthatitwouldbe impossible to do everything on its own, FieldFresh Foods team worked with local authorities to get things sorted out. The results were encouraging. Agencies like the Airports Authority of India set up modern perishablecenters(temperaturecontrolledstoragefacilities)inDelhiandAmritsar,forinstance.Budgetwas alsosanctionedbytheNationalHorticultureBoardforapermanentperishablecenteratAmritsarairportin Punjabstate. With the fiasco in the initial export consignments, FieldFresh realized that the road to becoming India's largestcorporateagriculturistwithtonnesofvariousfarmproduceisnotgoingtobeaneasyone.Litteredas itiswithimmenseregulatoryhassles,workingthelandinIndiahashaditshurdlesbecauseitisnotjustthe soilthatneedstobeturnedaroundbutalsothemindsetoftheaveragefarmer! AccordingtoRPSDhaliwal,HeadACEOperationsinPunjab Unless we train the farmers as per international benchmarks, exports become a question mark. While the farmers grow very good vegetables for domestic consumption,clearlytheglobalcustomer'srequirementsareofatotallydifferentvarietyforthesamevegetable. Alotofworkhastobedoneforthat." FreshproducemarketsinEuropeincludingUK Europe(includingtheUK)hasseveralkindsofmarketsincludingwholesalemarkets,marketsofdistribution and street markets. The markets throughout Europe and the UK are modern functional buildings specially designedforthepurposeofhandlingfreshproduce.Mostoftheservicesofthemarketsareoutsourcedand becauseofthecompetition,thelogisticalsupportandservicesatthemarketsaregenerallyofahighstandard (Louwetal,2005) TherearetwomaintypesofwholesalemarketsinEurope.Thefirstareassemblywholesalemarketslocated intheproductionareastocollectproducefromproducersandgathertheminbulk.Urbanterminalwholesale markets on the other hand, debulk large shipments of products to sell to other intermediaries who then retail to or prepare food for the general public (Cadilhon et. al, 2003). Wholesalers operations include procuring (taking possession of) produce, placing them on their stands in the market and reselling for a profit.Thisstockofproduceisacquiredfromawiderangeofsourcesincludingdirectorders,throughagents, brokersandimporters.TheproduceismainlycomposedofvegetableimportsfromHolland&Belgiumand fruitsfromUSA,Australia,SouthAfricaandSouthAmerica. Veryfewproducersdealonaonetoonebasiswithwholesalersinthemarket;rather,theyselltodistributors and brokers at predetermined prices or on the futures market. By the time the wholesalers purchase the product the price is virtually set and leaves little room for negotiation and only marginal discounts for quantities.Thewholesalersthereforeneverdealwiththeproducersdirectly.Becausethetradersonmarkets inEuropedonotsellonaconsignmentandcommissionbasis,theycarrytheentirerisk.Valueadditionbythe wholesalers is basically limited to prepacking or packing in the customers customized containers. The biggermarketshaveothertradersandevenfoodprocessorsonthepremises.Theproduceispeeled,slicedor mashedandpackedinbulkorsmallcontainersandsuppliedfreshonadailybasistotheirclients.(Louwet.al 2005).Theauctionsystemistheprimarypricingsystemforfreshproducebothattheassemblyandterminal markets.Thepricesoftheproductsemanatingfromthesemarketsarefairlystableandpredictable.Minimum prices are set and guaranteed to theproducersand ifthe produce is not sold,they are simply disposed off (Rademeyer2006). Thereisalsoaproliferationofstreet/retailmarketsallovertheUKandinEurope.Rome,forinstance,has over80ofthesemarkets,Paris65andLondonabout40.Someofthesemarketsopenonlyonceaweek;some onlyonweekendsbutthereareanumberofpermanentmarkets.Ingeneral,howevertheUnitedKingdomis dominated by supermarkets; French city dwellers prefer to shop for fresh produce at retail market stalls

while supermarkets are beginning to take over the rural food markets; in Italy multinational supermarket chains (that bypass wholesale markets) are starting to dominate in some areas but local supermarkets are stillcompetitiveandtheyprocurefreshproducefromtraditionalwholesalemarkets(Cadilhonet.al2003). Duetothecomplexityofimportingfreshproducefromdifferentcountriestomaintainyearroundsupplies, supermarketsinEU/UKhavecreatedacategoryapproach.Categorybuyinghasbeenverycommoninother consumerproductsbutwasintroducedtofreshproduceinlate1990s.Thesupermarketsnominateaselected product range to few importers. These importers in turn are assigned the task to building supply relationships in different parts of the world with the single focus of ensuring year round supply of a given quality. SameerSachdeva,HeadFreshExportsatFieldFreshputsitsuccinctlyIn our endeavor to hasten the learning curve for exports, we aligned ourselves to leading importers of premium and exotic vegetables in UK. The advantages were manifold: a clear understanding of quality standards, support in developing right agronomy and crop growing practices, assured market at a preagreed price, and above all patience in developing a new source! ExportcompetitorsofIndia The biggest competitor of India in fresh produce exports is China that has a huge production base with an efficientsupplychainandbetterinfrastructurefacilities.Intermsofproduction,thoughIndiaisthesecond largestproduceroffruitsandvegetables(15percentand11percentrespectively)itiswaybehindChinathat accountsfor34percentofworldoutput.Thelargestincreaseinproductionforbothfruitsandvegetableshas beeninAsiaandSouthAmericaespeciallyinChina,India,BrazilandChile.USAisamongthemajorexporter of these fresh produce and European Union (EU) market is one of the worlds largest markets for fresh horticultureproduce.Thismarkethasbeengrowingsteadilyinquantityandqualityforthepasttwodecades and presents a significant trade opportunity for a number of developing countries. Countries like Kenya, South Africa, Cte dIvoire, Uganda or Zimbabwe have experienced over time a sustained growth and expansion intheir export earningsfromnontraditional agricultural productsand have in some cases even emergedasmarketleadersforsomeoftheseproductslikepineapple,Frenchbeans,babycorn,cutflowers, papayaandmangoes. ItisextremelyimportanttoanalyzethelistofpotentialcompetingcountriesofIndiainfruitsandvegetables. Thiscanbearrivedatonthebasisoftheexportsquantityandsharefromtheexportdatainlastfiveyears (Exhibit20) QualityissuesinEuropeanmarket Europeanandotherdevelopedmarketsrequirestringentquality&safetystandardstobeeffectivelyadhered to in order to supply safe, wholesome and consistent quality products to the customers. All horticultural produce,beingperishable,needsextremecareateverystagetoachieveandretaininternationalqualityand delivery levels. In India, low awareness and literacy levels among workmen and farmers makes it further difficulttoensurerighthygienepracticesandoptimaluseofcorrectchemicals&pesticidessoastostrictly meet the maximum residual limit (MRL) level of chemicals as well as the microbiological standards. The quality and process control department at FieldFresh identified, standardized and defined the product & process standards, implemented international quality & food safety standards like Global GAP, BRC Food SafetyStandardsandISO:22000besidesbuildingarobustQualityManagementSystemtoensurecompliance of food laws and packaging requirements including the product traceability. Today, FieldFresh Foods has partneredwithhundredsoffarmersinPunjab&MaharashtrawhosefarmsareGlobalGapcertified,besides its own ACE farm at Ludhiana being certified for Global GAP, and Tescos Natures Choice standards. The packhouseisBRCcertifiedforFoodSafety,andalsoISO:220002005certified StringentQualityManagementSystem(QMS)atFieldFreshensuredthattheprocessesrangingfromfarmand seedselectiontoinputsapplicationuptodeliverywereintotalcontrolandpromptcorrectiveandpreventive measures were taken. The growing and harvesting of baby corn crops is contracted to a large number of farmers who are provided production plan in advance so that they can identify areas and necessary

resourcesforcultivation.Ascheduleofnutrientapplication,pestprevention,harvestingandtransportation procedure called Package of Practices is provided to each farmer to ensure the crop is free from any chemicalorbiologicalcontamination. FieldFresh,inashorttimespanof3years,hasbuiltareputationofbeingareliablepartnerforitsproduct range. Today the company commands a 10% supply share for baby corn to the UK market. The quality of deliveryandconsistencyofsupplyhavebeentwokeyingredientsforthissuccessinashortperiodoftime. ThecoststandardsarealmostatparwiththoseofThailand,worldslargestexporteroffreshbabycorn.The successofFieldFreshissuretoattractotherIndianentrepreneurstothisbusinessthatwillcreateahealthy competitionandenhancefarmerincomes. DomesticCompetitioninfreshproducebusiness AnumberofcooperativeslikeSAFALofNDDBandcorporatehouseslikeReliance,ITC,AdityaBirlaGroup, Godrej and Bharti Enterprises have entered into retailing, with focus on retailing of fresh fruits and vegetables. Some of the retail and wholesale stores are already under operation by the name of Reliance Fresh,Bhartiseasyday,ChoupalFresh,NamdharisFreshetc.ITC,METROCash&CarryandAdaniFreshare also entering into wholesaling. Exports of fresh fruits and vegetables are being done by Namdharis Fresh, ITC, Mahindra, FieldFresh and many other private players using Global GAP certified farmers. They are developingasupplychainwithforwardandbackwardlinkagesoperatinginanefficientmannerwithheavy investments in infrastructure and cold chain. These business houses have indicated that contract farming maygetthemtimely,consistentandadequatesupplyofproduceofgoodquality. TheentryofbigcompaniesinthefreshfruitandvegetablebusinessmeansgoodnewsfortheIndianfarmers, almostthreefourthsofwhomaresmallandmarginalcultivatorswithlessthanahectareofland.Almostallof thesecompaniesareplanninghugebackendoperationstocreatecaptiveagriculturalbases,eitherfortheir retail outlets or for supply. For starters, it means that farmers can sell directly to these retailers or aggregatorsandbreakfreeoftheregulatedmandis. According to the Central Potato Research Institute of India (CPRI), India produces 25 million tonnes of potatoes.Forthosewhocanlinkthesupplychainfromthefarmtotheshelf,abusinessworthRs25billionis upforgrabs.MahindraShubhlabhisupbeataboutthisdevelopmentandisalreadytestingdifferentsupply chainmodelstolinkagroretailfirms.Itwouldeitherenablethetransportationoffarmproductstoastoreor becomewhatareknownasaggregatorsoffarmproduce.Thistermisusedwhentheretailerleasesouta smallsectionofastoretotheaggregator,whosebusinessistocollectproducefromdifferentfarmsandfillup empty shelves in the store. The aggregator could use a mix of warehouses, cold storage facilities and refrigeratedtrucksdependingonthekindofproductthatistobeputontheshelf.Hewillalsobearthelossin the case of perishable items when in transit. Tesco in Europe has 7 per cent of its USD 40 billion business beingmanagedbyaggregatorsanddistributors. TheWorldBankbelievesthathugeinvestmentsbytheretailbiggiesinthesupplychaininfrastructurecould usher in a service revolution that would shorten the distance that fresh produce travels to reach the consumer. In a supply chain analysis of 13 high value commodities that covered 1,400 farmers, 200 commission agents and 65 exporters across the country, the Bank found that high transport costs and multipleplayersinthelinearsupplychainwerecripplinghorticulture.Indiaisalargelowcostproducerof fruitsandvegetablesbutisunabletocompeteintheglobalmarketonaccountofwhatittermsthelogistics tax on fresh farm produce. The inefficiencies in the system also mean that 2530 per cent of the produce (valued at around USD 11 billion) is wasted, imposing additional burden on both the grower and the consumer. At Reliance Industries Ltd, company sources say it is setting aside USD 10 billion to build its farmtofork linkage.Reliancehasdrawnupplansforapresencein784townsand6,000mandi(wholesalemarket)towns with 1,600 rural business hubs to service these. It has already rolled out 177 Reliance Fresh stores across majortownsin11states.Accordingtoacompanyreport,RIListargetingaturnoverofUSD8.5billioninthe nextfewyears.

GodrejAgrovetontheotherhandhastactfullyuseditsmarketingexperienceinruralareasbyopeningadvice centres called Aadhar These centers will enable the farmer to increase his production and farms in these villages will be directly linked to its retail business, Natures Basket, in Mumbai. The proposition here is to removetheintermediarywhoisaddingmorecostthanvalue.Godrejdoesnotusethecoldchainasamodern supplychain,includingrefrigeratedtrucksandwarehouses,wouldcomeatahighcostandthatburdenhasto bebornebytheconsumerandisnotsurewhetherhe/sheispreparedtopaythiscost, Rightnow,companiesaremostlydealingwithfarmersontheperipheryofcitiesbutanalystssaytheywould ultimatelyhavetoinvestincoldchainsandmoveintotheinteriors.Whethercompaniesexceptforthosewith deeppocketslikeReliancewillhavethecouragetodothatisinquestion. According to the Confederation of Indian Industry (CII), if India has to double fruits and vegetables productionto300milliontonnesby2012,itwouldrequirepumpinginclosetoUSD4billion.Butanalysts warnthatsuchinvestmentmaynotpaydividendsinceitdoublesthecostoftransportation. Behindthesqueakycleanshowroomsofthenewfoodretailoutletsthataredottingthecityscape,dirtywars are being fought. There is poaching of staff and suppliers, and aggressive price discounting as rival retail chainstrytowincustomanddestroycompetition.Mostofthegrubbyskirmishesareoverfarmersandtheir produce. Suddenly, the humble grower of veggies and fruits is being sought out and wooed as corporate Indias biggest names try to secure enough supplies to feed their rapidly proliferating chains. In this mad scramble,loyaltyisatadiscount.That'swhatthecooperativesectorgiantMotherDairyisdiscoveringtoits chagrin. The milk cooperative that diversified into fruits and vegetables (F & V) in the 1980s is losing its traditionalsuppliersasretailchainswithdeeppocketswoothemwithheftypremiums.Increasingly,Mother Dairy'sbackend,builtuppainstakinglyoverthepasttwodecades,iscomingunderstrain.Thefarmerswho havebeengrowingF&VspecificallyforitsSAFALoutletshavebeensellingtheirproducetothenewchains thatarereadytopaythatmuchmore.

ThebabycornsuccessstoryatFieldFresh:Experimentationfortherightbusinessmodel TheearlyyearsatFieldFreshwerefullofexperimentationcombinedwithhighspiritsemanatingfromacan do approach. The business attempted exports of a wide range of fruits like Thomson seedless grapes, mangoes,pomegranates,lycheeetc.Alltheseproductsweresourcedfromorchards/vineyardsthathadbeen inexistenceforseveralyears.Inparallel,thebusinessteamalsostudiedthecultivationofexoticcropsand supplypatternsofkeyexportingcountrieslikeKenyaandThailand. Supply chain intervention in orchard crops was limited as farmers were scattered and the layout of the orchards was largely unviable for producing large volume of high quality exportable products. In addition there was a vibrant local market for the mangoes, pomegranates, etc. These two factors alone made the supplyscenariohighlyunreliable.Atthefrontend,whiletherewasademandforselectedIndianfruits,the marketwasstillnascent.Marketpriceswerenotfixed.WhereIndiawasexportinganacceptedproduct,e.g., Thomsonseedlessgrapes,thewindowofopportunitywasverylimited6to8weeksstartinginMarch.After that,IndiansuppliesrantheriskofoverlappingwithsuppliesfromChile,thelargestgrapeexporter!Inthe case of grapes, the company relied upon existing vineyards, that were at best erratic in complying to internationalstandardsofquality(berrysize)andpesticideresiduelimitsimposedbyEU/UK. Determinedtobealeaderintheexportarena,in2008,thecompanybecamethe3rdlargestIndianexporterof freshgrapestoEU/UK.Thefinancialresults,however,werenotcommensuratewiththeefforts.Thatyear,the wholeindustrymadealoss,andFieldFreshwasnodifferent. Themanagementteamhadthisnaggingurgetocontrolitsdestinyendtoend.Withexportsoffruits,there waslimitedopportunitytoparticipateinthefarmingoperations.Equally,theexportmarketswerenotready to pay a premium for Indian fruits. The business team was in parallel, building vegetable focus where croppingcyclefromseedtoharvest,couldbemanaged;notonlyfromaqualityperspectivebutalsofrom theperspectiveofenhancingvaluecapturebothforthefarmerandthecompany.

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Enterbabycorn.Babycornistheearofmaizeplant(Zea mays L.)harvestedyoung,justafterthesilkshave emerged and no fertilization has taken place. The dehusked ears are eaten as a vegetable, whose delicate flavorandcrispinessaremuchindemandabroad.Babycornisfreefrompesticideanditsnutritionalvalueis comparable to cauliflower, cabbage, tomato, eggplant and cucumber. Its byproducts, such as tassel, young husk,silkandgreenstalkcanbeusedasgoodanimalfeed.Cattlemanurecanthenbeused,enablingorganic recycling through the plant animal chain. Baby corn provides many food benefits to people. Farmers can growthreetofourcropsayear.Thusproductionofbabycorngeneratesemploymentamongtheruralpoor. Internationally,brokerswhobuyfromfarmers,canneries,wholesaleandretailmerchantsandexportershave alreadybenefitedfromthiscropinThailand. Baby corn production and markets are expanding worldwide, especially in Asia, Africa and South America, although Asia has the highest baby corn consumption. Baby corn is usually consumed as fresh; however, frozenandcannedbabycornalsohasalargemarketshareparticularlyforexport.Worldbabycornsupplies mostly come from Asian countries. Therefore, they are regarded as producers rather than importers. Countries known as major exporters of baby corn include Thailand, China, Kenya, Zimbabwe, and Zambia. MajorbabycornmarketsareU.K.&EUtheU.S.,Malaysia,Taiwan,JapanandAustralia.Thailanddominates the world baby corn trade with both fresh and canned products. However, statistical information on baby corn production is limited because many producing countries either neglect tomake a report of baby corn productionorbarelyincludeitinsweetcornproduction.Intheglobaltrade,Thailandisestimatedtoaccount for80percentoftheworldtradevolumeofbabycorn.During20022004,Thailandexportedfreshbabycorn toapproximately30countries,andpreservedbabycornproductstoalmost100countries. USAisoneofthelargestbabycornmarketsintheworld.Itusuallyimportsfreshbabycorn;however,fresh babycornisrarelysoldinsupermarkets.Itisusuallyconsumedinhighendrestaurantsthatpreferunhusked babycorn.EuropeancountriesimportfreshbabycornmorethantheU.S.Freshbabycornisinmostdemand here. Baby corn products are imported both in loose and prepacked forms, though the latter is more prevalent. U.K. is the largest fresh baby corn market in the Europe. In U.K., fresh baby corn is normally distributed through retailers such as supermarkets. This contrasts with the U.S. market, where fresh baby cornisusedprimarilyinrestaurants.IntheMiddleEast,SaudiArabiaisthelargestimporterofcannedbaby corn.SomeAsiancountrieslikeJapan,Malaysiaalsoimportalotofcannedbabycorn. Starting in Punjab, in August 2005, a dedicated group of scientists conducted crop trials on baby corn at FieldFreshACE.Thesetrials,spreadover24months,broughtoutthemostappropriatefarmingtechniques fortheidentifiedareasinPunjabonbabycorncultivation.Alongwithcroptrialstheteamstartedtowork towards understanding the quality & certification requirements of global retailers. The technical team diligently worked to gain Global GAP (Good Agriculture Practices) certification for FieldFresh ACE facility. Simultaneously,FieldFreshengagedwithscientistsatPunjabAgricultureUniversity,Ludhianatodevelopan energeticteamofcropadvisorstrainedtoembarkthedifficultjourneyofgainingfarmertrust! ExtensionpersonnelatFieldFreshFoodsACEfarminvestedsignificanttimeandmoneyintrainingfarmersto meet the international standards of quality and compliance and sensitized them towards optimum use of resources like water and minimizing the use of chemical fertilizers & pesticides. They also promoted crop rotationandotherprogressiveagriculturalpracticeslikeintercroppingwithsugarcane,mintetc.tonotonly ensurepropersoil&watermanagementbutalsotoenhancethereturnperacretothefarmer.Sincemostof thefarmersalsohavemilchcattleoradairybusiness,theyfeelhappywhenthenoticethatfodderfrombaby corncropishelpingthemdeliver5%to10%bettermilkyieldbothintermsofvolumeandfatcontent.This has helped in reducing overall farming costs continuously that have now become comparable with the benchmark costs from Thailand. As a result, farmer incomes have gone up by 2530% on an average as comparedtoalternatecrops,besidesprovidinganassuredmarketfortheirproduce. A contractual agreement between FieldFresh and partner farmers provides a written guarantee to the farmers that the company will purchase all the produce grown, within specified quality and quantity parameters.Therelationshipalsoprovidesfarmerswithfreeofchargeaccesstoawiderangeofmanagerial, technical and extension services. The price along with the specifications is communicated in writing in advance. The farmer is incentivized to enhance income by delivering better quality produce. Most

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importantly,themoneyisdirectlytransferredintothefarmersbankaccountwithinaweekofdeliveryofthe produce,thusbuildingfurthertrustandtransparencyintherelationship. FieldFreshFoodshasbeensupplyingfreshbabycorninconsumerpackstotheUK&EUmarketssince2007 and has been able to successfully establish brand India with UKs leading supermarkets like Sainsburys, ASDA,TESCO,etc. Intheprocess,FieldFreshhasbecomethelargestIndianexporteroffreshbabycornby selling500metrictonsin2009(handlingover6,000tonsofrawmaterials)andintheprocesscapturedover 10% of the UK retail market by virtue of their ability to deliver consistently high quality and service standards,inlinewiththeexpectationsoftheirInternationalcustomers.Ithasalsobeenabletoachieveand ensureyearroundavailabilityoffreshbabycorntotheUKsupermarketsinanextremelyshortspanoftime, whichbyitselfisnomeanfeat. Inacountrywheremostofthefarmingisdonebysmallfarmers,scalingupofoperationsrequiresdeveloping a variety of capabilities. Since 2008, FieldFresh has embarked on capacity building exercise of a different kind.InthestateofMaharashtra,FieldFreshhasinvested(financiallyandmanagerialtime)inleadfarmers whohavebeentrainedtomanagealargepartofthevaluechain.TheseAgriEntrepreneurs,asFieldFreshcalls them,arebusinesspartnerswhohelpinbuildingasustainablevaluechain.Dependingonthecapacityofthe Agri Entrepreneurs the company is provide soft funding up to $200,000 in fixed infrastructure and compliances.Besidestheirownfarmingactivities,theseAgriEntrepreneursprovideseveralcoreserviceslike managingcropdemonstrationplots,recruitment&managementofalargegroupofsmallfarmers(including managingacommercialrelationship),providingcropadvisoryservicesandcoinvestmentandmanagement ofpostharvestinfrastructure.Mostofthese Agri Entrepreneurshavebuilttheirsmallorganizationsforthe purpose that is supported by a dedicated extension team from FieldFresh Foods. As on 2010, FieldFresh Foodsworkswithover3500small(averagelandholdingoflessthan3acres)farmers,growingbabycornon nearly 4000 acres through the contract farming. Of this, more than 75% farmers are managed by Agri Entrepreneurs. Says Rakesh Bharti Mittal, Chairman, FieldFresh Foods, There is a spark in the rural areas. Farmers are already earning more with us. More and more farmers want to participate in our contract farming program. From our point of view, this could be the agriculture BPO equivalent in India. We provide a consolidation opportunity. With divisions in families, a farmer only gets to hold 23 acres of land and earns only Rs 20,000 25,000 per acre. Those who are working with us do not have to go to moneylenders and borrow money at high costs.Instead,theyimprovetheirfarmincomesbyatleast2530% Thecontractfarmingtransition Initiallytheoperationsteamattemptedseveralsourcingmodelsleasinglandandfarmingunderitscontrol andmanagement,contractfarming,sourcingthroughintermediaries.Eachmodelhaditschallenges.Success in each approach required more than disintermediation. The company had to make available human resourcesformanagingthelinksinthenetwork. Incaseofleasedfarming,staffwasdeployedtomanagethefarms.Teamswouldshowupatappointedtimes andleavewhenthedaywasdone.Theplantwouldcontinuetogrowandwouldrequirenourishmentorcare; however, the farm employees had long gone home for the day! By the time we discovered the difference betweenanownermanagedfarmandcompanymanagedfarmweweremanagingover4000acresofland!says RPSDhaliwal. Besides managing the perishability of the crop, traceability is a crucial requirement for ensuring quality supplies.Workingwithintermediaries,whoserolewasaggregation,werantheriskofnotknowingthelevel of compliance to the standards of quality and of pesticide usage. Further, batch control, a key piece of identifyingtraceability,wasnoteasytoenforcewithintermediaries. By 2007, FieldFresh decided to focus on three golden rules for successful export business model in the horticulturesector:(1)ensureconsistencyofqualityandquantityinsupply(2)demonstratetraceabilityof productsand(3)abilitytoadaptsupplychainlogisticstothebusinessenvironmentoneoperatesin.Since majorityofthefarmersinIndiaaresmallandmarginal,motivatingthemtodiversify,assuringthemoftimely

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paymentsandregularofftakerequiredtremendouseffort.Asaresult,FieldFreshtookaconsciousdecision to focus on single product for initial years and debug the entire value chain. The idea was to sort out one scalableandprofitableproductvaluechainatatimeandsothestrategywastodevelopawelloiledsupply chainforbabycornwithwhichonecancompetewellininternationalmarkets. TodaythecompanyproducesequalvolumesofproductfromPunjabandMaharashtra.Theoperatingmodels are different in both the locations. In Punjab the company has a direct commercial relation with over 200 farmers, whereas, in Maharashtra, the company is engaged with over 3500 farmers through Agri entrepreneurs.EachAgrientrepreneurmanages400700farmers. TheFieldFreshteamadaptedtheirentirelogisticstocrowdedandcrumblingroads,irregularpowersupply andbureaucraticprocedures.Theyworkedinanextremelycoordinatedmannerandby2009hadperfecteda modern,efficientsupplychainnetworkofbabycornintwoentirelydifferentagroclimaticzonesofPunjab andMaharashtra.AlotofstrenuouseffortwasputinbyextensionteamatACELudhianaandMaharashtraat thefieldleveltodeveloplinkageswithfarmers,especiallyingainingthetrustofthefarmersandtomotivate them to work with the supermarket. Because of sustained and meticulous hard work put in, onthejob learning not only from successes but also from failures, the FieldFresh team, as of 2010, has been able to design an efficient supply chain for baby corn across Punjab and Maharashtra at all levels input delivery, credit,irrigation,timelyscientificadvice,productionasperspecificationsofexportmarketofEurope,careful harvesting, improved procurement, produce handling, cooling and packing facility, clean and fast transportation, careful handling, proper management of cold chain storage environment temperature, relative humidity, ventilation and sanitation, better and efficient processing and marketing techniques, grading, packaging and labeling as per domestic and international standards, and also efficient and competitiveretailing. Todiversifyornot While India can grow everything that Europe can consume, there are many obstacles and bottlenecks in linkingtheIndianfarmerstoEuropeanmarkets.WhenonegrowsonewintercropinPunjab,theverysame vegetablehastobegrowninthesouthaswellaswesternandeasternpartsofthecountrydependingonthe different climatic conditions. However, in Kenya andAustraliathey growthe same vegetablefor 52 weeks. Everyweektheysowaseedandeveryweektheyharvestthecrop.Indiadoesntenjoythesameluxuryinone location due to its widely dispersed agroclimatic zones. As a consequence, the teams need to be on the continuous lookout for new growing areas and also in identifying new farming relationships that can be nourishedoveraperiodoftime.Further,thereisaconstantneedtoseeknewlogisticssourcestobeableto maintaintheefficiencyofthesupplychain. Indiagrowsover35fruitsand70vegetableswiththeirmorethan200variants.Peopleindifferentstatesand regionshavedifferentlocalpreferencesintermsofcolor,shapeandsizeforthesamefruitorvegetable.For example,peopleincertaingeographicalareaspreferlong,violetbrinjalswhereaspeopleinotherareasprefer whitishgreen,roundones.Ifoneanalysestheconsumptionpatternoffruitandvegetables,itcanbeinferred thatfirstfivevegetablescomprisealmost60%ofallvegetablesandfirstfivefruitscomprisealmost75%of thetotalconsumptionoftheallfruitsinIndia. AninhousestudydonebyFieldFreshrevealedthatabasketoftop25freshproducecomprisingof7fruits& 18vegetablesthatareproducedandsoldinIndiacontributetoalmost80%oftherevenueand90%ofthe volumes.Outofthese18productsareavailableroundtheyearfromsomeagroclimaticzoneortheotherand restofthe7productsareavailableonlyforfourtotenmonths.Moreover,afreshfruitorvegetablethatis consumed the highest may not necessarily be the biggest contributor in terms of revenue or individual margins (Exhibit 21 and 22).Fore.g.Potato,tomato,onionandcauliflowerwerefoundtobehighvolumebut lowmarginitemswhereascoriander,garlic,gingerandgreenchilieswerefoundtobelowvolumebuthigh marginitems. Developing farmer linkages is relatively easier for those firms that have been involved with farmers over time, either through input supply or other means but Bharti had never been into agribusiness before. FieldFreshcoordinatedwithfarmersovercropselectionandtimingofcropping,whatagriinputslikeseeds, fertilizers and pesticides to apply in what quantities and when, provided timely advice on scientific

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agricultural practices to follow and postharvest management. They developed infrastructure for packing, grading, storage, transportation at their collection centers. These longterm trustworthy relationships that werebuiltandnurturedwithfarmersensuredtherewasaminimumbreachofcontractsevenwhenprices were high in the open market. A process driven approach with measurable outcomes has brought about higherlevelofcertaintyinthesupplychain. JointventurewithDelMontePacificLimited In late 2007, Rothschilds ELRo holdings divested majority of its equity in FieldFresh Foods to Del Monte PacificLtd,thatisaleadingproducer&marketerofpremiumfoodandbeverageproductsinthePhilippines havingtheworldslargestfullyintegratedpineappleoperations.DelMonteisexpectedtobringtoFieldFresh, its immense strength and experience in the area of processing branded food and beverage products. This newlyaddedfocusofFieldFreshreflectedthechangingretailenvironmentandmovefromjustfreshproduce to food and beverage processing as well. Given the growing opportunities in the domestic economy, FieldFresh wanted to enhance its focus through valueadded products in the domestic market, including developmentofacomprehensivestrategytoservethemarketsbusinesstobusiness(B2B)segment. Thefuture WhatcommencedasavisionofLinkingIndianFieldstotheWorldhasindeedbecomearealityforFieldFresh Foods.Fromgroundzero,FieldFreshhasinashortperiodoftimedevelopedasupplychainthatcanproduce andsupplythehighestqualitybabycornneededfortheUKmarketfromtwoprogressiveagriculturalbeltsof India viz., Punjab and Maharashtra. Given the poor state of Indias logistics, this was not an easy task. Cobbling together an integrated supply chain and linking it toan export market, in acost effective manner required considerable ingenuity to find the right mix of technology and manual inputs in farming and processing, the right levels of insourcing and outsourcing at different stages of the supply chain. The successful partnership between farmers and the company has demonstrated that indeed both the farming communityandthecorporatesectorcangainbyworkingtogetherandthatmoreandmorefarmerscanbe broughtintothefoldasthescaleofthebusinessincreasesmultifoldinthecomingyears.Liketheysaythe proof of the pudding is in the eating for both the farmers who have evidenced reliability & profitability along with trust & transparency in this relationship as well as for FieldFresh that sees a solid and scalable longtermpartnershipbuildingupwiththefarmingcommunity. FieldFresh Foods is hungry for growth, but chastised by initial failures, the management team is keen on building a longterm sustainable model based on experimentation. Managers at FieldFresh Foods are tremendouslyexcitedbytheprospectoflongtermgrowth,onaplatformoflearningbuiltonunderstanding thechallengesofsucceedinginagribusiness.In2010,FieldFreshwantstoexportover1,000metrictonsof babycorntothemostcompetitive,demandingandqualityconsciousmarketsinEurope.Theyalsowantto expandthenumberoffarmerpartnerstoover5,000fromtodays3500. ThemanagementandexecutionteamatFieldFresharejustifiablyproudoftheiraccomplishmentsthusfaron the ground. But the board that has gently nurtured the company to find its feet and patiently allowed the managementteamtorefinetheirbusinessmodel,isnowlookingforgrowthinlinewiththeirinitialvision. WiththeFieldFreshmanagementteamconfidentinitsabilitytoscaleupthebusinessmodeltodeliverhigh rates of growth, Sanjay is pondering about the choices he needs to make as he outlines his strategy to the boardtodelivertheexpectedgrowth. 1. Should FieldFresh grow opportunistically into different foreign markets as retailers and wholesalers demanddifferentproductsfortheirrespectivemarkets? 2. ShouldFieldFreshcontinuetoremainfocusedonbabycorn,whosesupplychainmarketlinkagesthey haveperfectedorexpandtherangeofproductstheywillsupply? 3. Should FieldFresh continue to maintain its primary export focus or shift relative emphasis to the growingdomesticmarket?

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References AgriMarketingSummit,ConfederationofIndianIndustries,Delhi2009. Blatt,Harvey(2008).AmericasFoodbyTechnopakAdvisors. Cadilhon, J., Fearne A.P., Moustier P. & Poole N.D. (2003), Changes in the organization of food marketingsystemsinSouthEastAsia:apreliminaryassessment.ImperialCollege,UK Coulter,Hugh(2004).WholesaleMarketManagementManualSupportforAgriculturalProducers SupporttotheVerticalStructureofMarket.EuropeanUnion,April2004. Dagar,ShaliniS.2007.Agriculture'sSecondWindby,BusinessToday,May20thedition. IndianHorticultureDatabase2009publishedbyMinistryofAgriculture,GovernmentofIndia,85, InstitutionalArea,Sector18,Gurgaon122015.Website:www.nhb.gov.in Kumar, Praduman and Surabhi Mittal (2003). Crop Diversification in India: Analysis by State and Farm Size Group. Agricultural Situation in India. Special Number, August 2003. Directorate of EconomicsandStatistics,MinistryofAgriculture,GovernmentofIndia,pp273280 Kumar, Sant, P.K. Joshi and Suresh Pal (2004). Impact of Vegetable Research in India. NCAP WorkshopProceedingsNo.13.PublishedbyNationalCentreforAgriculturalEconomicsandPolicy Research,ICAR,India. Louw, Andr; Mariette Geyser, Hilton Madevu & Leah Ndanga. 2005. Global trends in Fresh Produce Markets, Part of the NAMC Section 7 Section Committee Investigation on Fresh Produce MarketinginSouthAfrica. Mittal,Surbhi,2007:WorkingPaperno197,ICRIER,CanHorticulturebeaSuccessStoryforIndia? Pandey,MukeshandTewari,Deepali(2010),TheAgribusinessBook:Amarketing&valuechain perspective,ibdcpublishers,Lucknow,India. Rademeyer J.G.H (2006). Global Trends: Fresh Produce Markets. Impact Marketing Solutions for FreshProduceMarkets,Munster,SouthAfrica Singh. H.P., Negi, J.P. & Samuel J.C. (eds). 2002. Approaches for sustainable development of horticulture.DAC,MOA.NewDelhi.

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