IndiaRetailBiz

No argument in favour of modern retail can ever be completed without talking about the benefits that will accrue from direct procurement of farm produce and creation of back-end infrastructure. This, experts believe, will translate into 40-odd per cent benefit to farmers and consumers. This would also result in the savings accruing from rotting of fresh products.

Most of this benefit will, however, require adoption of contract farming and elimination of multi layered middlemen system.

Although exciting, despite good intentions and obvious advantages, only a handful of retailers like Reliance, ITC, Tatas and Bharti will have the wherewithals to undertake this as most of the rest will find it extremely hard to organise a pan-India network , which besides huge investment will require manpower and other resources to carry out the activity on such a massive scale.

While, Reliance Retail has initiated ‘contract farming’ to service its ‘Fresh’ and ‘Rangers Farm‘ outlets, Bharti has ventured into ‘corporate farming’ through ‘Field Fresh,’ through its joint venture with Rothschilds. While, ITC, for several years, has been also active on rural front through ‘Chaupal Sagar’ outlets and has recently launched ‘Chaupal Fresh‘ retail chain for basically selling farm produce, Tatas are also getting into agri-retail through a joint venture with the Ireland-based ‘Total’

What then is the solution?

DCM Shriram Consolidated (DSCL), owned by Ajay and Vikram Srirams, as reported earlier, is planning to fill in the gap by stepping in as the ‘interface’ between farmers and retailers. DSCL, will leverage its network of “Hariyali Kisan Bazaar” outlets, to source ‘fresh’ (horticulture) produce as well as grains like wheat and rice from farmers and supply the same to various retail chains and mandis across the country.

While, DSCL will place contract farming orders for produce on farmers, it will invest heavily on creating back-end infrastructure as it will be required to set up an extensive network of cold chain, refrigeration, transportation and distribution centres. DSCL’s pan-India presence in rural India will help it reach a large network of farmers. DSCL will also expand its existing network of 65 Haryali outlets to 200 outlets by 2008. The “Hariyali Kisaan Bazaar” chain outlets provide comprehensive solutions to the farmers under one roof. Each “Hariyali Kisaan Bazaar” centre typically operates in a catchment of about 20 kms and caters to agricultural land of about 50000-70000 acres and impacts the life of approx. 15000 farmers. Each Haryali outlet among others tries to bridge the last mile gap for providing agriculture inputs and know-how to the farmers besides offering financial and farm output services.

DSCL is currently running a pilot project on similar lines for Kishore Biyani owned Big Bazaar (Pantaloon Retail) and S. Goenka (RPG Group) owned Spencer’s Retail.

Source: Business Standard