Milk giant Mother Dairy has a cautious view on the impact of the entry of foreign players into the multi-brand retail sector in India. “Foreign direct investment (FDI) in retail will best be understood when we start to hear or see of the individual plans of the retail companies,” says an official statement.
In this regard, the foreign players may well be following the lead of companies such as Mother Dairy Fruit & Vegetable Pvt Ltd, the horticulture division of Mother Dairy, in the arena.
Pradipta Sahoo, the Business Head of Mother Dairy Fruit & Vegetable Pvt Ltd, the horticulture division of the firm, says his company pioneered initiatives to establish direct market linkages for farmers, set up cold storage capacities and reduced food wastage in the country, though the proponents of FDI in multi-brand retail have argued this can only be achieved by foreign MNCs.
“We understand farmers can be helped and given a direct value proposition if you establish a market linkage. No matter what you tell farmers in terms of improving technology or agricultural practices, he’ll go for it. But at the end of the day, if he doesn’t find a ready market where he can sell the produce and get a reasonable return for the investment he has made, that proposition is useless,” he says.
“The engagement with farmers so far has a direct market linkage, buying from the farmers, giving them more than the market price. That is how we have been associated with the farmers… We don’t involve any intermediaries, but having said that, our market share in the whole system is very little ,” he adds, explaining that the share of organised retail in the fruits and vegetable market in India is less than 1 per cent.
Food wastage
With respect to measures for reducing food wastage, Sahoo asserts, “We put our collection centres right at the farm level. We pick it up using crates. In the general supply system, people usually sell them using jute sacks. But we deploy lakhs of crates and we have developed and promoted a concept of giving pre-ripened fruits to consumers that can be ripened at home. So you get products that are safe, because there is none of the carbide ripening that is rampant in the rest of the market. In the process, we mitigate and almost eliminate the wastage and ensure food safety.”
What is more, “We have got our own captive cold stores in areas where we operate and in case we run short, we hire cold stores. For example, we store about 10,000 tonnes of potatoes every year in cold stores. For apples, we use cryo-cold stores, where temperatures are controlled, so the life is maintained.”
Frozen vegetables
He points out that Mother Dairy is the market leader in the frozen vegetables business, with products such as green peas, American sweet corn, cauliflower and other products enjoying a market share of about 40 per cent.
“This is a concept that Mother Dairy pioneered in the country to increase the shelf-life of an otherwise perishable product to 18 months. We embarked on an aggressive campaign to promote the concept. Since then, the industry has evolved, but it was primarily Mother Dairy that developed the concept and promoted it both on the consumer and farmer side,” he says.
But there is scope for more participation in these activities, acknowledges Sahoo.
“Whatever we have as of today is very little looking at the kind of size and fruits and vegetables we are producing. We produce almost 210 million tonnes of fruits and vegetables put together and the cold stores use is skewed toward potatoes.”
At the same time, Sahoo contests the estimate that about 30-40 per cent of India’s food output goes waste. “The wastage we are talking about in India of about 30 per cent is mainly the perception of people at a certain strata. Whatever you see as wastage, you will find some consumer to take it... Agricultural scientists and economists really need to ascertain how much the actual wastage is. We need to aggregate the figure and say, this is the actual wastage,” he says.
“All the wastage does not go into the segment that can be called an economic loss,” adds Sahoo.