Monday, April 29, 2013

On the anvil : Indian food chain transformation

I came across this article while researching cold storage in our area. While not directly related to my initial objective, this article was an interesting read and I wanted to share this with the community. It's a long but easy read on how our changing lifestyle preferences, passive govt. policies and developing retail sector are making a downstream impact on the farming sector. After all, we know it pays to be at the right place at the right time :)

Ajit Sable's family have owned their farm in India's western Maharashtra state for 10 generations, which even for a region that has been farming for more than 10,000 years is long enough to witness plenty of changes. Two generations back, they started cultivating sugar cane here in Shivthar, a village in Maharashtra's highlands near the Krishna river. India's most industrialized state soon became its largest sugar producer. Today, it's not sugar the 35-year-old Sable is talking about. He is discussing peppers, which he is now growing under polythene plastic coverings. Like an increasing number of farmers in India, Sable is exploiting a shift in taste towards fruits and vegetables among Indians.

Rising Middle Class
Thsese shifts have been under way for years but are accelerating with rapid urbanisation and the expansion of India's middle class. Take Avantika Singh, for example. A consultant in the hotel industry, she lives in an apartment block in Delhi with her husband Sanjay, a television producer, and their 7-year-old daughter. The Singhs are still fond of traditional Indian food such as idlis, southern style rice pancakes served with spicy sauce, and parathas, wheat flatbreads cooked with oil or ghee.But on this day Avantika, 41, is cooking pasta with fresh peppers. As a working person, I look at whatever is easy to do and nothing too elaborate, she says. When you make idlis it's a whole day, day-and-a-half procedure. I don't have that kind of time.

Middle class households are expected to grow 67 per cent in the next five years, bringing over 53 million households into an annual income bracket between 340,000 and 1.7 million rupees ($7,600-38,000). Bijay Kumar, managing director of the National Horticulture Board, says having more money than your parents is pushing up demand for high-protein foods.

Food Security
While the farm sector is slowly diversifying, it is a declining contributor to growth, despite providing a living to more than half the country's workforce. About 600 million Indians are dependent on farming-- half the population of 1.2 billion. Farmers are finding it ever more difficult to make ends meet.

The introduction of high-yielding seed varieties and increased use of fertilisers and irrigation spawned the Green Revolution in the 1960s that allowed India to become self-sufficient in grains. But experts say agriculture innovation and efficiency has stalled in recent years and farmers are getting squeezed by rising costs and inefficient agronomy.Increasingly, voices in government and among experts are calling for a different approach, one that curbs subsidy spending, tackles inflation and boosts agricultural production of higher-value foods.

Cut Safety Nets
Ashok Gulati is a recent recruit to the government's inner circle from the world of research. He says too much money is going into safety nets such as subsidies and minimum wages when the government should be investing more to boost agricultural growth and innovation. India's agriculture ministry planned to invest about $4.8 billion in 2011-12. I would say you should have 70 per cent of resources for growth and 30 per cent for welfare objectives, but it's the other way around, Gulati says.

The World Bank has criticised the subsidies as highly inefficient. But they have powerful political supporters, especially Sonia Gandhi, president of the ruling Congress Party, whose vote bank has long been in rural areas. Gulati also favours modernising distribution networks. Supply chains should be shortened, by making it easier for retailers and food processors to buy direct from farmers.

Cold Storage
About 30 per cent of fruit and vegetable production goes to waste in India. Summer temperatures which regularly top 40 degrees Celsius (104 F) also mean fruit stored without chilling can ripen overnight. Temperature-controlled warehouses are sprouting up across India but are mostly small-scale private enterprises.

The National Horticulture Board says wastage can be trimmed by increasing the amount of cold storage facilities available. We also need good infrastructure to collect and aggregate farm goods produced in remote areas, he said. Without robust storage, they need to be delivered to consumers as early as possible. In the last four to five years, demand for fruit has risen by 25-30 per cent. Producers can also focus on production if they have ability to process fruits or sell direct to supermarkets.

Supermarket Supply Chains
Indians are increasingly heading to air-conditioned stores, where aisles are packed with choice produce instead of the tiny mom-n-pop stores where items are lifted off dusty shelves offering just one or two brands of essential groceries. Players like Big Bazaar leverage their size and presence across India to buy from both big distributors and local suppliers.

Big Bazaar is one such player but the market is so huge that it can absorb many more (retail) brands.The supply chain and cold storage are also getting developed, so I think for the country, food business is a big bet. India's supply chains are fragmented and often involve several layers of middlemen between tractor and table.

In conclusion, it remains a Catch 22 situation, at least for now. Our road systems are still clogged and underdeveloped in key agricultural belts. Railway freight turnaround times are slow with limited availability of refrigerated freight vans. Cold storage of about 24 million tonnes is woefully inadequate for the world's second-biggest producer of fruit and vegetables. All of this means availability of fresh produce is highly regionalised. At the farms, producers want to sell to retail food chains because they offer higher prices, but it's hard to deal with them directly.Often, it's not worth the trouble and producers sell to wholesalers. They buy from the farm gate and pay lower rates but it eliminates the risk of transportation delays and wastage.

Credits : Complete and original article is available at Indian Express or Reuters.

Monday, April 22, 2013

Reaching up : Vertical Cultivation

During my recent travels, I got a chance to attend an Agri Trade Show in Atlanta. It was time well spent given the exposure and new ideas that I came away with. Need less to say, I have become a proponent of organized trade shows and symposiums.

In this post, I wanted to share a concept I was particularly interested in. The more I thought about it, my interest deepened beyond just the 'cool-factor'. Here is why I think this is especially interesting in the Indian landscape :
  • Tightening supply of high quality land and meteoric rise in land cost.
  • Increasing cost of logistics and inadequate transport infrastructure in remote agricultural belts.
  • Growing interest in farm-to-table produce in urban eateries.
  • Increase in awareness and consumption about fresh greens and salads.
  • Rapid rise in inflationary trends for food prices.
None of the above parameters are necessarily new or recent discoveries. With that said, there are very few agriculture practices which counter all of the above simultaneously. It's now been a while since Hydroponics has been touted as a method to achieve scale of production with greater predictability. Alterrus is a Canadian company which has taken Hydroponics to the next level. Their vertical growing systems for urban locations were impressive and seemed to achieve serious production volumes with manageable investment.

Urban farming is not a breakthrough but certainly a disruptive approach. Companies like Alterrus continue to develop compact, efficient and highly optimized solutions which often focus to serve the local needs. The vertical system allows the operation to occur at an urban location and produce considerable volumes which is the key to profitability. The big elephant in the room is : Cost. Given the Indian agri-trading landscape, my personal opinion is that such a venture may turn out to be challenging for an individual investor or producer. A group of integrated investors (producer > processor > consumer) should find this an attractive venture.

Investors, food processors, retailers or similar businesses who would like to pilot this concept in Chennai, please feel free to drop us a line. In the meanwhile, here are a few more inspirational winds of change that are blowing from the West :

Monday, April 15, 2013

Melia Dubia Consortium - Invitation to Participate

In the last few years, there has been a lot of interest exhibited in the cultivation of Melia Dubia as a biomass / timber crop. The interest has been primarily generated in the southern Indian states of Karnataka, Andhra Pradesh and Tamil Nadu due to favorable climatic conditions. As always, we are glad to respond to scores of inquires regarding cultivation and commercial prospects of Melia Dubia as an investment venture.

While there are small pockets of cultivation spread across the region, there is no organized effort in promoting the product to the best of our knowledge. We feel it would be helpful for like-minded agri-prenuers to form a group to periodically meet, brainstorm ideas about cultivation, marketing and creating awareness about this crop in the timber industry.

While the earlier cultivators of Melia Dubia broke ground about 3-5 years ago, I think this is the right time to collectively organize thoughts and efforts. Immediate and longer term benefits would be :
  • To spread awareness among agri-prenuers of the potential of this timber.
  • To educate cultivators of cultivation practices.
  • To develop marketing approaches and connect producers with consumers.
  • To bypass brokers and engage end-customers as a consortium with supply-side leverage.
  • To investigate additional revenue streams for Melia Dubia consumption.
As part of initial pulse-check, I would be interested to see how many folks are interested and have the ability to actively participate. Please take the poll on the right panel to express your current interest. I anticipate initial discussions to be conference calls and later move into physical meetings. Don't forget to drop us a note ( with your contact details so we may reach out to you.

For your reading pleasure, feel free to peruse through these online resources on Melia Dubia :
April 28 Update : The polling tool mentioned above was standard issue from Google (Blogger) but did not work as expected and was removed. However, we have heard from a few participants already, please continue to reach out to us via email and we'll be sure to include you when the initial consortium discussions are organized.

Monday, April 8, 2013

Savera Farms featured on Melia Dubia

Many of our readers subscribe to, which hosts a popular forum on Indian agriculture industry. The site also publishes a monthly journal which highlights current topics, concerns and provides insights from industry practitioners. Savera Farm was featured during their coverage of Melia Dubia. Hopefully, some of you got to read it and found it helpful. It was a blast responding to the interview. Till date, we have not had a chance to meet a lot of other progressive agri practitioners. If a meeting is organized in Chennai or Madurai, we look forward to meeting our peers and exchanging notes.

Click to access magazine (Browse over to Page 22)

Above, I have also included a link to access the magazine. Savera Farms was featured in the January 2013 issue. Additional posts on earlier media coverage can be accessed under the label 'In the News'.