Page 264 - DMGT509_RURAL MARKETING

Unit 14: Corporate Sector in Agri-Business

14.4 Selected Case Studies Notes

The corporate sectors in agribusiness are in different activities from cultivation, processing to
retailing. The initiatives of the corporate world in the field of agribusiness are described below.

Pepsi

PepsiCo was a pioneer in the concept of contract farming under which the company transfers
agricultural best practices and technology and procures the produce at a guaranteed price. To
support the initiative, PepsiCo set up a 27-acre research and demonstration farm in Punjab to
conduct farm trials of new varieties of tomato, potato and other crops. The PepsiCo model of
contract farming, measured in terms of new options for farmers, productivity increases, and the
introduction of modern technology, has been an unparalleled success. The company focused on
developing region- and desired produce-specific research, and extensive extension services. It
was thus successful in bringing about a drastic change in the Punjab farmers’ production system
towards its objective of ensuring supply of right produce at the right time in required quantities
to its processing plant. Encouraged by the sweeping success of contract farming in tomato in
several districts of Punjab, PepsiCo has been successfully emulating the model in food grains
(Basmati rice), spices (chillies) and oilseeds (groundnut) as well, apart from other vegetable
crops like potato. During 2002-03 crop year, farmers from Jalandhar, Amritsar, Hoshiarpur and
Sangrur districts of Punjab, and parts of Western Uttar Pradesh were contracted for Basmati rice
cultivation. The season’s acreage for the crop stood at 800 hectares .The company has partnered
with more than 10,000 farmers working in over 10,000 acres across Punjab, U.P., Karnataka,
Jharkand West Bengal, Kashmir and Maharashtra for the supply of potatoes. PepsiCo India has
also partnered with 1,200 farmers in Rajasthan to cultivate barley in a tie up with the United
Breweries Group.
Bharti

Indian telecom giant Bharti, has moved into the global fruit and vegetable market through a
joint venture with a unit of UK finance group Rothschild. Field fresh foods incorporated in
September 2004, is an equal partnership joint venture between Bharati enterprises, and ELRo
Holdings India ltd, an investment company of the Rothschild family. The business model is to
link Indian fields to the world market, by providing quality fresh produce to the markets world
wide through contract farming. It is leasing large tracts of land in Punjab and Rajasthan and has
developed an arrangement with a group of farmers in Uttaranchal as well. FieldFresh has 78
farms with 4,200 acres on lease in Punjab producing Beans, snow peas, carrots, okra, baby corn
and other vegetables for export to Europe and the Middle East. The leased arrangement is
increasing the income of farmers significantly. The lease rate in Punjab is anywhere between
12,000- 15,000 a year, which the farmer earns over and above his annual income.

Reliance

Reliance industries is one of the India’s largest industrial groups. Reliance industries got involved
in cropping and sale of medicinal and herbal plants, through its Reliance life sciences, its biotech
venture from 2001. It has developed a 200 core herbal garden in Navasari, Gujarat, where it
grows plants like aswagandha, patchouli, geranium and lemon grass. Reliance Life is extracting
aromatic oils from Patchouli, Geranium and Lemon Grass under the brand names ReliCare Pa,
ReliCare Ge and ReliCare Le respectively. The essential oils from these plants are anti-bacterial
and anti-fungal in nature. Reliance is entering food processing and export of fruits and vegetables
through contract farming and establishing chain of cold stores. These stores will be located in
Punjab.

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