Can an FMCG model supply change India's fruits and veggies market? A startup is experimenting
During 2014-15 India produced 86.602 million metric tonnes of fruits and 169.478 million metric tonnes of vegetables
India's diverse climate ensures availability of all varieties of fresh fruits & vegetables. It ranks second in fruits and vegetables production in the world, after China. Yet, 99 percent of fruits & vegetables are sold loose, on pushcarts, on footpaths or in mandis (rural markets). This is where Pravesh Sharma and his start-up venture Sabziwala step in. The model links farmers to consumers. So, the products are sourced from farmers, brought in trucks to a 15,000 sq ft distribution centre in Dwarka, Delhi-Gurgaon border, then packaged (with minimum handling) and delivered to grocery stores. Currently, the tin-roofed centre that resembles an industrial warehouse receives 15 to 20 tonne of fresh produce a day from Assam, Nashik, and Uttarakhand, and farms surrounding Delhi.
“We strive to eliminate stages where quality and value is lost and ensure that ultimately farmers get 20 percent of the consumer price and consumers get relief from uneven quality and wildly fluctuating prices. So, the packaged fruits and vegetables will be akin to a brand of toothpaste or cola or bread, and consumers can be sure of quality and taste and pick them up in a packaged form,” says Sharma, who voluntarily retired from the IAS in January 2016 after a career spanning 34 years and served for five years as Managing Director of the Small Farmers’ Agribusiness Consortium (2010-15), Ministry of Agriculture, Government of India, and undertook a successful national campaign to mobilise farmers into producer organisations (FPOs) to integrate smallholders in the value chain.
He is single-handedly lending an FMCG revolution in the Indian fresh produce sector through his start-up venture called Sabziwala. Why is this necessary? In 2007, the Food and Agriculture Organisations of the United Nations ranked India the lowest consumer of meat in the world (3.2 kg per person per year, about 120 kg less than the US).
With the vast on-ground experience he has, Sharma points out that e-commerce or online supermarkets aren’t an effective way of organising India’s fruits and vegetable (f&v) sector. None of the apps like Grofers or BigBasket buy directly from farmers. Sharma’s Sabziwala doesn’t take app or online based orders. Instead, it physically handles commodities. “We supply 50 percent of Grofers backend and about 20 to 30 percent of BigBasket backend, so they can fulfil the retail orders they receive on their apps. It’s the norm worldwide that consumers want to touch and feel fresh produce before buying. India is the world’s largest consumer of fresh produce and there’s more pressure on us to create a system that’s more efficient,” he says. PepperTap, a grocery delivery service start-up, for instance, raised $40 million and burnt through it in a year, because the clientele is niche. The network on ground is a robust one and that, in Sharma’s opening must be exploited to develop a framework for f&v. “Every kirana store has a fridge. If they can sell curd and milk, then why not f&v?” he asks. At currently we supply to 150 grocery stores in Delhi NCR and hope to scale up and reach other metros and set up cold storage chains for fruits like apple and mango.
Even Mother Dairy’s f&v brand Safal (which has robust procurement network spanning across 20 states including North East with nearly 8,000 farmers associated with it) after 30 years, has a daily business of only 300 tonnes in Delhi, a state with a daily market of 8,000-9,000 tonnes; the government cannot do large scale commercial work, he feels. The private sector, he adds, has delivered very good solutions on the staple side, big companies have done things with oil seeds, cereals, rice, pulses and edible oil and made innovations in rice and pulses but not in f&v. “I have spent more than half my career in agriculture. In India, value is lost in the marketing chain and not in the production chain, because farmers are efficient but can’t control market linkages beyond their farms,” explains Sharma.
Sharma says that within a year of operations, he has managed to offer the peasants who supply f&v to him an increase in profits from 20 to 30 percent.
Firstpost spoke to two farmers he sources from to assess the situation in the field. Dinesh Jagdale from Nashik supplies onion to Sabziwala. “If we sell on APMC portals, we are making ourselves vulnerable to excessive price fluctuations. For instance, the price goes from Rs 8 to Rs 14 for a kilo of onion. Simply guaranteeing that our products will be bought is not good enough if we are exposed to price fluctuations of 10 to 15 percent,” he says that the brand has increased his profits by 10 percent. Pinky from Assam supplies a less-fibrous variety to him, she feels unlike online ventures that order small amounts only for niche urban markets, Sabziwala gives her a larger platform to showcase her produce. “Farmers love to improve the quality of their produce if they find a market that values it. The north east has the purest kind of ginger and through the Sabziwala platform, we are being able to brand it well. We hope people in north India develop a taste for it,” she shares.
Going forward, Sharma says that the biggest flattery will be if clones pop up. “The total production of fruits and vegetables in this country is 28 million tonnes and the market is waiting with open arms for innovators.” And it is possible. “The milk you have in the morning might have poured by a woman in Gujarat the previous day. If 30 percent of the milk can be packaged, why can’t we adopt the same model for f&v?” he asks.
As per National Horticulture Database published by National Horticulture Board, during 2014-15 India produced 86.602 million metric tonnes of fruits and 169.478 million metric tonnes of vegetables. The area under cultivation of fruits stood at 6.110 million hectares while vegetables were cultivated at 9.542 million hectares. India is the largest producer of ginger and okra amongst vegetables and ranks second in production of potatoes, onions, cauliflowers, brinjal, cabbages, etc. Amongst fruits, the country ranks first in production of bananas (22.94 percent), papayas (44.03 percent) and mangoes (including mangosteen and guava) (37.57 percent). The vast production base offers India tremendous opportunities for export. During 2015-16, India exported fruits and vegetables worth Rs 8,391.41 crores. The major destinations for Indian fruits and vegetables are the UAE, Bangladesh, Malaysia, Netherland, Sri Lanka, Nepal, UK, Saudi Arabia, Pakistan and Qatar. However, India's share in the global market is still nearly 1 percent only. This can change if the fresh produce sector catches the attention of policy makers and entrepreneurs and organises itself efficiently.