Supply Chain Management of Fruits and Vegetables

Topics: Retailing, Supply chain management, Shopping mall Pages: 8 (2485 words) Published: November 28, 2008
Supply Chain Management of Fruits and Vegetables - A Case Study N T Sudarshan Naidu

India is witnessing rapid changes in retailing with urbanization, increase in disposable income, changing lifestyle, preferences and eating habits of its population. India with diverse agro-climatic conditions offers both opportunities and challenges in retailing of fruits and vegetables. Concentration of production with small and medium farmers in remote areas without proper infrastructure facilities and market linkages has led to large scale inefficiencies in supply chain. Namdhari’s Fresh has successfully overcome the challenges by producing fruits and vegetables on their own farms under different agro-climatic conditions apart from contract farming arrangements with more than 2000 farms and investing both in back and front end of supply chain. They have leveraged the competitive advantage of seeds, network of farmers and experience in agriculture technology of its mother company Namdhari Seeds. They deliver the quality fruits and vegetables with optimum freshness by uninterrupted cold chain network right from harvest till it reaches consumers. They supply the produce to their retail outlets, hotels, and also to other retailers apart from export. Key words: Retailing, supply chain, fruits and vegetables, contract farming

India is witnessing rapid changes in retailing of fruits and vegetables with booming economy, increase in disposable income, changing lifestyle, preferences and eating habits of its population, increase in number of nuclear families and working women and increased competition with entry of many players (Kumar, 2004; Rajadhyaksha, 2006; Anonymous, 2006; Sinha, 2007). Domestic market for both traditional and exotic fruits and vegetables is increasing in the context of rapid urbanisation and changing dietary preferences (Deshingkar et al, 2003). On an average Indians are spending more than fifty percent of their income on food items (Kumar, 2004; Rajadhyaksha, 2006). Now they spend more on fruits and vegetables than cereals and bread. Consumer spending in India on fruits and vegetables has increased from 15 to 25 % between 1993-94 and 2003-04 (Rajadhyaksha, 2006). These changes offer huge opportunities for the firms involved in retailing of fruits and vegetables. But, they also have to face challenges which are specific to agriculture sector in India. We are second largest producers of fruits and vegetables with 52.8 million tonnes and 108.2 million tonnes, respectively, in 2005-06 (Department of Agriculture and cooperation, 2007). This large production doesn’t mean that the firms can easily procure and supply to consumers. This is the biggest challenge they have to overcome in the present competition to offer the fresh and quality produce to consumers at competitive price. The agriculture related supply chain segment suffers from maximum inefficiency with cumulative wastage of $11 billion or 9.8% of agriculture component of GDP (Ahya, 2006). The investment of retailers is high into front end compared to back end and supply chain. The wastage is due to poor handling, lack of availability of refrigerated vehicles for transportation, poor packaging, multiple points of manual handling of produce, geographical distribution of farms, information asymmetry between producers and consumers and poor road network.

Namdhari’s Fresh has overcome these challenges by investing in production, procurement and cold chain of fruits and vegetables and reaping the benefits offered by booming economy and modern consumerism. Namdhari’s Fresh

Namdhari’s Fresh is a unit of Namdhari Seeds started in Bangalore in 2000. The parent company Namdhari Seeds was founded in 1985 by Sri. Thakur Uday Singh ji on the inspiration and guidance of His Holiness Sri. Satguru Jagjit Singhji. Namdhari Seeds is one of the leading seed producers, distributors and exporter in India. They export vegetable and flower seeds to Europe,...

References: Agricultural Statistics at a glance 2006. (2007). Department of Agriculture and cooperation. Retrieved June 6, 2007, from
Ahya, C. (2006). The retail supply chain revolution. The Economic Times dated December 7, 2006.
Anonymous, (2006). In T. Joseph (Eds), Businessworld The Marketing Whitebook 2006. New Delhi: ABP Pvt Ltd.
Deshingkar, P., Kulkarni, U., Rao, L., & Rao, S. (2003). Changing food systems in India: Resource sharing and marketing arrangements for vegetable production in Andhra Pradesh. Developmental Policy Review, 21, 627-639.
Kumar, M. (2004). Food retailing-yet to organize. Agriculture Today, 7 (3), 38-39.
Rajadhyaksha, N. (2006). A change in consumption. In T. Joseph (Eds), Businessworld The Marketing Whitebook 2006. New Delhi: ABP Pvt Ltd.
Sinha, P. K, & Kar, S.K. (2007). An insight into the growth of new retail formats in India. Working paper, IIM Ahmedabad.
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