‘We are creating a pesticide-free category’

Metro Cash & Carry India Pvt Ltd, the largest wholesaler in the country, recently partnered with Safe Harvest Pvt Ltd, an agglomerator that works with around 50,000 farmers mainly in the South to launch pesticide-free groceries under its own brand Fine Life Bio. The marketing push given to farmers producing pesticide-free food by wholesalers like Metro will not only benefit the growers, but is also important for the consumer and environment, says Raviganesh Venkataraman, Director - Offer Management & Supply Chain at Metro Cash & Carry. We are creating a new category of ‘pesticide free’ product that’s different from the organic, Venkatraman told BusinessLine in an interview, sharing insights on Metro’s sourcing strategy in the food segment, which accounts for over half of company’s turnover in India . Excerpts.

What prompted Metro to look at this ‘pesticide-free’ segment?

Consumers these days are increasingly looking at the health angle in whatever they consume and are willing to pay a premium. When we had introduced the organic players, there was an immediate shift in the packaged commodity space from regular products to organic. The certification of organic itself is a little hazy.

What is organic is not clearly understood by the consumers. We felt we should be able to give something of good quality for the consumer — definitely grown without using any pesticides and in a sustainable manner. We were working with Safe Harvest as a brand, which was working with around 50,000 farmers sourcing around 2,700 tonnes of foodgrains per annum. We have let Safe Harvest take care of consolidating the farmers, giving them the guidelines, collecting the produce. Metro will buy it, packs it under its brand, and then sells it to the consumer. This is unique to Metro also as normally we don’t co-brand. It is the first time we have co-branded. We lead the brand because we have an umbrella brand of Fine Life Bio across the globe. Right now, bulk of Safe Harvest’s sourcing is in the South. We have introduced the products in Karnataka and Andhra Pradesh and have recently taken it to Gujarat. We plan to take it to North.

We are creating a new category of pesticide-free produce. Right now there is a regular produce and the organics. Pesticide-free produce is definitely a notch above the regular product at about 10-15 per cent premium in terms of pricing, but significantly lower than the pricing of organic products. So I am able to migrate the customers by paying a small premium. And this premium fundamentally goes back to the farmers, who will get 15 per cent higher realisation. Technically, whatever price the farmer gets at the APMC’s market yard, he will now get at his farm gate. Basically, the farmer will be saving on the transportation costs.

But will this eat into your sales of organic products?

Interestingly, the introduction of this new category has not impacted the organic sales. Organics account for 20 per cent of our packaged food sales. This has carved a new niche in between and accounts for around 15 per cent of our sales since the launch of the product two months ago. Now, about 35 per cent of our entire packaged commodity is in the space of healthy, sustainable good food and is growing at a dramatic space. Fine Life Bio will create a space which will be very exciting. We will also look at working with other partners such as farmer producer organisations in other parts of the country, who can ensure us steady supplies.

How do you ensure that the produce is pesticide free?

Both the Metro and Safe Harvest are going together to verify this right from educating the farmers on farming practices, monitoring it and testing it on all the parameters on a continuous basis to be absolutely sure that we say is what we give. Right now every batch is tested by us and certified by us. We are moving as per the USFDA guidelines and testing the products for all those pesticides. The Safe Harvest team ensures that farming practices are right. The farmers are very happy doing this and are earning 12-15 per cent more. In the long term, by following good practices the health of soil is preserved and aquifers in the area are safe. Lots of other peripheral benefits.

So, why don’t you call the produce organic?

I need to ensure that the manure the farmer is using is organic. At this point I cannot prove this and that has a cost element. Secondly, the government is pretty hazy in terms of its guideline. I would rather want to see that proper guidelines come and are beneficial to the customer. At this point this is no way inferior to organic product. It simply doesn’t carry the handicap of the costs associated with it.

Is there a concerted push to position pesticide-free groceries among your clientèle?

We sell these products to small kirana stores, which account for a major chunk of our sales, followed by HORECA (otels, restaurants and catering service providers), and large canteens. Kirana stores sell these products to their end-consumers. Based on their request, we are developing even smaller pack sizes of 200 gm. We will be extending the smaller packs to all categories, including spices. At this point in time we have 60 SKUS under the pesticide-free produce, mainly cereals and pulses. Over the next nine months we plan to have the entire range across the country.

Any plans to introduce the perishables — greens and vegetables — in this category?

We don’t have perishables. We are working on that with some other partners. We have organics in veggies to some extent. The key challenge is supply chain as it is difficult to get farmers who are able to produce the right quality consistently. If you are able to get that kind of farmers you can do wonders.

How is your current sourcing of these vegetables?

We have collection centres at the farm gate in Malur and Chickballapur where we source tomatoes and other veggies. We also buy from consolidators in Ooty the hill vegetables. We buy onions from Nashik where we have a full-fledged procurement team. Today 85 per cent of our purchases are directly from farmers. In the west, we buy from Mancher and move it to Mumbai. In Delhi, we are buying some portion from Azadpur mandi but now a lot of our sourcing is moving to Ramra, on the border between UP and Haryana, from where we also service Punjab. We are also sourcing from China and Valencia territory from where we import oranges and apples.

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