Marketing

Grapes of growth: Sahyadri’s fruitful proposition

TR Vivek | Updated on June 14, 2021

Strength in numbers: Sahyadri has 10,000 member farmers in the Nashik region who collectively own about 25,000 acres and produce 1,000 tonnes of fruits and vegetables a day

Can this collective — a for-profit company owned entirely by growers — become the Amul for fruits and vegetables?

Twenty years ago, Vilas Vishnu Shinde, now 47, became obsessed about decoding his failure as a farmer. He had a master’s degree in agriculture engineering, with a gold medal to boot. He checked every box that made someone a “progressive” farmer. Shinde adopted the modern methods he had learned and diversified into selling vermicompost and growing mushrooms. Yet, the small grape farm he owned jointly with five uncles, near Nashik, never turned a profit.

Shinde’s is the story of most Indian farmers. India is a land of fragmented farm holdings with an average size of 1.1 hectares. More than 80 per cent of the farmers own even less. “The Indian agriculture ecosystem is stacked against farmers. Unless they collectivise, acquire greater bargaining power and harness economies of scale, failure would be their constant companion,” says Shinde, founder and chairman of Sahyadri Farms.

The farmer producer company (FPC), which he set up in 2010, was meant to do just that. Today, with a revenue of ₹525 crore, Sahyadri is the country’s largest FPC. A well known fresh and processed foods brand in Maharashtra, it boasts an expanding business-to-business and retail footprint. And, according to experts, it is an Amul in the making for fruits and vegetables.

 

Owned by farmers

An FPC is a for-profit company that is owned entirely by farmers and works like a cooperative society; outsiders or non-farmers cannot become shareholders. They collectively market and negotiate better prices for their output. This model forms the bedrock of the Indian government’s ambitious plans of doubling farm income and entails creating nearly 10,000 such organisations across the country. Sahyadri, the poster face of FPCs, has 10,000 farmers in the Nashik region who collectively own about 25,000 acres and produce 1,000 tonnes of fruits and vegetables a day.

Bunch up: Sahyadri farmers earned an average of ₹67 per kilo of grapes, compared to ₹35 in the wholesale mandis

 

In the initial years, Sahyadri focussed on grapes, which had a big export demand and potential for high value-addition. The company helped its member farmers not only increase yields by 25 per cent but also produce eight tonnes of export-quality grapes per acre, compared to one or two tonnes in the past. As a result, Sahyadri farmers earned an average of ₹67 per kilo compared to ₹35 in the wholesale mandis. “Farming is not a way of life or culture. It is a business where I have to compete in the global market with farmers from the US and South America. Indian farmers have two options before them: Collectivise or quit,” says Shinde.

Creating better value

In 2018, Sahyadri invested ₹300 crore to build a fruit processing plant in Nashik, to increase farmer incomes by value additions. It now sells branded jams, ketchups and juices in western India. It has set up a network of a dozen stores in Mumbai, Pune and Nashik and makes about 38,000 home deliveries a month through its e-commerce platform. “With the capacity to process 1,110 tonnes of tomatoes a day, we can guarantee our farmers a minimum price of ₹4 a kilo even when market prices crash and farmers throw their output by the roadside,” says Shinde.

Sahyadri has set up a dozen stores in Mumbai, Pune and Nashik, and makes about 38,000 home deliveries a month through its e-commerce platform

The FPC model not only helps fetch better prices, it can also lower the cost of production and increase access to credit. As a large distributor of farm inputs such as seeds and fertilisers, Sahyadri can procure them cheaper and sell at a 10 per cent discount to its farmers. It has become a channel partner for farm input conglomerates such as Bayer.

“Sahyadri is a frontrunner in introducing new colour varieties in grapes. We support Sahyadri with our global expertise in modern agronomic practices through field visits and knowledge-sharing sessions with global grape experts. Bayer and Sahyadri have jointly developed export-compliant plant protection programmes for okra and strawberries and are exploring synergies in banana and tomato,” says Simon Wiebusch, COO, Bayer Crop Science division for India, Bangladesh and Sri Lanka.

For Ranjit Kumar, the head of agri business management at ICAR’s National Academy of Agricultural Research Management in Hyderabad, who trains and mentors FPCs, Sahyadri offers a good case study.

According to Kumar, there are three things going for Sahyadri. “Shinde himself is a farmer trained in agri sciences who understands the problems and has a vision to create a completely integrated value chain for horticulture. Two, it has won the trust of farmers by offering instant benefits such as better prices. And three, it is open and collaborative... giving farmers access to every possible technology,” he says.

Sahyadri works with agritech start-ups to digitise the holding of its farmers and implement processes for traceability. Traceability — the ability to know the exact origin of a batch of produce, how it was grown and what chemicals were used in the process — is fast becoming almost mandatory, especially for exports.

“Horticulture in India has the same potential as milk. There is no reason why we can’t create an Amul for fresh fruits and vegetables,” says Shinde.

(For more on FPCs, listen to BusinessLine’s ‘Field Notes’ podcast featuring Vilas Shinde bit.ly/3gt9kJR )

Published on June 13, 2021

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