India’s rapidly growing economy and spiralling consumer spending present both huge opportunities and challenges for the fresh produce business.
While Indian consumer demands are growing and evolving, fresh fruit and vegetable suppliers and retailers are struggling to keep pace amid a range of hurdles, from small farm units through government restrictions on sourcing and selling produce to lack of infrastructure. But these challenges are no match for the market opportunities, and the sector is now making steps towards capitalising on the vast potential.
These were some of the key takeaways from Fresh Produce India, India’s only international conference and networking event for the fresh fruit and vegetable business, which offered dynamic discussion of the market developments influencing India’s fresh produce business.
Calls for government support on farm sourcing
Fresh Produce India kicked off with a focus on farm sourcing, one of the key challenges faced by both local and foreign entities in India, and Raman Ahuja of Fieldfresh Foods highlighted the need for government support to develop commercial production. The Indian market is still not really ready for a corporate player in the fresh produce arena, Mr Ahuja said, making it very difficult to break into the sector and engineer improvements.
National government policies to assist the sector must become demand- rather than supply-led, he noted. “The biggest challenge has actually been getting the government to spend the money. While there are budgetary allocations and subsidies available, there have been no real takers because the Indian government is still steeped in the supply-side challenges,” said Mr Ahuja. “Any investment in horticulture has to be consumer-led – for instance, there’s no point having a cold chain near the point of consumption if you don’t have one near the farm.”
State governments also need to reform their agriculture policies to enhance interaction between the corporate and the farmer, Mr Ahuja added.
The current sourcing challenges are not insurmountable, but success begins with building strong relationships with farmers based on trust and education, a point underlined by Björn Witte, CEO of Desai Fruits and Vegetables, which is aiming to ramp up its banana production to 300,000 tonnes by 2015. “Education of farmers, volume aggregation and supply chain excellence are all key to tackling the sourcing challenge,” he told delegates.
Organised retail on steep learning curve
At the other end of the chain, India’s organised food retail sector has so far struggled to make an impression on the fresh produce market, delegates heard in a session led by Arvind Singhal of Technopak Advisors. Even with the major impetus set to come over the next five years from global and domestic players stepping up their operations, he forecast that modern retail’s share of total consumer spending would remain below 15 per cent, with its share of fresh produce sales languishing much lower. Indeed, with modern retail not developing fast enough to keep pace with consumption, traditional retail formats like mom and pop stores are likely to see significant growth in the near future, Mr Singhal predicted.
While high real estate prices and a fragmented supply chain have encumbered retailers’ efforts, a failure to market their produce effectively to consumers was identified as a key stumbling block to date. Success relies on having the right people to manage their fresh produce sections, according to K Radhakrishan of Future Fresh Foods, who said his ideal was to “combine the infrastructure of organised retail with the skill-sets of the pushcart street vendor”. He added that the head of a retail store’s fresh produce section must sell from the heart rather than the head. “The difference between the in-store staff member and the pushcart vendor is that one is working for a wage while the other is working for a livelihood,” said Mr Rahakrishnan.
Bright outlook for imports
India’s economic boom, and the resulting increase in disposable income that is spreading across the country, is also driving demand for imported fruits, delegates heard in the final session of the conference. Since India opened up to imported fruits around 10 years ago, the growth rates have been consistent and impressive, with the market heading for a value of US$150m in 2010/11, according to Keith Sunderlal of the SCS Group. “That figure is not huge, but we expect India to become a very significant market in the global produce trade in five years’ time,” he said.
Apples continue to account for the lion’s share of imported fruits, aided by their year-round availability and capacity to withstand the lack of cold chain, but Mr Sunderlal outlined the almost boundless possibilities for suppliers that are prepared to “work hard at their market opportunity”, or “enter, establish and persevere.”
EU market losing lustre for exporters
India’s growing demand for high-value produce is also attracting more interest from domestic suppliers with a traditional export focus. Indian grape suppliers’ frustration with stringent EU market requirements came to the fore in a session looking at the lessons from last year’s Chlormequat Chloride residue issue. And while a panel of speakers including Tesco Group Food Sourcing’s Johnathan Sutton, Frédéric Rosseneu of Freshfel and Henk van Duijn from the Dutch Embassy in New Delhi confirmed the potential to expand India’s table grape exports to Europe, some suppliers said the increased burdens in terms of residue inspection measures and compliance costs were beginning to make exports to some destinations unviable.
Fresh Produce India attracted a number of high-profile sponsors, including Desai Fruits and Vegetables, ASIA FRUIT LOGISTICA, IG International, Maersk Line, Dana Fresh International, Zespri International, Oneonta Trading Corporation, Suri Agro Fresh, the United States Apple Export Council and the Washington Apple Commission.
Fresh Produce India Expo
The event also saw the launch of Fresh Produce India Expo, which displayed a diverse range of products and services from companies including Escort Cold Chain Solutions, MWV Wadco India, Fieldfresh Foods, Adani Agrifresh, the Washington Apple Commission, Safmarine, Maersk, Interko, Decco, Sunnyridge Farm, Bioconservacion and Dana Fresh.
The exhibition enhanced the excellent networking opportunities offered by hour-long networking breaks during the Fresh Produce India conference and by two cocktail evenings. Delegates were also able to participate in tours of the bustling Azadpur Wholesale Market and retail stores including Reliance Fresh and Easyday Market, which is run by Bharti Retail.
