With an annual production of 91 million tonnes providing more than 18 per cent of the gross agricultural output of the country, India’s fresh produce industry is going strong. The country has the potential to be part of the answer to looming threats over food security and it has been described as having “underdeveloped horticultural capacity”, due to its multitude of different climates and soil types as well as its ability to provide sufficient labour.
Mangoes, grapes, garlic, chillies and okra from India have become commonplace in UK wholesale markets and to a certain extent within the supermarket aisles but, like any developing market, standards can vary.
Only at the end of last year, a Delhi-based NGO survey found traces of internationally banned chemicals on Indian fruit and vegetables sold within the country, but government groups like the APEDA (Agricultural and Processed Food Products Export Development Authority) are working tirelessly to make sure the actions of the few do not taint the majority of the fruit and vegetable industry in India.
According to the India Retail Report 2011, published last month, the GDP growth rate during the last two years in India was about seven per cent and growth has been fuelled by sustained investment and buoyant services. And it is estimated that India has 240m acres of cultivable wasteland lying idle that could be converted to horticultural production.
What’s more, standards and accreditations are moving forward. Importer Univeg UK has a project to import Fairtrade-accredited table grapes from India, with the first volumes expected to reach the UK by early next year. There have been some misgivings from retailers following some maximum residue level (MRL) problems linked to Indian grapes, but the company has been working with a group of small growers in India to develop the initiative over the past three years. Although the project has been to slow to get off the ground because of the audits needed for the Fairtrade accreditation process, everything seems back on track.
“It’s something that we’ve discussed very openly with our suppliers in India,” says Univeg UK’s Fairtrade commercial manager Rosemary Lalley. “They fully understand the requirements they need to adhere to in order to meet all EU quality legislation. It has been a key factor in looking at the timetable of the project to make sure the farmers can deliver.
“We only have a small number of hectares so that is a limiting factor, but volumes will potentially increase as more growers might come into the group.”
A fresh approach
In testament to the potential for the Indian horticultural industry, the third Fresh Produce India congress last month proved a prime opportunity to discuss the country’s progress. Some 230 delegates from 22 countriesattended the event in New Delhi on 2-4 March and many issues were raised as part of the conference.
It became clear that 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 to government restrictions on sourcing and selling produce to lack of infrastructure.
However, these issues are no match for the market opportunities and the sector is now taking steps towards capitalising on the vast potential.
Furthermore, some delegates called for more government support on farm sourcing. The eventkicked off with a focus on farm sourcing, one of the key challenges faced by both local and foreign entities in India, and Raman Ahuja ofFieldfreshFoodshighlighted the need for government support to develop commercial production. The market is still not really ready for a corporate player in India’s fresh produce arena, Ahuja said, making it very difficult to break into the sector and engineer improvements.
He told delegates that national government policies to assist the sector must become demand- rather than supply-led. “The biggest challenge has actually been getting the government to spend 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 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 agricultural policies to enhance interaction between the corporate world and the farmer, 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, chief executive ofDesai Fruits and Vegetables, which is aiming to ramp up its banana production to 300,000t by 2015. “Education of farmers, volume aggregation and supply chain excellence are all key to tackling the sourcing challenge,” he said.
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 includingTesco Group Food Sourcing’s Johnathan Sutton, Frédéric Rosseneu ofFreshfeland Henk van Duijn from theDutch Embassy in New Delhiconfirmed 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.
KING OF MANGOES TAKES A BLOW
Adverse weather this season has seen Indian Alphonso mango production fall to 30 per cent of normal levels, according to the Maharashtra State Agricultural Marketing Board.
The orange-yellow coloured variety, mainly grown in Maharashtra and other parts of western India, is called “the king of fruits” by Indian consumers and the severe shortage has seen prices in the commercial capital of Mumbai soar to Rs$2,500 (£35) per carton - double last year’s levels.
A cold winter in the Konkan region, where Alphonso is grown, is to blame for the shortage. The region experienced temperatures of 17-18°C for 65 days between December and February, affecting the fertilisation process. Untimely rains are also reported to have reduced yields.
Alphonso is in demand overseas, particularly among expats in the Middle East, Europe and the US, but exports have been affected severely.
INDIAN GRAPES UPDATE
Grape exports from India will be down compared to last year this season because of an MRL problem overhanging from 2010, when detection of chlormequat chloride component residues in Indian grape supplies to Lidl in Sweden put the brakes on an otherwise healthy looking season. Now, exporters are keen to reassure the market that this year is a different story.
But inevitably, the drop has been dramatic and put the previously flourishing Indian grape industry almost back to square one. Some importers, such as Dutch firm PeDe, have reduced their intake of grapes by half. And last season’s MRL-related problems and a less favourable rupee:euro exchange rate have led many Indian grape producers to look at nearby Asian markets where consumption levels have been steadily growing.
