Potato Contract Farming

Win-Win Model for

Agro Processing

Introduction

• PepsiCo is a world leader in convenient foods and beverages, with 2006

revenues of more than USD 35.1 billion and 168,000 employees.

• PepsiCo India Snacks (Frito Lays) is one of the largest convenient foods

company in India. Entered in India in 1989

• Today PepsiCo India has 3 state of the art snack food plants in India

• PepsiCo beverages and snack operations directly employ more than 4600

people in India and indirectly 60,000

• PepsiCo partners with the different state governments to provide access to the

latest varieties and agronomic practices for the farming community in

multiple crops across the country

PepsiCo Snacks has three World Class

Food Processing Plants

Established in 1989North

Region

Channo

Started inOctober 2004

KolkataEstablished in 2001 East

Regiion

Pune

West &South

Region

2700 Kms

28

00

Km

s

PepsiCo in India has a legacy of

supporting agriculture

and PAIC to cooperatively develop a comprehensive

Punjab farmers

contract farming and created backward & forward

storage, agronomy to increase farm productivity

Paddy & Barley

• Started with Investment and partnership with PAU

agro-technology program and crop solutions to

• Partnership with state governments; have pioneered

linkages for process grade potatoes

• Made investments in R&D in varietal introductions,

• PepsiCo India is focusing on Potato, Citrus, Corn,

Strong brands growing rapidly…

more than half of

business is

processed

potatoes

India is the 3rd largest producer

of Potato in the world

Potato Production (000 Tonnes)

70300

32,000

25000 21500

11500

China Russia India USA Poland

Year 2005Source : Karvycomtrade (FAO Data)

Vicious cycle –

Conservative Farmers

Low investmentMinimize inputs vs. Maximize outputLimited choice

Role of the

Corporates

and,

government

for step jump

Low Earning Low RealizationQuality / Productivity

No Market OrientationMeet customer Quality Expectations

Pay for performance

Pepsico’s Contact Farming Program

Contract Farming :

Growing Partnership with Farmers

All India

Qty Under contract (TON)

No. of Farmers11000

57894

800125

2001 2003 2005 2007

• Quantity under our Contact farming program has grown

almost five times since 2003

2002 2003 2004 2005 2007

Area Under contract (Acre)

•No of farmers directly benefited from our initiatives has

jumped from 800 in 2003 to almost 11000 in 2007 and

acreages from 2000 to 1100010900

• Pepsico’s contract farmers have been getting significant

benefits over other farmers because of insurance, banks,

blight control packages and attractive buy back prices

2001 2003 2005 2007

6250

800 2000

31668

56%

17802

38%

11102

23%2920

9% 22%

5500

PepsiCo – overcoming market challengesBUILDING BLOCKS FOR A SUSTAINABLE CONTRACT FARMING PROGRAMME

Land preparation & planting,crop monitoringduring growing period harvesting & procurement,

transportation logistics prompt farmer payment system

Commercialization

The extension services team

-selection and training Farmer education program Field

trials at farmer fields

-multi-locational & crop timing

Technology Transfer

Evaluation of promising varieties and hybrids

Multi locational trials and short-listing - selection Blueprint

for agricultural practices after adapting to localconditions, to

suit intellectual & financial means of the farmer

Evaluation of farmer economics

model,Demonstration,farming

R & D Activities

Frito-Lay attempting to provide a win-win market

linked self sustaining contact farming model

AgriCompanie

s

Quality based fixed buyback

„Pay for Performance‟ systems to drive

quality and continuous supply

Programsupport

Insurance

Govt

Locally evolvedFarmer’s Organization

Directly with the

Farmer

Farmer FRITOLAYBanks

SeedCompanie

s

InputCompanie

sProvide technical support and extensionservices for chip grade farm practices.

AdvantagedSeed

3PServices “Partners in Progress” Model

Align Indian agronomy to the industry

needs…

Increase Farmer awareness aboutconsumer requirements.

Ware

Potato

Chilled

product

French

Fries

Potato

crispsQuality Trait

Flakes

Boiling Type

Bruise resistance

Coulour of Flesh

Dry matter content

Frying colour

Shape of Tuber

Size

Store-ability

The needs of both modern potato

processors and export markets are

often very specific with regard to the

variety, tuber size, skin colour and flesh

colour.

Source :Rabobank International

Processors generally require aconsistent supply of high quality tubers

Challenges in Pre & Post Harvest

Technology in Potato ….

SeedManagement

Planting BedManagement

MaturityManagement

PreHarvest

Management

Sampling & LabTest

TruckLoading

StoragePost

HarvestManagement

21

Planting Bed Management

• Farm infrastructure to be improved for better field practices

and land Preparation

• Financial institutions/Banks for easy and cheap credit

• Develop irrigation systems

• Uninterrupted & Best Quality Fertilizer & pesticides

Simple Solutions : High Impact…

Improving the geometry has a significant impact on the Potato Size and Quality

Traditional GeometryRow to Row Spacing :18 inches

Plant to Plant Spacing : 4 inches

Improved GeometryRow to Row Spacing :26 inches

Plant to Plant Spacing: 8 inches

Irrigation : Shift from Traditional „Jhapta‟ irrigation to a simple flood irrigation method

Traditional Improved

Simple Solutions : High Impact…

Low grade automation in harvesting can

minimise the losses

Traditional form of earthing up using spades Simple power tiller can significantly improve

doesn‟t provide adequate soil cover the quality of ridges and soil cover

Traditional form of harvesting results in higher

mechanical damage to the Potato and lower

efficiency

Simple drum harvesters can improve

efficiency and reduce damages.

Low grade automation in harvesting can

minimise the losses

Inspection SamplingAcceptance or Rejection based on Quality

Parameters

• Sampling Protocols• Initial Inspection of samples

• Quality checking using potato receivables protocolsand sampling methods

• Pre Harvest & Post Harvest Cook Test

Infrastructural Investments

.. in Sampling Technologies

.. Quality Analysis & Testing lab

… Lab Equipments

…. Qualified Lab Technicians

Holistic approach to program development

with a national footprint

Supply Chain efficiency.

Improving Farm productivityLeveraging the traditional Vendorssystem.Village level Labs

Region specific / AdvantagedTechnologyProductivity levels at par with World – 20t/h

Focus on Farmer economics

Strengthening the social fabricUnique InsuranceTie with input companies for timelyavailability at discounted rates.

Awareness and EmpowermentEducation program (HIV / AIDS)

Women empowerment

Thank you

Presented by:

Aakristi

Lalita

Sahil

For your patience