scm potato pepsi

7/29/2019 SCM Potato Pepsi

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Pepsi-Supply Chain of PotatoIshan Sharma- ABM09008

Ajitesh Puri- ABM09009

Seerat Jangda- ABM09010

Nithya Komundari- ABM09014

Puja Priya- ABM09022


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Company Overview

Pepsi- entered India in 1989, pioneer in contract farming since 2001 Project with the Punjab Agro Industries Corporation and Punjab Agriculture

University

Program focuses on evolving agricultural practices to help Punjab farmers

produce crops that would make Indian products internationally competitive

Potato is the largest crop for contract farming for producing potato chips forFrito Lays

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Refreshment

beverages

Low calorie

options

Diet Pepsi

7Up Light

Quaker Oats

Lehar Lite

Pepsi,

7UP

Mirinda

Mountain Dew

Hydrating and

nutritional

beverages

Aquafina drinking

water

Product Portfolio

Chips Drinks

Lays

Kurkure,

UncleChips

Cheetos

isotonic sports

drinks Gatorade

fruit juices and

juice based drinks

Tropicana,

Tropicana Twister

and Slice


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Overview of Potato Sector in India

India - 3rd largest potato producing country

Production- 25 million metric tons -8 % of the worlds total produce

Grown on 1.5 million hectares of land -4th country having maximum area

cultivated for potatoes

Yield rate per hectare-19 tons per hectare (European countries 30-40 )

Major producing regions are UP, West Bengal and Bihar- 72% of the national

production

80% of the potato in India is grown in winter months (Rabi crop)

India provides the unique advantage of potatoes being grown in different

seasons and different geographies, thereby making process grade potatoes

available all year round

Very small quantity is exported-0.5% (72000 MT) of the total worlds ofpotatoes

The importing countries are Sri Lanka, Nepal, Mauritius, Singapore, United

Arab Emirates and Japan

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PepsiCo Potato Operations

Traditional Value Chain: Farmer-----Consolidator------Wholesaler-----Semi-wholesaler-----Retailer

Farmer is not motivated to focus on quality issues --no premium attached

PepsiCos involvement in Indian agriculture stems from its vision of creating a

cost-effective localized agricultural base in India by leveraging farmers accessto world-class agricultural practices

Frito-Lay, the food arm of PepsiCo, is the largest potato procurement company

and India is their third-largest operation worldwide.

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Operations

Three potato processing plants in India:

Punjab (Sangrur)--- 10,000 MT

West Bengal (Sankrail near Kolkata)7500MT

Ranjangaon near Pune---- 18000 MT

The models used are: working through, co-operatives, involving NGOs and

working directly with farmers

Vendor is the local person hired by the company as a liaison person between

farmers and company. He is accessible to the farmer.

The vendor also ensures availability of seeds and other inputs at the farm

level and is involved in monitoring the crop along with the company

agronomists. Potatoes grown in India for traditional use have high sugar content and less

solids.

Processing requires potatoes with low sugar content (0%) and high solids to

avoid browning of the finished product

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Quality Control Steps

R & D Thrust Areas:

The most common variety grown in West Bengal is Kufri Jyoti, other major

variety is Kufri Chandramukhi. Chipsona I and Chipsona II and Atlantic

with low sugar and high solid content have been introduced for processing

purposes.

Before introducing the varieties to the farmers, extensive trials of various

varieties were undertaken and a package of agronomic practices suitable to

the local agro-climatic conditions has been developed in collaboration with

Central Potato Research Institute (CPRI)

The package of practices developed includes specific fertilizer requirements

and spraying schedule

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Farm Inputs:

The vendor ensures that the farmers falling under his supervision have all

the required inputs at the right time

Input kit is given free of cost

Crop insurance under Agricultural Insurance Company (AIC) and weather

insurance from ICICI Lombard

Win-Win situation for both farmers and company:

Company was able to negotiate special premium rates with AIC

Clearance of claims is also much faster

Farm Production:

Team of agricultural graduates employed to make the use of chemicals and

fertilizers much more timely and effective

Crop spacing: Increase spacing helps to increase yield, reduce greening of

potato, and reduces the share of undersized potatoes

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Harvesting and packaging:

Handle potatoes like eggs not like stones

Instead of jute bags, the use of plastic bags for packaging to ensure better

storage

Grading and Sorting:

Mechanically graded for size

Visual inspection for damaged potatoes

Test for sugar content -by frying a small sample from the lot

Storage:

Critical factors in successful storage include variety, methods of culture,

harvest, field curing, temperature and humidity control, storage and sprout

inhibition

Stored at 12 degrees to control conversion of sugar to starch.

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Processing Center:

Washing and peeling

Metal detection and inspection for physical damages and discoloration

Run through rotating slicers

Deep fried--optical testing for color

Chips are mixed with spices and packed

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5PApproach

Production

Protection

PassportProgrammemonitoring

Post-Harest

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PepsiCos 5P production process

Production: PepsiCo supplied its contract farmers with high quality seeds of

processing grade. PepsiCo also arranged for inputs such as fertilizers.

Protection: Comprehensive packages were developed to suit the respective

geographies, pest and disease status as a complete solution kit.

Programme monitoring: Regular programmes are organized for the farmers

to train them in the safe use of the pesticides, proper spraying techniques,

identification of the pests and diseases

Passports: The passport is a tool for traceability reasons and serves as a

document for keeping farm activity records at a farmers level. The farmer canuse the passport to work out the cost/benefit he is getting.

Post-harvest: Farmers are trained in grading the potatoes to meet PepsiCos

requirements.

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Comparison

The cost of production for PepsiCo farmers is Rs. 30,180 per acre whereasthe same for farmers selling to the traditional market is Rs. 25,280

Major difference in the production costs

1. Seed cost: Higher because of the size of the seed potatoes and specific

variety used.

2. Agro-chemicals cost

Sustainability + quality + traceability = added value for every partner in

the food value chain

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Thank you

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scm potato pepsi

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