“Exporters must learn from grape & rice industries”
In his exclusive interaction with TPCI, Azhar Tambuwala, Director – Marketing, Sahyadri Farms, speaks about the challenges confronting marginal farmers in India, the reasons that motivated them to open their business, the impediments to the exports of fruits and vegetables and the future roadmap for the industry.
TPCI: How did you come up with the idea of starting a business in this line (specify the sector)?
Mr. Azhar Tambuwala (AT): The challenges of marginal farmers have existed forever in our country. Their general focus is on farming and they don’t completely understand marketing, branding, finance, technology and processing. They possess 2-5 acres of land, which is a lot for a city dweller; but the fact is that usually this land that they possess is hereditary and unlike the inhabitants of the cities, these people must earn a living from their small land. At an average, for 1 acre of land, they earn a revenue of about Rs 60,000 a year. So, for 2-5 acres, they are probably earning about Rs 3 lakh in a year. From this, they have to re-invest in farming, take care of their children’s education, medicals, food expenditure and other basic living expenses. In today’s world, this is fairly little for a man to survive with his family. From this paucity of money arise issues such as the lack of education of the girl child since she’ll get married and go away or when you take loans, its difficult to repay the amount from such a small land holding. Moreover, one bad season could lead to crop failure and revenue loss. This leads farmers to private money lenders who give loans on high interest rates, which they are unable to pay back if nature and markets do not support them. These factors lead to a state of depression, where families get disturbed and the farmer is forced to take the ultimate step. These are very deep-rooted problems, which are not just related to farming; they are social problems too, and there’s an urgent need to address these issues.
So, the germ of Sahyadri was sown from this seed i.e. to basically create sustainable farming entrepreneurship, making farmers reliant on their own work & making farming profitable. We want to create sustainability from the farmer’s perspective till the consumer. The idea was to create a cooperative where we today have about 625 shareholders & 8,000 growers who’re linked to us. All our growers are marginal growers. We wanted to create value at the farm level by giving our farmers technological know-how. By bringing in agronomists to interact with them, we have our own weather stations informing farmers about weather conditions & advising them on preventive solutions rather than curative. We have an academy where we’re teaching farmers how to adapt to new trends and skill development; we take our farmers overseas for exposure visits, we have processing facilities for aseptic and frozen; we’re bringing in new varieties and building our own retail chains so that farmers have direct access to sell their produce; we have a range of FMCG products and an agri input division serving our growers with quality inputs at lower prices than the markets. We’re creating a sales network to penetrate into our domestic markets. All of this, a small farmer cannot do individually. It’s when people come together and create an organization, this value is created.
So, it wasn’t a business idea; it was the need of the hour. It is about the duty that we have towards our society.
TPCI: What were the initial challenges you faced, and how did you overcome them?
AT: When we came up with the plans, initially we were not getting any bank support because no bank wanted to invest in a farmer’s cooperative of that size. Back then, we were being given loans at a higher interest, whereas now we are offered loans at less than half the rate. Today we’re a bankable entity. Secondly, our own growers needed to understand what we are out to do. So, one of our biggest challenges was to spread our philosophy among our farmers. All our initiatives were never tried before. There was no precedent.
TPCI: Which markets did you tap for your product and why? What market penetration/promotion strategy did you follow?
AT: In the beginning, since we were private people who were in the business of supplying grapes to Europe, we explored the European markets. Taking all that experience and understanding, we brought it into Sahyadri Farms. We built our value chains based on our experience of exporting grapes to Europe. Now, we are working on multiple markets of the world with a variety of products and brands. Our long term focus is our home market where there is true potential to be harnessed.
TPCI: Who are the key competitors, and what unique competitive advantages have helped you establish your business presence?
AT: Because we’re into so many different product categories, every product category has got its own uniqueness. So, it will be difficult to answer this question. Generally, when we are in grapes trade, we need to check the supply situation of our competitors like Chile, South Africa, Peru and plan the business accordingly. That goes for the other products too– melons, bananas pomegranates, mango and the vegetables too.
Creating cost and product value at all stages has helped us establish strong business relations across the world.
TPCI: What are the major tariff/non-tariff barriers that you have experienced in the international markets? What should be the roadmap to overcome these challenges?
AT: Duties are charged in Europe, which make Indian produce expensive, whilst some others countries have preferential tariffs or no duty. In the US, you cannot supply any fresh fruits except for mangoes.
As far as pesticides are concerned, I wouldn’t call them “barriers”, I would call this as a compliance which is not easy to meet. Our lab testing costs per year itself are around a few crores.
The trade-related issues at diplomatic levels must be dealt with by the government or trade promotion bodies. APEDA and other Boards are created for the facilitation of the industry. Therefore, it’s important that these boards promote trade. At the farmer’s level, companies like ours hold the farmers’ hand and educate them to create the products that the various markets want.
TPCI: What are the expansion opportunities you envision for yourself in the global market at present? How do you plan to tap them further?
AT: We’ve set up a company in Dubai and a company in Holland. We’re looking for new markets and new products all the time and have got a strong R&D department. Recently we’ve been appointed by Hindustan Lever to manufacture all their Kissan range of ketchups and jams in our factories. Our aim is to have at least 200 retail outlets in India in the coming years. These will be fruit and vegetable specialty shops where our growers can sell their produce. We plan to reach out to the consumer with the concept of safe food with traceability.
TPCI: What is your view on the general competitiveness of Indian exporters in this sector? How can it be further enhanced?
AT: Indian F&V exporters need to learn from the grape and rice industries which have established themselves firmly. Achieving certification standards, product value addition, investments in pre & post harvest management standards, infrastructure & cold storages will bring in greater reliability for importers in other countries. Bringing in new varieties which are high yielding, more resistant to pests and diseases, will attract better markets – all of this will overall increase the value and the competitiveness of the industry.
Mr. Azhar Tambuwala is the Director of Marketing at Sahyadri Farms, Maharashtra. Encompassing a pool of as many as more than 8,000 marginal farmers of the country, this is a cooperative of the farmers, by the farmers and for the farmers. The views expressed here are his own.