Bharti-Rothschild to get 3rd partner

Wal-Mart supplier Del Monte a likely candidate.

Two years after setting up an ambitious 50:50 joint venture to market farm produce, the Bharti-Rothschild combine is likely to rope in a third partner for FieldFresh Foods (P) Ltd.

The likely partner is the US-based Del Monte Corporation, a large supplier to Wal-Mart Stores Inc., the world's largest retailer. Bharti and Wal-Mart recently signed an agreement for wholesale cash-and-carry operations in India.

Confirming the development, a Bharti spokesperson said: "ELRo Holdings, an investment company of the Rothschild family, has no plans to exit FieldFresh. Both partners are looking for a third strategic partner."

ELRo Holdings India Ltd is an investment company formed by Evelyn de Rothschild and Lynn Forester de Rothschild, who is co-chair.

The spokesman added that given significant logistical challenges in India, both partners were discussing possibilities of upscaling operations and evaluating value addition opportunities by way of food processing and a comprehensive B2B strategy.

"For this purpose, both partners are seeking alliances with international strategic players," the statement said.

Some time back, Rakesh Mittal, vice-chairman, Bharti Enterprises, who is in charge of the initiative, had said the business model would be changed by July this year. Today, a spokesperson added: "The business is in a formative phase in which FieldFresh is examining various models from collaborative to contract farming. We are confident of the potential of agri-business and will make the requisite investments."

The joint venture, which was set up to export Indian fresh produce to European and West Asian markets, has had a tough time from the start.

For instance, by the time the first FieldFresh containers of mushroom, grapes and okra were delivered in 2005, much of the produce had rotted. While that was an initial setback, primarily a result of logistical delays, problems continued.

The joint venture had an initial investment of $50 million and planned to bring 20,000 acres under cultivation countrywide.

But sources close to the business said most of the 4,200 acres leased by FieldFresh's intermediaries from farmers across eight districts of Punjab had been returned to the owners.

At present, the company's farming is mostly restricted to a 30-acre piece of covered land, part of a 300-acre model farm in Ladowal, near Ludhiana in Punjab. The land has been leased to FieldFresh by the Punjab government.

A variety of sources, interviewed by Business Standard over the past few months, said the initiative started to suffer major setbacks over a year go.

"It was a combination of factors including the desire to perhaps grow too fast. Then there was the issue of the farming cycle and the nature of the lease," a source said.

For instance, the joint venture tried to grow vegetables in June, once the land was free of the wheat crop that had been harvested by the original owner.

But that proved to be four months too late, as the planting season for those vegetables is February. "This delay resulted in one-fourth of the yields we wanted," the source said.