Pantaloon sources potatoes through cold storages

Even as the Left and opposition parties in West Bengal target organised retail for selling farm products, Pantaloon India has started sourcing potatoes through cold storages, thus eliminating other intermediaries.

Recently, the company, which runs its food retail under the Food Bazaar banner, has started beefing up its agri-retail business by procuring potatoes from West Bengal's Bardhaman district.

In the coming months, Food Baazar would double the amount of potato procured from the state, which at present stands at "one truck per week", to meet the increased demand, said Arvind Chaudhary, CEO of the food business of Pantaloon Retail.

By procuring potatoes through cold storages and eliminating other intermediaries, farmers would improve their returns by 10 per cent, he claimed.

"The profit is shared through commission and omission, with farmers enjoying the maximum benefit. Roughly, a farmer's profit margin increases by 10 per cent in the whole process," he told Business Standard.

Under the model adopted by Pantaloon, the company has an arrangement with the cold storage owners, who buy the produce from farmers and sell them to Food Baazar.

Taxes, including the APMC cess, will be paid by the cold storage owners, as the present law does not allow retailers to buy farm products from the mandis.

Also, the company has tied up with Pogo chips for retailing potato chips under its own food brand Tasty Treat.

Pogo would buy potatoes from the farmers through the cold storages in the Pantaloon network and sell the same to Pantaloon, Chaudhary said.

The company will buy fruits and vegetables, excluding potatoes, from the wholesale markets.

"We are increasing our agri-retail business. Wherever we have stores, we will buy vegetables and fruits from the nearby wholesale market," he said.

The company plans to add 75 new Food Bazaar outlets across the country.

Currently, 20 per cent of agri-products sold at Food Bazaars across the country are procured directly from the farmers.

By next year, the company aims to procure nearly 50 per cent of agri-products directly from the farmers.

Food Bazaar procures farm products through contract farming in Maharashtra and UP.

In the case of UP, the company through an agreement with a cluster of farmers procures potatoes on the basis of a pre-determined quantity and quality. The farmers are paid on the basis of market price.

In Maharashtra, the group purchases Alphonso mangoes through contract farming on the basis of a joint price discovery mechanism.