Why should we get excited about companies rushing into rural India? One reason is because it is benefiting farmers. But that is not all. Corporate India's increasing fascination with agribusiness will deliver less apparent but equally large benefits to consumers of food. The journey of food from farm to fork is longer and more complicated than most of us know. Between what farmers produce and what we eat lies a long chain of transportation, storage, processing, grading, preserving, packaging and retailing. This food chain in India has been grossly underdeveloped, hurting the interests of both farmers and consumers. Farmers don't get the best prices for their produce. Increasingly, they are also not growing what consumers would like them to grow. For consumers, the choice of foods in India is much more limited and prices more volatile than in most other countries. That is tragic in a country with the world's largest and the most diverse arable land.

One of the biggest benefits of corporate involvement in agriculture would be a better alignment of consumption and farming patterns. Companies have begun to transform the food chain which benefits farmers, consumers and corporates. Companies like Nestle and Amul have been doing this for a long time. But their impact was limited to a few sectors and geographic areas. The entry of industrial houses that had little or no previous interest in agriculture will enhance the speed and spread of impact. Here is a sample of such initiatives.

-Rohit Saran with Malini Bhupta and Malini Goyal

PEPSI: Pepsi Foods
Tomato to Tropicana

PICTURE SPEAK

"We brought about a horticulture revolution in Punjab. The next big revolution will be farming in the sea." ABHIRAM SETH, DIRECTOR, EXPORTS AND EXTERNAL AFFAIRS, PEPSI

Pepsi's rural venture is a case of obligation turned into an opportunity. Investing in food processing and farming was a precondition of the MNC's entry into India in the late 1980s. The company imported a state-of-the-art tomato processing plant from Italy to Punjab in 1989. The plant's processing capacity was 35,000 tonnes, while Punjab's total tomato crop was 28,000 tonnes a year. In the next four years the company worked extensively with farmers, Punjab Agriculture University and a host of experts to improve the quality and quantity of tomato cultivation. This meant developing a new breed of tomato, implementing new ways of field preparation, crop monitoring, processing and reforming the payment systems. By 1994 the production of tomato in Punjab had shot up to 1,30,000 tonnes. Productivity had increased from 16 tonnes to 52 tonnes per hectare in just five years. Market prices of tomato dropped, yet the income of the farmers increased due to the huge rise in productivity.

The changes brought about by Pepsi through contract farming soon spread to farmers and crops that didn't directly deal with Pepsi, leading to an overall improvement. Having sold the tomato processing plant to HLL in 1995, the company has moved to other crops. It is heralding citrus plantation in the country. By end-2005 over one lakh citrus saplings will be planted in Punjab and the number of trees is estimated to go up to two lakh by 2007. This will feed Pepsi's Tropicana juices, the raw material for which is currently imported. All operational expenses are being borne by Pepsi, while capital expenses are met by the Punjab government and farmers. Earlier this year, the company flew some farmers from Punjab to its citrus plantations in Florida, US. Pepsi has also launched an ambitious seaweed cultivation programme in Andhra Pradesh "We brought about a horticulture revolution in Punjab. The next big revolution will be farming in the sea," says Abhiram Seth, director, exports and external affairs, Pepsi.

TATA: Tata Kisan Sansar
A Web of Alliances

PICTURE SPEAK

"There is immense scope to add value all the way from the farm to the plate." KAPIL MEHAN, COO, FERTILISER BUSINESS, TATA CHEM

Tata's journey to rural India has evolved over several years, the latest initiative being the launch of Tata Kisan Sansar in October, 2004. Till last year, the group's two companies Tata Chemicals and Rallis India ran separate rural initiatives. Tata Chemicals owned a chain called Tata Kisan Kendra in Uttar Pradesh, Haryana and Punjab. The centres offered farmers a host of products and services ranging from agri-inputs (e.g. seeds, fertilisers) to financing to advisory services. Rallis, among other things, was involved in a unique programme with select farmers in Madhya Pradesh. The company partnered ICICI Bank and HLL in offering deals to farmers that covered operations from pre-harvest and post-harvest stage. Farmers were first provided with seeds, pesticides and other inputs, mostly funded through loans from ICICI Bank. Once the crop was ready, it was bought by HLL and ICICI Bank loans repaid through the income from sale. But the experiment didn't sustain for long.

In April 2003, Rallis' operations were merged with Tata Chemical's. On October 26, 2004 the company relaunched its Kisan Kendras as Tata Kisan Sansar (TKS) which will evolve as a network of one-stop shops for farmers providing everything from inputs to loans to know-how. Right now TKS comprises 421 centres-all franchisee-run-in three states. The centres are linked to 20 hubs owned by Tata Chemicals. TKS has three broad sources of income: sale of inputs, advisory services and fee charged on the sale of partners' goods. TKS already has 15 partners, including ICICI Bank, ING, SBI and agri-input companies. The company also undertakes contract farming in 15,000 acres of land. It grows paddy and vegetable seeds in Uttar Pradesh and Punjab and fruits in Karnakata and Maharashtra. The produce is sold to retail chains or exporters. "Compared with the opportunities, corporate involvement in agriculture is still in experimental stage," says Kapil Mehan, COO, Fertiliser Business, Tata Chemicals. "There is immense scope to add value all the way from the farm to the plate."

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