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Expert rating in farm to fork game3/18/2023 ![]() Wal-Mart is trying to learn from the difficulties of Indian chain operators such as Reliance Industries RELI.NS and Shoppers Stop SHOP.NS, most of which rely on middlemen after struggling to establish a strong direct farm supplier base. Slideshow ( 6 images ) CUTTING OUT THE MIDDLE MAN “It’s going to be a huge challenge and requires a lot of work on the ground,” Reddy said during a recent visit to Narayangaon, a few hours from the city of Pune where Wal-Mart runs one of its seven Indian farm procurement centres. In North America, retailers like Wal-Mart can buy from a few hundred farmers who provide hundreds of thousands of tonnes of produce between them. That means contracting with thousands of farmers will still yield only a few thousand tonnes. Wal-Mart must buy in small batches from small plot-holders in a country where more than 80 percent of farms are under 2 hectares. Fresh produce accounts for about 30 percent of Wal-Mart’s sales in its wholesale outlets in India. To get there, Wal-Mart plans to sign up 35,000 farmers over the next three years, up from the 6,700 it has now. Wal-Mart, by far the most aggressive foreign supermarket operator in India, expects to open its first store selling directly to the public in 12-18 months, and aims to turn a profit in 10 years, something it hasn’t managed in China after 12 years. India recently let in global supermarkets, despite heavy political opposition, in the hope of improving the supply chain and bringing down wastage and costs in a country where one-third of fresh produce rots and food inflation is persistent. Under the reforms, foreign retailers must source at least 30 percent of their goods from local, small industries. “We plan to procure as much as we can via direct farming so the procurement from traders in local markets is as little as possible,” said Krishnakant Reddy, who is in charge of direct farming in south and west India for Wal-Mart, which already operates in India through 17 wholesale stores. ![]() It will also be a test of whether India's politically fraught decision to allow in global supermarkets in order to modernise its food supply chain proves to be the right one. Investing in farmers to help them improve quality and efficiency, and getting around the army of costly middlemen, will be key to whether global chains like Wal-Mart and Tesco Plc TSCO.L succeed where local operators have failed to make a profit. ![]() They give us a higher price than the market for better quality,” said Todkari, 29, who works the field in western India with his elderly father. “They train us and assist us right from when the crop is sown to when it’s harvested. Most farmers in India, though, don’t meet Wal-Mart’s standards. His acre of cauliflowers is big, leafy, and a deep shade of green, thanks to modern irrigation and quality nutrients and seeds - all provided by the world’s largest retailer. Raj Jain, president of Wal-Mart India, addresses the media during the inauguration of a newly opened Bharti Wal-Mart Best Price Modern wholesale store in the southern Indian city of Hyderabad September 26, 2012. ![]()
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