Farewell to farms

Two years after being established as an equal joint venture between Bharti and the Rothschilds to market farm produce, FieldFresh Foods is set to turn a new leaf. The Bharti group is now in the midst of restructuring its business based on its experiences over the last two years.

And that’s not all. On the cards is induction of a third business partner for the venture. The name doing the rounds is the US-based Del Monte Corporation, which is a large supplier to the world’s biggest retailer, Wal-Mart. A Bharti spokesperson, while refusing to divulge who could be the partner or the nature of the association, says “both the partners are seeking alliances with international strategic players.”

But there could be more to it than meets the eye. Well informed sources told BT that a split is imminent between Bharti and the Rothschilds, who have invested in FieldFresh through their investment vehicle ELRo Holdings India. This is though contested by Bharti, which maintains that ELRo holding has no plans whatsoever to exit the joint venture.

This is only part of the story. The group is also planning to revamp the business operations of FieldFresh. Says the Bharti spokesperson: “In light of the significant logistical challenges in India, both partners are discussing possibilities to upscale the operations of FieldFresh and are evaluating value addition opportunities by way of food processing as well as setting up of a comprehensive B2B strategy.”

Clearly, the past two years were challenging for FieldFresh and the initial plans for the venture went haywire to a large extent. Initially an investment of $50 million had been earmarked for the venture over a period of three to four years and there were plans to bring 20,000 acres under cultivation countrywide.

While Bharti officials are unwilling to disclose the investment in the business so far, its initial attempts at collaborative farming where it took the land on lease, cultivated it and provided employment for farmers, did not work.

Consequently FieldFresh had to return most of the 4,200 acres leased by its intermediaries from farmers in Punjab. Now it is planning to focus more on contract farming and sourcing directly from farmers.

The venture was dogged by other problems from the start. For instance, the lack of a cold chain for storing the produce. Consequently by the time the first FieldFresh cargo was delivered in 2005 much of the produce had turned putrid. Learning lessons from its past experience, the company is now planning to invest in setting up its own cold chain and logistical support. It’s also investing substantially in R&D at its 300-acre model farm in Ludhiana in an attempt to improve the quality of its produce. It’s now keen to move a step up the value chain into food processing.

The focus for FieldFresh for the present remains the export markets in Japan, Europe and the Middle East. As the retail market expands in India, it may supply to Bharti Wal-Mart as well as Bharti Retail’s planned network of supermarkets. There will be plenty of challenges ahead for the venture as it looks to grow and scale up operations.