ITC eyes bigger presence in fruit, vegetable business after govt's agri reforms

Riding on the agriculture reforms announced by the central government, FMCG major ITC Limited is planning to expand its fresh fruits and vegetable business in a big way. The company will explore the export potential of frozen and fresh vegetables too. "We are exploring different locations (to develop, engage with) more export-oriented fruit and vegetable clusters, closer to the port cities," S Sivakumar, Group Head - ITC's Agri-Business and Information Technology, says.

Sivakumar said it was too early to put numbers to the investment plans as specific rules and guidelines that have to follow the Ordinances are yet to be out. The Ordinances provided an alternate route to bypass the existing mandi system to sell farm produce directly to the buyers. They exempt the sale of farm produce from the clutches of the Essential Commodities Act under most conditions. The Ordinances also introduce the provision for pre-harvest price assurance agreement with the buyer and the farmer.

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According to Sivakumar, while the actual investment figures will be decided after the rules and guidelines evolve, the company has already commenced work in terms of putting the plans together. "Compared to various direct buying activities, which we have already been doing, we will see a lot more activity going forward in grains as well as horticulture," he said.

ITC already has presence across multiple horticulture areas of fruits for feeding its B Natural fruit juices, which are 100 per cent domestic fruit-based, unlike imported concentrates in the case of several others, the company says. It is planning to expand its backend infrastructure in different locations because of the government's reform measures.

The current push will also see an expansion of its Farmland brand fresh vegetables and fruit retailing business. "Due to COVID-19 and reforms, there is a lot more consumer awareness and concern today about food safety and hygiene. There is a traction for value chain that supports and assures the consumers on (safety and hygiene). Therefore, we now see more interest for Farmland products, hence the need for better resources and formation of clusters of direct sourcing," Sivakumar said. Onions, tomatoes, etc are all products that no longer come under the Essential Commodities Act.

On exports, Sivakumar said that globally the trade flows are likely to take some kind of shift because of coronavirus. The people are now diversifying their procurement dependence. "For example, the middle east Asia would be keen to diversify where all they source fruits and vegetables, both fresh as well as processed. So frozen vegetables and fresh vegetables are some of the other areas that we are working on plans to see what we need to build now, riding on this COVID concern in both global and domestic markets," Sivakumar adds.

The company will also strengthen its traditional grain sourcing infrastructure. "We will be strengthening the wheat (procurement) for sure, in many of those locations where there are multi-crop as part of our own crop development - where paddy cycle as well as pulses and other Nutri cereals cycle - are there in the 365-day cycle, so that some of these (additional infrastructure) will be used for many of these activities as well," he said.

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