Panama Nature Fresh Pvt. Ltd.

• Subject- Panama Nature Fresh (P) Ltd.• Object- Large/Small Farmers, Middlemen,

Technology Partners• Properties- Modernizing Collection-

Distribution Model (Corporate Farming)• Events- Expansion Plans of Panama’s

Contract Farming Model in India

SOPE

Legal | Ethical | Moral Issues in SOPE

Legal Issues: Tax rebates for food processing, duty-free imports of machinery and equipment and liberalized imports of seed varieties for contract farming.

Ethical Issues: Small Farmers might be marginalized due to ‘stringent’ quality issues

Moral Issues: Patient Nurturing and Hands-On approach (size NOT befitting the stature of a large conglomerate)

Explanation of SOPE

Antecedents

Tata Chemicals ‘suspended' the operations of Khet-Se Agriproduce India, a 50:50 tie-up with Total Produce of Ireland for sourcing, packaging and distribution of fresh fruits & vegetables (F&V).

Bharti Enterprises forayed into horticulture through a 50:50 partnership with the Rothschild Group. Initially, the idea was to export mushroom, okra, Thompson seedless grapes, mangoes, pomegranates and lychees to niche markets in Europe and West Asia. Over the years, increased emphasis on processed foods and beverages, from canned fruit drinks and slices to ketchup and sauces.

Determinants

India being the world's No.2 F&V producer behind China or its growing consumption demand spurred by rising incomes and urbanization.

Vast opportunities to consolidate a business characterized by fragmented value chains and sizable post-harvest losses.

If organized procurement and distribution had met with reasonable success in milk, why couldn't it be replicated in other perishable produce?

Concomitants

Amendment of the Agriculture Produce Marketing Committee Act in 14 states, which allows farmers to sell their produce in open markets. This has opened the gates for the companies to enter this segment.

The United Progressive Alliance government's 'approach paper' to the Eleventh Plan gives clear priority to the development of contract farming.

Analysis of SOPE

Benefits of contract farming

Seek to integrate the supply chain to ensure timely availability of quality and quantity of raw material.

Significantly, it also reduces the procurement cost for them by doing away with the middlemen.

It leads to significant gains for them, as not only do they get the raw material as per their specific demands, the cost is also much less.

Working of ‘Corporate Farming’ Model

• The company supplies all the inputs required for cultivation, while the farmer supplies land and labour.

• Company provides all the material including seeds as well as technical know-how and there is also a guarantee of purchase of the produce after harvest. In most cases, the minimum price of the produce is fixed in advance.

Land, which, is currently used to grow staple crops like wheat and rice, will be used to grow crops required by the food-processing industry, which also has a significant overseas market.

Rampant increase in contract farming will eventually lead to loss of food security of the country, implying that the country might become dependent on imports.

the crop required by the company might not be recommended for that particular area. This can also have negative implications on the quality of soil.

Problems associated with the Model

Involve the farmers in policy making (Bharat Krishak Samaj)

Economic security offered by the contract farming very attractive. Public institutions have failed to provide farmers with the essential protection and support required for viability on a sustained basis.

Solutions