Jan 2, 2009

Business - PepsiCo goes hi-tech to ensure potato supply

Suvi Dogra

Having faced sourcing issues for potato in 2008, food and beverage major PepsiCo is planning to ensure supply by introducing farming equipment and technology and new potato seed varieties to decrease chances of crop loss. It also aims to increase the acreage under contract farming by entering new states across the country.

“We will introduce new hand-held and semi-automatic equipment from Taiwan and Thailand with the vision to increase yields and reduce losses,” PepsiCo International Regional Agronomy Director (South Asia) Ray Nalder told Business Standard.

The company is introducing direct seeding and harvesting equipment given the low mechanisation involved in cultivating food-grade potatoes in the country, which leads to loss of yield. It will also bring in new instruments to achieve sustainable irrigation and water efficiency in the fields specially for paddy farming. This is in line with PepsiCo’s aim to achieve positive water balance this year.

Nalder, however, did not share the investment figures involved for the initiative. “Farmers need to be profitable, and not just sustainable. We will invest enough to ensure the model is adopted by more farmers,” he said.

Frito-Lay, the food arm of the company, uses around 150,000 tonnes of potatoes per annum for its products, 50 per cent of which comes from contract farming. PepsiCo has partnered with more than 10,000 farmers working in over 12,000 acres across Punjab, UP, Karnataka, Jharkand, West Bengal, Kashmir and Maharashtra for the supply of potatoes.

In 2008, PepsiCo faced shortage of process grade potato due to crop failure in Maharashtra on account of drought, in Karnataka due to late blight and in Punjab due to frost. This led to a short supply of some of the faster moving stock-keeping units (SKUs) for PepsiCo’s potato chip brand Lay’s.

PepsiCo, which has introduced six high-quality, high-yield potato varieties in the past, will also introduce new potato varieties in the country this year.

“We have already developed new varieties of food grade potatoes and we are now working on two more varieties-bred in India for India,” Nalder said. The new varieties are said to be better suited for Indian weather.

Further, with an aim to make India a sourcing hub for its juice brand Tropicana, PepsiCo plans to make its citrus farming initiative in Punjab commercial. “India has the potential to be the sourcing hub for PepsiCo worldwide,” Nalder said. “The citrus plants that we have developed in Punjab took 6 years to grow and experiment has been successful. We plan to make our operations commercial by next year,” he added.

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