Sunday, October 30, 2011

Food retailers and Kirana’s on a glove game

The adoption of organised retailing in India has been quite slow in comparison to other rapidly transforming economies throughout Asia. For a total population of a billion and a middle class population of over 400 million people, organised food retailing is still in its nascent stage in this country.

The curtain raiser
The major factor which fixes the adoption of organised retail is the well established food retailing system of neighborhood Kirana stores. The Kirana’s have proved themselves as capable enough to meet the customer’s daily needs. The only thing which the Kirana’s are lacking is the overall shopping experience from organised shopping centres and that’s why modern trade is making its way in the crowd. The trend in food and grocery retailing, however, has started with a growth concentration in the South. Though there were family owned traditional retail chains in South India such as Nilgiri's as early as 1904, the retail revolution happened with various major business houses foraying into the establishment of chains of food retail outlets in South India with focus on Chennai, Hyderabad and Bangalore markets, preliminarily. In the Indian context, a countrywide chain in food retailing has been pioneered by Big Bazaar and Reliance fresh only. Since then many big Indian corporate players have jumped into the lucrative business of establishing retail chains throughout the country.

Supply chain – ushered in modern retail
With the deep pockets in organised retailing it is very easy to put up shiny stores but the hard part is supplying them with fresh, clean and safe vegetables and fruits through an efficient supply chain that links farms and consumers, country and cities - here lies the revolutionary achievement. At the moment, India has one of the most fragmented produce-supply chains on the planet. 30 percent of all fresh produce is lost or gets spoilt before it reaches the market. On an average, after getting plucked from the field, the fresh produce passes through six or seven middlemen before a consumer can buy it; resulting in tortuous journeys, big markups and poor quality damaging the products at the end.

Therefore, one can say that the most rewarding effort lies in replacing the existing supply system with efficient network of international quality of supply chain but adapting it rightly to Indian conditions.

Supply chain in organised retailing is as important as somewhat of a cornerstone of any business; it has occupied the centre stage of modern trade. "The days of competitive advantages was all about marketing which is now a past. It's now all about the supply chain” – speak the experts. Today the consumers are more inclined than ever to look at the small print on the back of packaging that tells them about the point of the production of the goods and the route of the supply chain through which the products were ultimately routed to the point of sale. In today’s just-in-time economy, retailers, manufacturers and service companies all have to depend on the chain of processes of production, procurement and supply of the products, components and services they need in order to meet the requirement from customers. They are majorly dependent on the suppliers and therefore, required to trust and honour the relationship for an uninterrupted service.

However, in today's increasingly globalised, technically-automated and all the way connected society, the issues of trust and dependence are still not as clear as they should be. In fact, in conventional supply chain process, companies had to develop effective partnerships with their partners where trust and responsibility were not that importantly focused.

But in modern trade when companies those are usually competitors but come to work together on specific projects or joint supply arrangements, may become suppliers to each other, which necessitates the sharing of sensitive information and access to a degree of operations that benefit both the parties.

Moreover, supply chain management is becoming important not only as a mechanism for ensuring that products are on the shelves, but also it is vital enough for the sustainability of the players in the organsied retail industry.

Specifically in food retailing, it’s the freshness and quality of the product that matters the most and to achieve these two parameters retailers have started procuring directly from farms. 

In the process the key component, the farmers are definitely upbeat about selling directly, but they are still wary. Although the retail chains wanted to ink a deal with the farmers and even tried out the partnership model, the point is that the farmer needs a fixed price and that too over a certain period.

So, now the retail chains have to pay the farmer a higher price, bear the cost for an effective cold chain system and other necessary infrastructure but also has to put a reasonable price tag on the products at the end.

But the key question still remains – that are pointed at the retailers only - Will farmers be benefited in the process? It seems to be a competition that will bring down the margins of costs but the savings will be pocketed by the retailers themselves because it is a different universe altogether. The farmers are needed to be taken care of by creating a win-win situation for both the sides otherwise the whole system might get collapse.

Eliminating the odds
The food retailing basket mostly comprises of fast-moving, short life cycle fresh products in offerings which demands a highly modified and a bit complicated supply chain process. Working with the suppliers and getting them in sync with the fast paced process pose a challenge for the organisations. To overcome the hurdles the key component that is needed to make it work effectively is the proper utilization of technology supported by highly evolved system of information technology.

Technology adds in synchronizing and balancing the system at the lowest cost and resulting in a high customer service level. Technically evolved supply chain process can help retailers assess tradeoffs to meet their customer’s needs, but in a way that allows them to make a profit. Supply chain planning helps dramatically increase forecast accuracy, streamline product introductions, assess promotions and create plans attuned to the market; and supply chain execution provides transportation, warehousing and inventory management to ensure cost effective order fulfillment and on-time deliveries.

But the complication still remains unsolved as to how to set up an efficient supply chain in a place where the roads are crowded and crumbling, the power supply is so irregular and interrupted, the water is still somewhat unsafe and the bureaucracy is so complicated and arduous? How to transform a structure so deeply entrenched with so many political burdens? And, finally how to drag a wasteful, archaic system further to the evolved times of 21st century?

It is surprising that a country with a strong feeling like “Everything else can wait, but not agriculture,” as stated by our first Prime Minister Jawaharlal Nehru, still follows the age-old food-distribution legacy of the 1940s and ‘50s. In 1966 the government introduced a new law that banned farmers from dealing directly with retailers and forced them to sell through licensed middlemen, called ‘mandis’. As a result: a grossly inefficient system developed in which farmers are divorced from market feedback and often have to wait months to be paid. What is even more surprising is that the current system is not doing anything about it and after that there is nothing to comment on.

Last but not the least
The country’s shopping sector is currently dominated by more than 12 million Kirana’s, most of them tiny, dusty and offering a small and unreliable selection of goods. But still the Kirana’s will remain the replica all over; the intensity of penetration can be stunted but cannot be scratched. As Kirana’s have the advantage of quick accessibility which give them the fast buyer advantage and even by home delivery the organised retail formats are not able to swamp them on this recital.

The mid way for this glove game can result in formation of organised retail chain in small formats replicating the typical Kirana formats which will replace the Kirana’s with accomplished supply chain and enhanced present-ability of SKU’s/Products for aggrandized shopping experience. The antithesis of the mid way can be the crookedness of organised retail to Kirana’s or the other way round. Finding this feasible the pioneer of organised food retailing - The Future Group, has decided to supply their private brands to Kirana stores later this year; the private label will include food as well as non food items. At the same line the second colonizer Reliance retail is also coming up with something same in planning to sell its private labels to mom-and-pop stores. Initially, the group would sell private labels in apparels and later the food and grocery items, as the perish-ability of food products is still a concern area.

Either this way or the other, the service providers need to change their offerings constantly to collate with the dynamic customer buying behavior. The expectations from the dispenser will remain uncertain irrespective of its domain whether it is the age-old Kirana store or a neighbourhood store from an organised retailer chain.




Originally published by me on 18th June 2009 in India Retailing Magazine accessible through the below link


http://www.indiaretailing.com/Expertview_details.aspx?Id=38



Wednesday, October 26, 2011

UK scientists come together to help feed the 7 billion

The Universities of Exeter and Bristol, in partnership with Rothamsted Research have officially joined forces to tackle one of the biggest challenges facing humanity: how can we sustainably feed a growing population?

The Food Security and Land Research Alliance launches at the House of Commons today amidst reports that the world population is on the brink of reaching seven billion.

The Alliance brings together world-class expertise across a range of disciplines, from biosciences and agricultural science to economics and the humanities. It will establish the South West of England as a centre of global significance in the arena of food security and land research.

Projects that the Alliance is working on include:

· Finding wheat varieties that can stand the heat of global warming

· A cropping system to double maize yields

· Bringing previously unusable agricultural land into production

· Working with farmers to find solutions to dairy cattle lameness and feather-pecking in laying hens

· Improving controls of irrigation systems to save water

Professor Nick Talbot, Deputy Vice-Chancellor of the University of Exeter said: "Ensuring global food security is without question one of the biggest challenges facing humanity and it can only be achieved by dramatic increases in food availability across the world. At the same time the pressure escalates to use land to satisfy demands other than for agricultural commodities. The need for research to help secure global food security and ensure resilient land management lies at the heart of the new Alliance."

Professor Alistair Hetherington, Faculty of Science Research Director at the University of Bristol said: "Our three institutions are strongly placed to address this challenge through world-class research. Together we hold a huge range of expertise, encompassing bioscientists engaged in tackling crop diseases, leading work on farm animal welfare, climate change science, soil and nutrients science, and the full breadth of economic, social science and humanities."

Professor Maurice Moloney, Director of Rothamsted Research, commented on the partnership, saying: "Collaborations of this nature are essential as we look to meet the challenges of global food and energy security." He also highlighted Rothamsted's exciting new research facility: "The new Farm Platform, at North Wyke in Devon, gives us the facilities and technology to conduct collaborative research and we are looking for researchers to work with us on this Platform to explore alternative land use scenarios and their impacts."

Case studies

Yes we (may) have no bananas: the impact of bacterial Xanthomonas wilt in Africa

University of Exeter scientists are working to tackle a major threat to banana and plantain farming.

Developing African nations are highly vulnerable to food security threats posed by new and re-emerging crop pathogens. Disease outbreaks can have devastating consequences. This is perhaps best exemplified by Banana Xanthomonas Wilt (BXW), caused by the bacterium Xanthomonas campestris pv. musacearum (Xcm). Bananas and plantains are major food staples and cash crops in the East African Great Lakes zone. In the last decade the BXW disease has emerged in the Great Lake Region of East Africa, devastating the livelihoods of millions of people. BXW was first identified on enset, a plant related to the banana, in Ethiopia in the 1960s, and discovered on Ugandan bananas in 2001. It has since spread into neighbouring Kenya, DR Congo, Rwanda and Burundi and Tanzania (2007). BXW can become epidemic within weeks, leading to complete crop loss. Many families have abandoned banana cultivation, which has caused unsustainable increases in food price.

The long-term objective is to develop resistance to BXW. Banana is propagated vegetatively so traditional breeding methods are extremely slow and difficult. No BXW-resistant germplasm has been identified either, so resistance to BXW must be achieved by genetic enhancement of banana's defences. The researchers hope their work with collaborators in the region to understand how this new and devastating pathogen arose will lead to its control or eradication. They expect to learn lessons that will apply to other newly emerging diseases.

Research led by Dr David Studholme and Professor Murray Grant of the University of Exeter and funded by the National Agricultural Research Organisation of Uganda, is addressing two important questions about BXW. Firstly, they are using high throughput DNA sequencing of Xcm strains isolated from different locations to reconstruct the evolution and spread of BXW during its passage from Ethiopian enset to banana-growing regions. Secondly, the Xcm bacterium that causes BXW appears to have recently 'jumped' from sugarcane, maize or sorghum and only recently developed the ability to colonise banana. The team is using genome sequence data from Xcm and related strains from these other crops to reveal the genetic basis of these 'host-jumps'. This data can also be used to develop and validate diagnostics and detect newly emerging virulent lineages.

Putting a stop to pain and distress in farm animals

Scientists from the University of Bristol are working with farmers to address some of the chronic animal welfare problems that are significantly affecting production on UK farms.

Lameness causes suffering in up to a third of UK dairy cattle at any one time and leads to a loss of animals through early culling, inefficient milk production, and frustration and stress for dairy farmers. Feather pecking in laying hens also causes pain, is found in almost all flocks and costs the industry over £12 million per year in mortality and lost production alone.

The University of Bristol Veterinary School has worked with the Tubney Charitable Trust to tackle these problems. First, the project teams collated scientific information about the risk factors that influence these painful conditions. Both projects then, crucially, developed and tested the best methods of helping farmers to implement this knowledge on farm. The involvement of dairy companies (MilkLink, OMSCo, Long Clawson, Dairy Crest), laying hen producers (Noble Foods, Stonegate, Country Fresh Pullets) industry bodies and farm assurance schemes (RSPCA Freedom Food, Soil Association, Assured Dairy Farms, BEIC) was essential for success. In partnership, the projects developed new approaches that are now showing real results on farm. In both situations, practical strategies for commercial farms were devised, and the effectiveness of these strategies was tested on treatment farms (which received ongoing advice and support) by comparing the reduction in lameness or feather pecking with that observed on control farms (which were simply monitored).

For dairy cows, the initial mean prevalence of lameness on the 227 farms involved was 37%; at the project's conclusion over 4,800 fewer cows were observed to be lame. For laying hens, the more interventions that were implemented on the 100 farms involved, the greater the reduction in feather pecking observed.

Working to improve water usage efficiency

A new sensor developed by Rothamsted Research & Delta-T devices allows the measurement of matric potentials in soils, which can be used to control an irrigation system according to water stress, saving water.

The sensor, developed by Rothamsted Research, which receives strategic funding from BBSRC, and Delta-T Devices, can be used to accurately measure soil drying by roots over the whole season. It can also be used to control an irrigation system according to water stress and therefore save water. One potential use for this instrument is to decide whether or not to apply expensive irrigation water once the crop is growing well. It covers a wide range of matric potentials, does not need maintenance, is robust and does not fail when the soil becomes very dry. When water is in contact with solid particles (e.g. clay or sand particles within soil), adhesive intermolecular forces between the water and the solid can be large and important. The forces promote surface tension and the formation of menisci within the solid matrix. Force is then required to break these menisci.