In the firm lands of Nashik, Sangli and Baramati, a ‘grape revolution’ is gaining momentum. Once backed by traders, the grapes business in India is now being spearheaded by Mahindra & Mahindra, which has quietly built a $100-million fruits business from Asia to Europe and North America, in a period of 15 years.
Mahindra may be manufacturing small passenger aircraft or building the over ₹15 crore fastest-ever electric car of the world to showcase its technological capabilities, but its commitment to farmers to increase their income is noteworthy.
In 15 years, it has expanded grape cultivation areas in the country, after convincing farmers to switch to grape cultivation, which provides more yield than other crops such as sugarcane or rice.
When the company forayed into the grape business as part of its strategy to diversify from tractors, it began with exporting a few containers. But now it has achieved a volume of several hundred containers. In 2017, India had exported 888 containers, but in 2018 this came down to 535 containers. In this, Mahindra has had the lion’s share.
Having worked with farmers and helping them with technical know-how as well as better market access, Mahindra is also ensuring that the farmers get the best price from the international market. It is also inviting international experts at its own cost to advise farmers on grapes cultivation in accordance with international food safety norms. In the process, the company is building a solid grape ecosystem that could rival Egypt and other leading grape cultivating nations.
Profitable partnership
“The purpose of our company is to impact communities and help them to rise and develop business models which are inclusive and which can help our ecosystem’s players to benefit, so that all have a win-win situation,” said Ashok Sharma, president, Mahindra Agri Solutions, a 100% subsidiary of Mahindra & Mahindra. When Mahindra ventured into this business, farmers did not have knowledge about cultivating the right variety of grapes for the international market. Though Europe was very keen to buy from India, it had very stringent norms on chemical residue.
So the company started training the farmers on how to manage that and it put its people on the ground as well as deployed agronomists to go to the fields and explain concepts. At that time, while other companies were just buying from farmers and trading in grapes, Mahindra invested in building capability and skills of farmers.
Now, the company is working with about 1,400 farmers, helping them with modern practices. Their output too has grown substantially.
“Ten years ago, a farmer used to get 4 tonnes per acre. Now they get about 12 tonnes. The output has increased due to good agricultural practices,” Mr. Sharma said.
In the past, farmers had access only to the Indian market, where prices were quite subdued. They used to get ₹25 to ₹30 per kg. But now, with exports, they sometimes get anywhere from ₹70 to ₹100, depending on the variety of grapes and the market. “This is a great example of how private enterprise, farmers and the government can work together to create a very sustainable export business model; this is something badly required for our country today,” Mr. Sharma added.
Dependence on Europe
In 2011-12, when Mahindra realised that Indian exporters were highly dependent on Europe, where there is restriction on consumption and no certainty in pricing, it started working towards developing new markets. The company then forayed into Canada, Malaysia and China, for which it had to develop new varieties in new geographies.
“We moved outside Nashik, to newer areas like Baramati and Sangli regions where new varieties could be grown,” Mr. Sharma said. A few weeks ago, Baramati shipped 100 containers. Mahindra has managed to double the output as farmers are switching to grapes from other crop.
Bajirao Shinde, a grape farmer from Nashik said his family had benefited by moving to grape farming and their association with Mahindra had been rewarding.
“While my brother manages the grape farming business, I stay in the farm and work closely with workers. We are increasing the land under grape cultivation,” Mr. Shinde said.
Mahindra’s Saboro grapes command a 10-15% premium in China.
To cater to big global retailers like Edeka in Germany, which prefer to buy directly from farmers, the company has set up a packing house in Nashik, which sources grapes directly from the farmers and packages them in accordance with world-class standards for export. The company declares to buyers that it follows fair trade practices — no child labour, payment of fair wages, providing proper support to employees and not indulging in exploitation of any kind, besides employing good agricultural practices.
This helps as consumers wouldn’t mind paying a half or 1 Euro more, the company says. Now, Mahindra is preparing Indian farmers for the next level.
“We are using block chain and perhaps we are the first company in the world to use it for fruits. Now, through blockchain, a customer in Europe or China, can know who the farmer is and when the grape was harvested, besides other details,” Mr. Sharma said.
Expanding markets
Last year, the company acquired Netherlands’ Origin Fruit Direct, a €60-million company having deep roots in Europe. Through this venture, Mahindra has gained access to markets like South Africa, Peru and Chile, taking its supply chain beyond India. “Today, we are roughly a $100 million company in fruits, including grapes, and that makes us the largest Indian fruit company,” Mr. Sharma added.
