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Will Big Bazaar founder’s gigantic food park in Bangalore actually help farmers?

Nayantara Narayanan, Scroll.in

Bangalore, 25 September 2014

As Prime Minister Narendra Modi made his way to Tumkur near Bangalore on Wednesday morning, several newspapers carried full-page ads announcing that he was “inaugurating the era of food prosperity; to share the joy of food with farmers entrepreneurs and consumers”.

Modi was opening an integrated food park, established and run by the Kishore Biyani-led Future Group. The 110-acre facility has been established under a scheme of the Ministry of Food Processing and is Biyani’s giant step towards becoming a leader in the fast moving consumer goods business.

People in India are working longer hours, commuting longer distances and cooking less. The demand for ready-to-eat food is rising and with it the business of food processing. Kishore Biyani, the founder of the Big Bazaar supermarket chain, is looking to tap into this food processing potential at the India Food Park, in which he plans 50 units for food processing and facilities to make Indian savories and snacks, frozen food products, chutneys, pasta, dry fruits and nuts, chocolates, and more.

Giant rasoi

Biyani sees the food park as a giant “rasoi” for Future Group’s branded food business. What the park will essentially do is cut out the middle-men, give the company control over the quality of its food products and improve it profit margins.

The company estimates that as much as Rs 1,000 crore will be invested in the park in the next three to five years. It has already invested Rs 250 crore into the facility, having received assistance of Rs 50 crore from the ministry.

The park is set up to collect produce, especially fruit and vegetables, from agricultural cooperatives in the region. A manufacturing centre in the park will play host to other companies that want to set up food processing units. The park will provide the infrastructure – energy, water and sewage facilities, office space and so on. It will also have multiple cold storage facilities to keep food fresh.

“What a facility like this does is take away some of the friction of doing business in India,” said Devangshu Dutta, chief executive of the consumer goods consultancy Third Eyesight.

Food centres

The government’s food park scheme started in 2008, the first mega food park built in Andhra Pradesh in 2012 and several others set up after that. So what makes the Tumkur park special? Unlike other mega food parks that are food-manufacturing centres, this one has better access to the market. “If you have the ready market, you can concentrate on productivity and give it your best shot,” said Prashant Agarwal, joint managing director of consulting firm Wazir. “The advantage of companies like Future Group coming up in processing parks is so that they can bring in investments and then marketing is not a problem.”

While India Food Park will share the joy of food with entrepreneurs, whether farmers and consumers will feel that same joy remains uncertain. “Ultimately both the consumer and manufacturer will benefit but by how much not one can say,” Agarwal said.

Said Dutta, “I don’t think it necessarily translates into benefits for the farmers or, for that matter, the customers. It definitely benefits the companies and it depends on them whether they will pass some of that upstream or downstream.”

(Published in Scroll.in.)

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