Pepsi-Supply Chain of Potato

Ishan SharmaAjitesh PuriSeerat JangdaNithya KomundariPuja PriyaABM09008 ABM09009 ABM09010 ABM09014 ABM09022
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Company Overview

Pepsi- entered India in 1989, pioneer in contract farming since 2001 Project with the Punjab Agro Industries Corporation and Punjab Agriculture University Program focuses on evolving agricultural practices to help Punjab farmers produce crops that would make Indian products internationally competitive Potato is the largest crop for contract farming for producing potato chips for Frito Lays

Product Portfolio
Refreshment beverages
Pepsi, 7UP Mirinda Mountain Dew Hydrating and nutritional beverages Aquafina drinking water

Low calorie options

Diet Pepsi 7Up Light Quaker Oats Lehar Lite

Chips
Lays Kurkure, UncleChips

Drinks
isotonic sports drinks Gatorade fruit juices and juice based drinks Tropicana, Tropicana Twister and Slice

Cheetos

Overview of Potato Sector in India

India - 3rd largest potato producing country Production- 25 million metric tons -8 % of the worlds total produce Grown on 1.5 million hectares of land -4th country having maximum area cultivated for potatoes Yield rate per hectare-19 tons per hectare (European countries 30-40 ) Major producing regions are UP, West Bengal and Bihar- 72% of the national production 80% of the potato in India is grown in winter months (Rabi crop) India provides the unique advantage of potatoes being grown in different seasons and different geographies, thereby making process grade potatoes available all year round Very small quantity is exported-0.5% (72000 MT) of the total worlds of potatoes The importing countries are Sri Lanka, Nepal, Mauritius, Singapore, United Arab Emirates and Japan

PepsiCo Potato Operations

Traditional Value Chain: Farmer-----Consolidator------Wholesaler-----Semi-wholesaler-----Retailer Farmer is not motivated to focus on quality issues --no premium attached PepsiCos involvement in Indian agriculture stems from its vision of creating a cost-effective localized agricultural base in India by leveraging farmers access to world-class agricultural practices Frito-Lay, the food arm of PepsiCo, is the largest potato procurement company and India is their third-largest operation worldwide.

Operations
Three potato processing plants in India: Punjab (Sangrur)--- 10,000 MT West Bengal (Sankrail near Kolkata)7500MT Ranjangaon near Pune---- 18000 MT The models used are: working through, co-operatives, involving NGOs and working directly with farmers

Vendor is the local person hired by the company as a liaison person between farmers and company. He is accessible to the farmer. The vendor also ensures availability of seeds and other inputs at the farm level and is involved in monitoring the crop along with the company agronomists. Potatoes grown in India for traditional use have high sugar content and less solids. Processing requires potatoes with low sugar content (0%) and high solids to avoid browning of the finished product
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Quality Control Steps

R & D Thrust Areas: The most common variety grown in West Bengal is Kufri Jyoti, other major variety is Kufri Chandramukhi. Chipsona I and Chipsona II and Atlantic with low sugar and high solid content have been introduced for processing purposes. Before introducing the varieties to the farmers, extensive trials of various varieties were undertaken and a package of agronomic practices suitable to the local agro-climatic conditions has been developed in collaboration with Central Potato Research Institute (CPRI) The package of practices developed includes specific fertilizer requirements and spraying schedule

Quality Control Steps

Farm Inputs: The vendor ensures that the farmers falling under his supervision have all the required inputs at the right time Input kit is given free of cost Crop insurance under Agricultural Insurance Company (AIC) and weather insurance from ICICI Lombard Win-Win situation for both farmers and company: Company was able to negotiate special premium rates with AIC Clearance of claims is also much faster Farm Production: Team of agricultural graduates employed to make the use of chemicals and fertilizers much more timely and effective Crop spacing: Increase spacing helps to increase yield, reduce greening of potato, and reduces the share of undersized potatoes
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Quality Control Steps

Harvesting and packaging: Handle potatoes like eggs not like stones Instead of jute bags, the use of plastic bags for packaging to ensure better storage Grading and Sorting: Mechanically graded for size Visual inspection for damaged potatoes Test for sugar content -by frying a small sample from the lot Storage: Critical factors in successful storage include variety, methods of culture, harvest, field curing, temperature and humidity control, storage and sprout inhibition Stored at 12 degrees to control conversion of sugar to starch.
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Quality Control Steps

Processing Center: Washing and peeling Metal detection and inspection for physical damages and discoloration Run through rotating slicers Deep fried--optical testing for color Chips are mixed with spices and packed

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Production

PostHarest

Protection

5P Approach

Programme monitoring

Passport

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PepsiCos 5P production process

Production: PepsiCo supplied its contract farmers with high quality seeds of processing grade. PepsiCo also arranged for inputs such as fertilizers. Protection: Comprehensive packages were developed to suit the respective geographies, pest and disease status as a complete solution kit. Programme monitoring: Regular programmes are organized for the farmers to train them in the safe use of the pesticides, proper spraying techniques, identification of the pests and diseases Passports: The passport is a tool for traceability reasons and serves as a document for keeping farm activity records at a farmers level. The farmer can use the passport to work out the cost/benefit he is getting. Post-harvest: Farmers are trained in grading the potatoes to meet PepsiCos requirements.
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Comparison

The cost of production for PepsiCo farmers is Rs. 30,180 per acre whereas the same for farmers selling to the traditional market is Rs. 25,280 Major difference in the production costs 1. Seed cost: Higher because of the size of the seed potatoes and specific variety used. 2. Agro-chemicals cost

Sustainability + quality + traceability = added value for every partner in the food value chain

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Thank you

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