Large retail chains like Reliance Fresh, Subhiksha and Spencer's have not been able to do sourcing of their entire farm products directly from the farmers. Most of them have found a way out in the artiyas or commission agents, an integral part of the mandi system.
These chains have signed 2-3-year purchase contract with leading commission agents in mandis, who charge commission for selling fruits and vegetables to them.
Reliance Industries, for instance, operating its retail stores under the Reliance Fresh name, has not been able to maximise its "farm to fork" operations, aimed at cutting the layer of intermediaries and purchasing directly from farmers.
Though the company is buying directly from farmers through its collection centres, known as Ranger Farms, the volumes are not large enough to meet the entire demand from the stores.
Therefore, the company has to source products through commission agents in mandis as well. "We have signed a three-year contract with the Reliance Retail to supply farm products to them. We charge 3 per cent as our commission from the company and the company pays our money in 15 days on an average," said a leading commission agent at the new sabzi mandi, Jalandhar.
This agent also supplies products to Subhiksha and Spencer's but their purchase volumes are low compared to Reliance. He, however, charges the same rate and commission for selling products to them. He sells fruits worth Rs 50,000 per day on an average to Reliance and about Rs 3,000-4,000 to the other two chains.
The information available with the Agriculture Market Committee, Jalandhar shows that Reliance Retail is purchasing fruits and vegetables worth Rs 5 lakh daily on an average from traders outside the state too.
In Delhi's Azadpur mandi too, retail chains are buying from commission agents.
"Overall, we manage to buy 60 per cent of fruits and vegetables directly from farmers. However, for the rest we depend on mandi vendors in each city," said G Kashinath, president (Sourcing), Subhiksha.
