Tatas to start corporate farming

In what could be the country's largest corporate farming initiative, the Tata group's newly-created Amalgamated Plantations is looking at an "organised corporate farming" proposal that will leverage the country's burgeoning organised retail grocery business.

The initiative plans to go beyond plantation management to enhance productivity and add value to feed the demand from the new grocery retail chains.

The proposal is part of a reorganisation of Tata Tea's plantation business last week, when it announced the transfer of its North Indian tea plantation business in Assam and Dooars in north Bengal to Amalgamated Plantations.

Tata Tea, IL&FS and International Finance Corporation have 20 per cent each in the company, and the balance is to be split among Hardeep Singh, chairman, Amalgamated Plantations, consultant Ranjit Barthakur's Globally Managed Services and the company's employees.

The company says it is the country's largest corporate owner of agricultural land with 24,000 hectares (nearly 60,000 acres) under its fold.

It has permission to use five per cent of the Assam plantations for non-tea crops, where it already grows spices and vegetables, and it is awaiting similar permission for the West Bengal plantations.

Singh, who is the former head of food company Cargill's India, said the business model would extend to landowners around its plantations, as well as other parts of the country, to leverage the benefits of scale.

The objective will be to improve productivity and add value to the produce, given that India's per-hectare productivity of 55 tonne is significantly behind the US and The Netherlands, where it is 500-600 tonne.

Singh said there was a gap in the market for good quality agricultural produce. "Most business enterprises are talking about the arbitrage from farm to market, but we will focus on improving productivity on the supply side," he said.

He did not rule out entering processed foods beyond tea. "We will provide products that the customer is looking for and where we can participate in creating a differentiated product," he added without commenting on specific categories.

The Amalgamated Plantations' initiative is part of an effort to increase the company's profitability. It is also in sync with a growing trend of involvement in agriculture by conglomerates like tobacco-to-hotel major ITC, PepsiCo, Bharti and Reliance.

The last two have started farming initiatives to tie up supplies for their respective retail chains.