PepsiCo has a large contract farming program in India to source agricultural raw materials. It works with over 11,000 smallholder farmers to produce crops like potatoes and tomatoes. PepsiCo provides farmers with access to seeds, pesticides, loans, insurance, and guarantees to purchase the crops. This helps farmers increase their incomes and manage risks. Other companies can also adopt contract farming models to reliably source quality ingredients and support small farmers. Governments and companies should focus on improving contract terms and strengthening farmer groups or cooperatives.

1. Contract Farming of
Vanilla

2. Meaning of Contract Farming
It is an agreement between farmers & processing and marketing firms for the
production and supply of agricultural products under certain agreement,
frequently at predetermined prices.

3. Benefit of Contract Farming

4. The GOI Had Run The
Largest Contract
Farming Model

6. Vanilla
• Introduced in India, by the British, in a spice garden at Kurtallam in Tamil
Nadu owned by the East India Company.
• It is cultivated for its pleasant flavour, which is one of the costliest spices in
the international market.
• The Indian farmers started vanilla cultivation in the mid- to late 1990s,
prompted, mainly by the falling profits from rubber and coffee
• India accounts for 2% of the worlds vanilla exports

7. Vanilla Contd.
• Karnataka leads in the country's vanilla cultivation followed by Kerala and
Tamil Nadu
• The potential for vanilla cultivation in the country is tremendous as a result
of a growing demand for Natural vanillin in place of the synthetic substitute
following the shift towards natural products the world over.
• It is a very ideal, most economic orchid crop for organic cultivation having a
tremendous potential for domestic consumption and exports given the
growing demand for Natural vanillin in the global market.

9. • PepsiCo is a world leader in convenient foods and beverages, with 2006
revenues of more than USD 35.1 billion and 168,000 employees.
• PepsiCo India Snacks (Frito Lays) is one of the largest convenient foods
company in India.
• Entered in India in 1989
• Today PepsiCo India has 3 state of the art snack food plants in India

10. • PepsiCo beverages and snack operations directly employ more than 4600
people in India and indirectly 60,000
• PepsiCo partners with the different state governments to provide access to
the latest varieties and agronomic practices for the farming community in
multiple crops across the country

11. CONTRACT FARMING PROGRAM

12. • Quantity under Contract farming program has grown almost
five times since 2003
• No of farmers directly benefited from our initiatives has jumped from 800
in 2003 to almost 11000 in 2007
• PepsiCo's contract farmers have been getting significant benefits over other
farmers because of insurance, banks, blight control packages and attractive
buy back prices

14. CONTRACT FARMING MODEL

16. What is the rationale behind the agri-
supply chain initiative of Pepsi?
• As a leading food and beverage company, agriculture is central to their supply
chain.
• Since their products depend on a safe, high-quality, and affordable supply of
agricultural raw materials to meet the demands of their business as well as
the expectations of their consumers, customers, and other stakeholders.
• Given the importance of agricultural materials to PepsiCo, they are
committed to incorporating the best thinking, practices, and technology to
support sustainable agriculture within PepsiCo’s global farming supply chain.

17. Is it consistent with its objectives
and philosophy
• PepsiCo's Global Sustainable Agriculture Policy is an essential part of the
broader and more comprehensive PepsiCo Responsible Sourcing Guidelines,
which incorporate applicable portions of the PepsiCo Supplier Code of
Conduct, Sustainable Farming Initiative, Environmental Health and Safety
Policy, Sustainable Packaging Policy, Forestry Stewardship Policy, and Land
Use Policy.
• PepsiCo aims to implement specific programs and measurement processes
to improve overall agricultural supply chain performance. PepsiCo aims to
work with these partners to improve and embed best practices in their
operations.

18. Explain Pepsi’s style of management and
approach to plantation crop?

19. • PepsiCo’s 360-degree farmer connect program can transformed the lives of small and marginal
growers across India.
• PepsiCo India can introduce collaborative farming of process-grade products in India.. More than 45
percent of farmers in India are small and marginal farmers with a land holding of one acre or less.
• PepsiCo India can improve their incomes through a 360-degree farmer connect program that includes:
• Assured buy-back of produce at pre-agreed prices, which insulates farmers from open market price
fluctuations.
• Supply of high quality planting material, including its proprietary advanced seed varieties.
• Offering advanced plant protection program and technical know-how developed in collaboration with
leading agri-input companies like DuPont, Bayer and BASF.
• Soft loans through a national level tie-up with State Bank of India.
• Facilitation of crop/weather risk insurance in partnership with leading insurance companies to protect
farm incomes.

20. Can other companies emulate Pepsi’s
Practice?
• Yes other companies can also adopt Contract Farming. Some benefits that the
companies can help by contract farming are
• Contract farming with small farmers is more politically acceptable than, for
example, production on estates
• Working with small farmers overcomes land constraints
• Production is more reliable than open-market purchases and the sponsoring
company faces less risk by not being responsible for production
• More consistent quality can be obtained than if purchases were made on the open
market

21. Can it be improved?
• Contract Farming can be improved by drafting a new law by the
Government to prevent disputes between farmers and companies
• Companies should try to enter into contract farming with farmer
cooperatives instead of individual farmers, as it creates healthy relations
between the farmers and the companies and also it helps to obtain large
quantity of produce at a time from a single entity.

22. To Sum Up…..
Collaborative efforts of farmers, companies and the
government in contract farming of medicinal plants will
add to the over-all socio-economic developments of
nations.

23. “YOU LEARN SOMETHING EVERYDAY
IF YOU PAY ATTENTION”
-By ReLeBlond
THANK YOU