1. INTRODUCTION

Fruits and vegetables typically constitute an essential part of the daily diet in India and they

are in great demand round the year from most sections of the population. The commercial

value of fruits and vegetables in terms of direct consumption, processing as well as trade has

risen substantially in recent years. Their economic importance has also increased and high

labor intensity in the production of most fruits and vegetables production also makes them

important from the employment angle as well. Increase in area allocation under horticultural

crops has often been suggested as a measure for agricultural diversification, increased

employment and income.

India ranks first in the world with an annual output of 32 MT fruits, about 8% of the world’s

fruit production; also is the second largest producer of vegetables (ranks next to China) and

accounts for about 15% of the world’s production of vegetables. The current production level

is over 71 million MT. But the real challenge starts after the production. More than 72

percent of the vegetable and fruits are wasted in every year in the absence of proper retailing,

storage and other infrastructure facilities. The sector is constrained by widespread

fragmentation in the supply chain, low productivity levels, and huge post harvest losses

arising out of inadequate storage, cold chain and transport infrastructure, logistics and supply

chain management.

Against a production of 180 million mt a year of fruits, vegetables and perishables, India has

a capacity of storing only 23.6 million mt in 5,386 cold storages across the country, of which,

80 per cent is used only for potatoes, according to the latest DIPP paper on Foreign Direct

Investment (FDI) in retail. According to industry estimates, 25 to 30 per cent of fruits and

vegetables and five to seven per cent of food grains in India get wasted.

Traditional Indian retailers account for 12 million retail outlets all over India and more than

40 percent of them sell vegetable and grocery (IBEF, 2008). Indian food retail consists of

staple commodities comprising grains, pulses, and vegetables. The Indian food retail

business, especially vegetable retailing is witnessing a rapid growth in India's organized retail

sectors. The traditional retailing of vegetables is not very much organized, amounts to 97% of

the total market (Ernst & Young, 2006), is extremely localized and highly fragmented with

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large number of intermediaries. The intermediaries between the customers and farmers are

traditional retailers with different outlet formats-mom and pop shops, non-permanent shops in

the market, pavement vendors, roadside vendors and push cart vegetable sellers, wholesale

traders, commission agents and auctioneers.

The farmers themselves sell their produces directly to the end consumers in local markets,

regulated and unregulated 'farmer markets', or they sell to intermediaries—agents and

organized retailers. The market place is usually in close proximity to the farmland and

customers accessing the market live in and around locale. Farmers selling vegetables directly

to the customer amount to very small fraction by volume. Farmers sell bulk of their produces

to agents and auctioneers. The agents buy small quantities of produces from farmers and

transfer it to wholesalers directly or through another agent. The auctioneers are people who

enter into buying contract with farmers for whole or partial quantity of the produce and sell

the produce to an agent or a wholesaler. Auctioneers also transfer the vegetables to

wholesalers directly or through another agent. Wholesalers of vegetables sell to retailers—

both traditional and organized retailers, and to customers, who buy in large quantity. Cart

vendors, a type of traditional retailers, buy vegetables from wholesalers or organized

retailers, sell to customers in mobile carts and deliver to customers at customer's doorsteps.

Currently, organized retailer Reliance Fresh (Reliance Retail Ltd) follows a Value Chain

business model (VCM). Organized retailers who adopt VCM procure the produces directly

from farmers and sell to customers by avoiding intermediaries. This model is based on its

core growth strategy of backward integration and progressing towards building an entire

value chain starting from the farmers to the end consumers. Very fewer players are involved

in this model compared to the traditional retailing model or organised retailer's hub and spoke

model. Farmers, organized retailers, and customers are the players who form this value chain.

In this practice, farmers, organized retailer's operational units, consolidation centres, hub

(distribution centres) and retail outlets stores, and customers are players. Small farmers,

contract farmers and lease farmers are the primary source of supply of vegetables to the

organised retailers. Contract farmers and lease farmers are farmers who execute a trade

agreement with the organized retailers for sale of vegetables. Figure 3 illustrates the VCM

business model of vegetable retailing. Vegetables move from farm locations to customers in

four phases farmers to consolidation centres, consolidation centres to hub, hub to retail

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outlets (stores) and stores to customers. Independent farmers supply their produces to the

consolidation centres; contract farmers and lease farmer's produces are picked up by

consolidation centres. One consolidation centre supplies vegetables to multiple hubs,

depending upon the product. Hubs get direct delivery from the contract farming locations.

The hub takes care of supply of vegetables to retail outlets. It has supply coverage to all

stores of a specific geographical area. A hub is served by one or more consolidation centres

and a consolidation centre serves one or more hubs. A store is served by only one hub. Store

sells vegetable in retail quantity to the customers and is the last phase of distribution in VCM

business model. The hub disposes off the shelf life-expiring vegetables and do not sell to cart

vendors. Value chain business model differs from hub and spoke business model in

dependency on wholesale market and supply link between hubs. The hub in the VCM

disposed off the shelf life-expired vegetables, but hubs in HSM sell off to the cart vendors.

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Fig 1: value chain of reliance fresh

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2. COMPANY PROFILE

Reliance Fresh is the convenience store format which forms part of the retail business

of Reliance Industries of India which is headed by Mukesh Ambani. Reliance has made an

investment of 250 billion in the last 4 years in their retail division. The company already has

886 Reliance Fresh outlets across the country and 47 in Bangalore. These stores sell fresh

fruits and vegetables, staples, groceries, fresh juice, bars and dairy products.

The company may not stock fruit and vegetables in some states. Though Reliance Fresh is not

exiting the fruit and vegetable business altogether, it has decided not to compete with local

vendors partly due to political reasons, and partly due to its inability to create a robust supply

chain. This is quite different from what the firm had originally planned.

When the first Reliance Fresh store opened in Hyderabad on October 2006, not only did the

company say the store’s main focus would be fresh produce like fruits and vegetables at a

much lower price, but also spoke at length about its “farm-to-fork" theory. The idea the

company spoke about was to source from farmers and sell directly to the consumer, removing

middlemen out of the way.

Organizational structure:

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ZONAL

MANAGER

CLUSTER MANAGER

AREA MANAGER

Fig 2: organizational structure of Reliance Fresh

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STORE MANAGER

ASSISTANT STORE MANAGER

COMMERCIAL ASSOCIATE

SUPERVISOR

CUSTOMER SERVICE ASSOCIATE

3. METHODOLOGY

A descriptive research was carried out to fulfill the requirements of this project. In this

chapter, objectives, sampling frame, database and method of analysis employed are presented

under the following headings

3.1 Objectives

The objectives of this project were to:

1. To identify different fruits and vegetables procured in the outlet

2. Identify the reasons for wastage of fruits and vegetables in the retail outlet.

3. To estimate wastage value of F&V in the outlet

4. To suggest remedies for minimization of wastages

3.2. Nature and Source of Data:

The study was based on the secondary data which was collected from the concerned store.

F&V that was sorted out and discarded was recorded as part of a daily routine normally

performed by the store. Percentage of dump quantity is employed for analyzing the data.

Record of dump of fruits and vegetables on daily basis was used as the data. No primary data

gathering have been carried out within the project. The data presented in the report has kindly

been given by representatives from the store

This research has been conducted based on descriptive in nature. The data overstate the

amount of fruits and vegetables actually ingested because they do not take into account all of

the substantial quantities lost due to human use through waste, moisture loss, and spoilage

beyond the farm gate in the marketing system and the home. Moreover, retail outlets of fruits

and vegetables are more dependent on cold storage, logistics and distribution; this of study

includes the same to identify the source wastages.

Analysis of sources of wastage of fruits in retail markets is undertaken to suggest ways

out to minimize this loss and improve the return.

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3.2.1. Nature and size of Sample:

The value of fruits and vegetables sold and dumped extracted from the sales report is

used for the study. The data is collected for each day for 60 days

3.2.2 Period of the study: The study was conducted for the duration of 2 months i.e. from

the periods of July to August 2013.

3.3 Analytical tools and techniques employed:

To fulfill the specific objectives of the study, the nature and extent of availability of

data, the certain analytical tools and techniques have been adopted. Measures of central

tendency and percentages were used to analyze the data and interpret the results properly.

Percentage waste was calculated in relation to sold value in monetary terms.

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4. RESULTS AND DISCUSSION

Keeping the specific objectives of the study in view, the results were

presented under the following headings:

a. Fruits and vegetables procured in the outlet

b. estimate wastage value of F&V in the outlet

c. reasons for wastage of fruits and vegetables in the retail outlet

d. suggest remedies for minimization of wastages

4.1 Fruits and vegetables procured in the outlet

Table 1: Fruits and Vegetables catalog of Bhuvaneshwarinagar Reliance Fresh Retail outlet

Sl. No Name of Vegetables Name of Fruits

1 Amranthus Red Bunch Banana Robusta

2 Brinjal Purple Papaya

3 Broad Beans Banana Yellaki

4 Cabbage Pomegranate

5 Capsicum Apple royal gola

6 Carrot Regular Melody melon

7 Cauliflower Guava

8 Chilly Green Mango Neelum

9 Cluster beans Sapota Round

10 Coriander Bunch Apple Rose

11 Cucumber Apple Red Delicious

12 Curry Leaf Plum Indian

13 Methi Watermelon

14 Mint Bunch Apple Fuji

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15 Okra Mosambi

16 Onion Muskmelon

17 Potato Pears Indian

18 Radish White Orange Imported

19 Ridge guard Banana Red

20 Spinach Bunch Banana Nendrean

21 Tomato Custard Apple

4.2 estimated wastage value of F&V in the outlet

Dump can be divided into two groups: Recorded in-store dump and unrecorded in-store

dump. Recorded in-store dump was defined as waste occurring after purchase from the

supplier. This waste is sorted out and discarded by stores when there is little or no

possibility of selling the products. This could be due product deterioration for unpackaged

FFV. Unrecorded in-store dump consisted of waste that was discarded but not recorded.

This means that it had the potential to be either pre-store waste or recorded in-store waste

if recorded in any of these categories. Unrecorded in-store waste originated from two

sources: underestimated mass when recording unpackaged waste; and unrecorded of

wasted items. The latter can occur in error or as a deliberate act, e.g. it is not cost-

effective to record small amounts of waste. The general procedure for registration of

dump amounts: all products that are discarded are registered via the item-code and also

the reason behind the discard is registered. The amount is registered in monetary terms.

Only products that are sold by weight are registered by weight, sometimes with estimated

weight and sometimes actual weight. The purpose of this very comprehensive registration

is not primarily to quantify waste for the retail sector, but to get statistics about product

loss that might have a significant influence on the economic result of each retail shop and

company, as this might have a significant negative impact on the economic results for the

shop owner and the retail company. F&V that was sorted out and discarded was recorded

as part of a daily routine normally performed by the stores. The routine starts with an

inventory in the morning where products considered unsellable are sorted out. Products

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are considered unsellable if they have passed their best before or use-by date. Since FFV

are sold without a date label, the sorting of these products is based on visual appearance.

Table 2: Table showing average daily F & V sales

DAY F & V SALES (Rs)

Monday 50916.33

Tuesday 51221.457

Wednesday 64239.429

Thursday 62661.794

Friday 53045.203

Saturday 71315.612

Sunday 83692.96

AVERAGE 62442

Chart 1: chart showing behavior of F& V sales

Monday

Tuesd

ay

Wed

nesday

Thursd

ayFri

day

Saturd

ay

Sunday

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

F & V SALES

F & V SALESLinear (F & V SALES)

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DAY DUMP (Rs)

Monday 2747

Tuesday 2749

Wednesday 2759

Thursday 2773

Friday 2767

Saturday 2766

Sunday 2714

AVERAGE 2754

Table 3: table showing daily average of dump

Chart 2: chart showing behavior of dump values

Monday Tuesday Wednesday Thursday Friday Saturday Sunday2680

2690

2700

2710

2720

2730

2740

2750

2760

2770

2780

DUMP

DUMPLinear (DUMP)

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Chart 3: pie chart showing proportion of dump to F & V sales

F & V sales96%

Dump4%

F & V salesDump

4.3 reasons for wastage of fruits and vegetables in the retail outlet

As this study emphasizes dumping at retail level but before that it is

necessary to acquaint with the different parts in value chain where dump

occurs. The most important reasons for dumping in different parts of the

value chain are described below:

Damage in the marketing chain:

Fruits and vegetables are very susceptible to mechanical injury. This can occur at any

stage of the marketing chain and can result from poor harvesting practices such as the use of

dirty cutting knives; unsuitable containers used at harvest time or during the marketing

process, e.g. containers that can be easily squashed or have splintered wood, sharp edges or

poor nailing; over packing or under packing of containers; and careless handling of

containers. Resultant damage can include splitting of fruits, internal bruising, superficial

grazing, and crushing of soft produce. Poor handling can thus result in development of entry

points for  molds and bacteria, increased water loss, and an increased respiration

rate. Produce can be damaged when exposed to extremes of temperature. Levels of tolerance

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to low temperatures are important when cool storage is envisaged. All produce will freeze at

temperatures between 0 and -2 degrees Celsius. Although a few commodities are tolerant of

slight freezing, bad temperature control in storage can lead to significant losses.

Some fruits and vegetables are also susceptible to contaminants introduced after

harvest by use of contaminated field boxes; dirty water used for washing produce before

packing; decaying, rejected produce lying around packing houses; and unhealthy produce

contaminating healthy produce in the same packages. Losses directly attributed to transport

can be high. Damage occurs as a result of careless handling of packed produce during loading

and unloading; vibration (shaking) of the vehicle, especially on bad roads; and poor stowage,

with packages often squeezed into the vehicle in order to maximize revenue for the

transporters. Overheating leads to decay, and increases the rate of water loss. In transport it

can result from using closed vehicles with no ventilation; stacking patterns that block the

movement of air; and using vehicles that provide no protection from the sun. Breakdowns of

vehicles can be a significant cause of losses, as perishable produce can be left exposed to the

sun for a day or more while repairs are carried out. Loss of product because of changes in

supply chain management, for example, changes to packaging specifications or incorrect

demand forecasting leading to disposal of product either to landfill or anaerobic digestion.

Such losses are estimated to equate to the order of 100,000 to 150,000 tonnes or around 5%

of the total waste arising. Although precise estimates are not available, disposal to anaerobic

digestion is increasing while disposal to landfill is falling.

Dump at Retail and wholesale sector

At the retail marketing stage losses can be significant. Poor-quality markets often provide

little protection for the produce against the elements, leading to rapid produce deterioration.

Sorting of produce to separate the saleable from the unsaleable can result in high percentages

being discarded, and there can be high weight loss from the trimming of leafy vegetables.

Arrival of fresh supplies in a market may lead to some existing, older stock being discarded,

or sold at very low prices.

Following were the major reasons identified for dumping at the retail outlet:

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Lack of knowledge on how different products should be handled especially fruit and

vegetables as they are sensitive to storage etc.

Lack of timely sorting of fruits and vegetables.

No sale for long duration and the stock held up in the store.

Damage caused by customers while picking for the good produce.

Nature of the produce: for example Tomato is more prone to be dumped compared to

other vegetables.

Weight reduction due to loss of moisture in fruits and vegetables after certain period of

time.

problems with product quality, quality that does not meet the retailer’s specifications and

additional trimming of edible parts, such as for precut produce (ex. Cauliflower, Cabbage

Bad display- banana in front of chiller will decrease the quality of banana

Watermelon, papaya, muskmelons are dumped due to stacking one over the other, fruits

are spoiled due to weight exerted by each other.

Fruits and vegetables are exposed in large piles (Musambi, Pomegranate) – with the

results that fruits in the middle or the bottom of the pile will easily get damaged and must

be disposed. Also if a fruit becomes rotten in the pile, the surrounding fruits are more

likely to be rejected than if they are displayed one by one.

Improper Indenting: What the customers buy is dependent on the weather, the season, the

offers of the week, and on the general mood of the customers. All this makes it difficult to

indent adequately: Lack of knowledge among the personnel regarding ordering, it takes a

long time to learn how to calculate the right amounts to Indent.

Improper handling while arranging and keeping the stock. Break-down of products due to

wrong mechanic handling also occurs. (Watermelon easily get damaged due to rough

handling).

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A part of the wastage was due to occasional reasons such as mistakes and special

occasions. Special occasions, e.g. promotions or holidays, and festivals cause waste since

they can be difficult to predict.

Expectation of customer perfection: Many customers select stores based on the quality of

perishables, and therefore retailers feel compelled to have only produce of perfect shape,

size, and color—leading too much of the culling.

Large Pack sizes: Produce arrives in preset quantities according to case size. This limits

the flexibility for produce buyers to purchase exactly the amount needed. For example, if

a grocer wants 200 gm grape but they come in cases of 500 gm, the store is then stuck

with 300 gm extras.

Unnecessary inventory: excessive storage and delay of products or information resulting

in excessive cost, overstocking and over handling by both staff and customers and

damage to items on the bottom from the accumulated weight.

Products, do not achieve their intended market outlet because, they have to be marked

down for sale or because they do not meet the required specification. Such products are

channeled to dump. This type of loss can represent a significant economic loss to business

even though it reflects an efficient use of the product because it is being channeled into its

next best market rather than being disposed off.

Poor ventilation of produce also leads to the accumulation of carbon dioxide. When the

concentration of carbon dioxide increases it will quickly ruin produce. (For example,

Lack of aeration due to tight packing of vegetables like Brinjal, Okra, Carrot, French

beans, Radish etc.)

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4.4 ways to minimize dumping at Retail outlet:

Marking down the price of F and V in order to dispose of excess stock.

Promotions that have passed (post-holiday discards are most common) so to reduce the

dump, offer discount for out-of-date promotional items or slightly damaged goods.

Avoid exposing Fruits and vegetables in large piles. This was the main cause of dump of

Musambi in the concerned store.

Poor ventilation of produce also leads to the accumulation of carbon

dioxide. When the concentration of carbon dioxide increases it will

quickly ruin produce. (Ex. Lack of aeration due to tight packing of

vegetables like Brinjal, Okra, Carrot, French beans, Radish etc. Avoid

tight packing and punching of plastic bags should be done.

The increased pre-store waste could be a consequence of waste reduction measures in

previous steps in the supply chain, meaning that if the producer and supplier allow

through products with questionable quality, the wastage might just move to a later stage

in the supply chain. Shifting the waste from in-store to pre-store is a way to save money

for the store. Allow only good quality produce or produce without any damage to enter

the store.

Common and more standard appearance of crates used to deliver fruit and vegetables

would make the personnel’s work easier.

Information to the personnel and set target goals for decreasing the wastage.

Packages – using the right type of packages for specific fruits. For example Watermelon

comes in gunny bags, which is one of the reasons of dump during loading, unloading,

transportation, stocking and arranging. Separate nylon bags should be used for packing of

Watermelons.

Indent the right amounts at the right time. What the customers buy dependent on the

weather, the season, the offers of the week, and on the general mood of the customers. All

this makes it difficult to order. Proper training for indenting should be provided to the

personnel.

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One idea is to Store at the right temperatures and right light. Lowering the temperature in

the fridge/freezers does increase the freshness of the products especially green leafy

vegetables. Fruit and vegetables should be stored at optimum temperatures.

“Separate display” for the different produce. In store, produce of less quantity used to be

kept in a single crate, for ex. Banana stem, Banana flower and Drumstick which is one of

the reasons of early dumping.

Avoid overstocked product displays: retail stores operate under the

assumption that customers buy more from brimming, fully stocked

displays, preferring to choose from a towering pile rather than from a

scantly filled bin. (Ex. Apple). Product display redesign using platforms and other

props to make produce bins appear fuller.

In order to reduce the dump, workers should be instructed about

product quality specifications.

Proper display: Workers should be trained on display considerations.

For example Tomato should not be kept beside Papaya as ethylene

production from tomatoes cause early ripening of Papaya.

Timely segregation of fruits and vegetables like tomato, onion, okra

and chilli.

Adapt the FIFO inventory management method.

Nailing done by customers to check tenderness especially in Bottle

gourd and Pomegranate. Company should attempt to restrict damage

caused by customers while picking for the good produce.

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5. CONCLUSION

The objective of this research was to assess the monitory value lost due to dumping of fruits

and vegetables at Bhuvaneshwarinagar Reliance Fresh. The store has average daily total sales

of Rs. 206000 and F and V accounts for 31 per cent of total sales.

In the process of research various sources identified for dumping of fruits and vegetables.

Among them most common reasons were poor indenting practices, poor segregation of fruits

and vegetables in order to separate dump from fresh produce, improper stacking of fruits like

watermelon, papaya, banana.

From the above study we come to know that the average daily F and V sales of

Bhvaneshwarinagar Reliance fresh was around Rs. 62442/-. The average dump values to be

Rs. 2754/-. The F and V dump value accounts for 4.54 per cent of average daily sales.

It is observed that at the weekends have relatively high F & V sales and low dump.

In order to reduce dump at the store level the store must follow proper indenting, proper

stacking of F & V.

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REFERENCES

http://en.wikipedia.org/wiki/Reliance_Fresh

R. Arivazhagan, P. Geetha, and Ravilochanan Parthasarathy, Analysis of Sources of

Fruit Wastages in Retail outlets inChennai, Tamilnadu, IndiaInternational Journal of

Trade, Economics and Finance, Vol. 3, No. 3, June 2012

Business Models of Vegetable Retailers In India, Paulrajan Rajkumar and Fatima

Jacob Department of Management Studies, Anna University, Chennai, India

Retrieved from www.greatlakes.edu.in/uploads/pdf/Chapter3.pdf

DIPP report on multibrand retailing. Retrieved from

dipp.nic.in/...paper/DP_FDI_Multi-BrandRetailTrading_06July2010.doc

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