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Amazon to source directly from farmers

This project has been initiated as part of Amazon’s focus on food and grocery as growth area for future.

, ET Bureau|
Last Updated: Dec 18, 2019, 01.08 PM IST
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Amazon is starting a cold chain hub in Pune to develop a sustainable farm-to-fork model
New Delhi: Amazon is running a pilot project in Pune where the US e-commerce company is for the first time sourcing fresh produce directly from the farmers as part its farm-to-fork initiatives.

Amazon Retail India Pvt Ltd (ARIPL), the wholly-owned food retailing venture of the US giant, is currently working with dozens of farmers in the region and the company has created a cold chain hub in the vicinity to supply fresh produce to sell online through its Amazon Fresh and Amazon Pantry, two sources familiar with the development, said.

Amazon plans to expand this program to other parts once the project is successful, one of them said. Currently Amazon purchases fruits and vegetables from aggregators in various mandis.

“We are engaging with farmers and government bodies to develop a sustainable farm-to-fork model by investing in technology,” an Amazon spokesperson said in an emailed response.

The pilot ptoject has been initiated as part of Amazon’s focus on food and grocery as growth area for future.

“Grocery is an important priority that we would like to keep improving our service and expanding,” Amazon’s India head Amit Agarwal told ET in an interview last week.

Food and grocery is largest portion of India’s retail market and organised retailers, including e-commerce companies, are trying to tap into the growth.

Currently organised retailers account for $25 billion of India’s annual $580 billion food and grocery market and the segment is expected to grow to $69 billion by 2024, according to Axis Capital.

“Our ambition is to have the largest wallet share of customers for grocery purchases,” Agarwal said.

Amazon’s US rival Walmart Inc. already sources fresh produce from hundreds of farmers in many Indian states. Walmart operates more than two dozen Best Price branded wholesale stores. The US retail behemoth last year acquired Amazon’s rival Flipkart for $16 billion.

In 2017, ARIPL had received government approval to invest $500 million in the food retailing subsidiary that for the first time allows Amazon to stock and sell locally produced food items. Currently a portion of food products on Amazon’s India marketplace is sold by ARIPL.

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