Making a presentation on contract farming at a seminar organised by Confederation of Indian Industry (CII) here, Pepsico executive director Abhiram Seth said that contract farming has its risks too, in the form of natural calamities, diseases, future market and price fluctuations. He said that encouraging farmers to grow several crops could increase mutual dependence for the benefit of both.

He said that the key to the success of contract farming is technology transfer. Only when the yield is high, and enough is grown from the same field, profit can be be shared between the farmer and industry. The other key to the success is planning for the entire season, ensuring steady supply of the commodity at pre-agreed price on pre-agreed day and hour.

Talking about tomato, he said, it is highly perishable anddelicate. It has to be harvested immediately after it reaches red ripe stage, unlike sugar cane which can be left behind in the field up to 100 days after maturity. Tomato cannot be stored after harvest as in case of many other fruits and vegetables.

However, Seth recalled, the success did not come that easily. Pepsico Foods Ltd (PFL) had set up a 30 tonnes/hour tomato processing plant at Zahura in Punjab in 1989-90.

In the first year, the plant ran effectively for just two days. Now it had processed over 40,000 tonnes of tomato, the bulk being exported.

"We did a mistake of setting up the plant first and then entering into contract. In all new ventures, it should be the opposite," he said.

The farmers had to be initiated to deep chieseling of the field, raising nursery for high yielding varieties of tomato, the use of equipment and improvised vehicles to transport tomato in crates from the farms to the plant. The fertilisers were found to be adulterated and filtered, now procured directly from thecompanies.The average yield in the state was then 20 tonnes/hectare as against India's 10 tonnes/hectare and world average of 24 tonnes/hectare. Now it matches with 48 to 58 tonnes/hectare in Europe and USA respectively. The total crop production in the state also increased from 28,000 tonnes in 1990 to 1.70 lakh tonnes last year and an estimated 2 lakh tonnes this year.

The total availability of the crop increased from 28 days during the season to 55 days now.

Initially, experts from the USA had to show results in demonstration farms and convince farmers. Afterwards, they themselves started converging to the PFL. While PFL insisted on payments by cheques, he said, 80 per cent of the farmers did not have any bank account. The entire operation is now monitored through computers.

Nearly 2,000 farmers now grow tomato for Pepsico, as 1,700 farmers grow chilli. The company is now carrying out farm trials of technology transfer in potato, carrot, ginger and garlic. Its exports have grown from Rs 9 crore in1990-91 to Rs 213 crore in 197-98.