Unilever’s Indian business sourcing tomatoes locally
HUL is working with its partner, the fruit processing company, Varun Agro, to share sustainable agricultural practices with 2,500 smallholder tomato growers. The farmers are celebrating significant yield increases as well as the security of a guaranteed buyer and fair prices.
In the past, Hindustan Unilever (HUL) was dependent on imports for the majority of its tomatoes because of the inconsistent quality and availability of the commodity from local producers. Prices, too, were volatile. In 2010, HUL identified the business benefits of sourcing more raw material locally and changed it procurement practices so as to reduce costs and improve sustainability.
Varun Agro now works directly with around 2,500 small-scale farmers to meet HUL’s quality and sustainability requirements. Farmers are being asked to cut their use of water, pesticides and fertilisers, so as to limit their impact on the environment. Varun Agro oversees the training and advice on good agricultural practices that farmers are being offered.
Under the contractual arrangements with Varun Agro, farmers can sell 25% of their produce on the local market, giving them a secondary route to market which allows them to take advantage of higher prices if the opportunity arises.
HUL is also collaborating with Bayer CropScience and Syngenta, the two agribusiness companies, to develop the value chain. These specialist agronomy partners assist in areas such as setting up tomato nurseries, providing training in pest management and plant protection, and using ‘demonstration fields’ to showcase best practice.
100% of HUL’s requirements for tomato paste now comes from Varun Agro.
Farmers involved in this value chain, who have taken part in training and activities to upgrade their crops, have seen their yields increase from around 24 Mt per hectare to 65 Mt per hectare. The quality of their crop has also increased and they benefit from the security of a guaranteed buyer.