Indian Farmers and Organized Retail: A Misleading Fantasy

Indian farmers are in distress. There have been a number of farmers march to the national capital. Among the Indian farmers’ demands for loan waivers and MSP, the policy experts will also announce the requirement of development of organized retail in India to help out the Indian farming sector. The organized retail is being considered as the ultimate solution by the agri-experts and the economic analysts alike, for improving the condition of Indian farmers. I have tried to analyze its impact on Indian farmers below:

The two decades experience

Policy experts claim that organized retail is a must for Indian farmers to get remunerative price for their products. Organized retail companies claim the same.

Organized retail has been in India for two decades now. Two decades can be considered a long enough time horizon for anything to have a substantial impact. Can any organized retail company, Indian-owned or FDI-controlled, claim a substantive patch of Indian farming around their area of operations to have benefitted by them?

Making claims as the saviour is one thing and to back it up after 20 years of existence requires the real proof. However, there is nothing on offer on this front, apart from parading of 15-20 farmers, at the maximum.

The procurement model

Everybody in India knows that Indian farmers have small land-holding. Policy experts keep claiming that organized retail is going to save Indian farmers. Leave aside the data on actual procurement from small farmers, can any organized retail company show their procurement model which involves small and marginal farmers?

Organized retail companies procure from large farmers and appoint them as middlemen to procure from small and marginal farmers if need be.

Indian agriculture suffers from a multitude of middlemen and organized retail is no different. It itself is a middleman and to add further, brings their own intermediaries into the picture. This claim can be easily countered should these companies share their procurement model.

For whose benefit

Organized retail companies are listed companies and private corporations. I suppose their objective is to maximize profit for their owners and shareholders. Now from where does helping Indian farmers come as a stated objective?

Yes, they use this as a lip-service and to push for FDI in the retail sector.

The supply chain will be built

It is said and keeps getting said that organized retail will build the supply chain, warehouse, cold chain to bring down wastage and spoilage. Again, it has been 20 years. Can any organized retail company claim building a supply chain of handling quantity comparable with the farming output of the surrounding area?

Middlemen will help farmers to survive for his own benefit but organized retail will not

Middlemen that have existed in India since centuries are based in a certain area and not geographically mobile. They are dependent on Indian farmers to make their fortune and they will ensure that Indian farmers will continue their drudgery. If need be, they will keep lending their money to Indian farmers, of course at a high interest rate.

Organized retail companies have no such need or connect with Indian farmers. To start with, they have no procurement relationship of substance and even if they do have one, albeit limited in nature, at the time of distress, they will just start procuring from somewhere else. After all, they have to continue their business. They have not taken up the responsibility of the Indian state to take care of farmers.

Conclusion

Amul says that dairy farmers get 78% of what the end-customers pay. Can any organized retail company make a statement like this about their farmer procurement and prices paid to them?

Let us get it straight. Organized retail companies are in the game for profits on their investments and Indian farmers come nowhere in the picture. Else, after 20 years of existence, there would be at least some farmers somewhere some place in India benefitted by them.

The only way in which Indian farmers can improve their lot is by farmers’ co-operatives similar to Amul. But that is not what is in the interest of Indian politicians. And Indian media will also not say anything about it.

In the meanwhile, Indian farmers’ plight will continue. Organized retail will continue to paint itself as the saviour to further its own cause, supported by experts, of course; but not by proof of action.

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