FDI in Retail: Who is Thinking of Farmers ?

Ever since government came up with the document for discussion on FDI in multi-brand retail trade, most debates in media have veered round business, business players, effect of one business format over another and infrastructures required to make business more profitable. The debate no doubt will continue in days to come. But the farmers, original producers of foods and food products which constitute bulk of retail business, and who should be the focal point of discussions, are sadly missed out.

Though the DIPP document on its part does submit that farmers will be benefited, the argument nonetheless appears too blurred to be convincing. Further, the document is based on the premise that our ‘production (farmers’) system’ is ready to cope up with increased quantitative and qualitative demands of food products which FDI in retails is expected to generate. The fact is – it is not. It will also not be prudent to think that efficient supply chain and increased demand will infuse vigor into an already weak and sagging production system. It would rather be sensible to include farmers and existing farming system in discussions. Strong and efficient farming system is must for the success of mega-retail business in India.

Where do we stand today? According to a NSSO study, 40 percent of farmers have lost interest in agriculture. The household income from agriculture has been reducing. Eighty percent of total 12 crore farm holdings own only 20 percent land. Not only is the average land holding of Indian farmers too small, they are ‘fragmented’ too. Overall per holding agriculture productivity in our country is lower than almost all the countries mentioned in the DIPP’s document. So who all are going to benefit by the efficient back-end operations and improved infrastructure of business? Certainly not the aam Indian farmers! Instead there would be further land consolidation in favor of the already rich and resourceful farmers making room for the expanding gap between the rich and poor farmers to expand further.

It is no secret that when small and marginal farmers change their cropping pattern from cereal or staple food-based crops to high value crops (in which retailers would be interested), the quality of their nutrient intake deteriorates as they become dependent on the market for their staple food.

National Commission on Farmers has reported about the almost stagnant and decline in productivity of our farmlands. In the last ten years credit to agriculture sector has gone up by 200 percent and fertilizer subsidy by 300 percent. Yet, the productivity of rice, wheat, and pulses has almost remained constant. Now when area under cultivation is shrinking because of urbanization and industrial growth, intensive and commercial farming on limited land will have its own toll on the productivity of lands.

All efforts notwithstanding almost 60 percent arable land with no irrigation facility are dependent on rain. Increasing fluctuation in rainfall, depleting ground water level, lower and improper fertilizer usage, are issues of great concern. Rural infrastructure is another area of worry. One cannot drive high speed air-conditioned trucks carrying fresh perishable foods on roads inapt even for bullock-carts. Villages lack dependable power-supply.

“Farming is the riskiest profession” said M. S. Swaminathan, an eminent agriculture scientist. In spite of being an agricultural country our farmers are not insulated from hosts of risks. Existing insurance system is either out of reach for them or too complicated to be relied upon. Arrival of retails in a big way will certainly make farming riskier. Meeting customers’ will make farming more resource intensive farming. We need to learn lessons from the innumerable incidents of suicides by farmers being reported from across the country.

Contract farming, projected as the ‘panacea’ for many of problems the Indian farmers are facing, is yet to pass the test of time as anticipated. Instances are galore of one party blaming the other of dishonoring the contract. Though, theoretically it presents a win-win situation both for the farmers and private players, it’s implementation at the field level has been very tricky and in many cases farmers have been found on the losing side.

It is high time we appreciate ground realities and make farmers focus of our discussions as we have been making big retail waalas like, Wal-mart, Carrefour, Tesco, and unorganized retailers like mom & pop stores. The need of the hour is to first work on the ‘root’ of the business before thinking of strengthening the ‘shoot’ and expecting colorful flowers and fruits to blossom. There are still many loose ends which need to be tightened at the very early stage of the supply chain, i.e., the production stage. A word is enough to the wise. Believing that foreign investments will do all these will be like dwarf’s leap for the moon.

Still waiting for monsoon in Odisha, India ....
 
Niraj
 
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