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LATEST NEWS UPDATES | Markers and Supermarkets by Sukanta Chaudhuri

Markers and Supermarkets by Sukanta Chaudhuri

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published Published on Dec 8, 2011   modified Modified on Dec 8, 2011

Some time ago, newspapers in Britain carried full-page advertisements from the curiously named British Pig Association. This consortium of pig farmers was clamouring publicly that the supermarket chains were squeezing the farmers dry. Alongside them, Britain’s dairy farmers complained that a supermarket cartel was paring down their prices, while production costs went up and up.

These farmers too have powerful lobbies; they are still in business. To this end, Britain, like all European countries, spends vast sums as direct and indirect farming subsidies. In other words, the taxpayer subsidizes supermarket profits, while health, education and other State services suffer massive cuts. The supermarkets’ gains are not passed on to the consumer. Food prices in Britain are rising steadily, contrary to a slight fall in other consumer prices. Any rollbacks owing to price wars are palliative at best.

Such facts need to be borne in mind as India strains to convince itself that foreign direct investment in multi-brand retailing will bless producer and consumer alike. Of all the arguments advanced to this end, the most preposterous is that foreign-owned supermarkets will “eliminate the middleman”.

This is a quibble on words. The supermarket engaging directly with the farmer eliminates the traditional middleman. This classic functionary can exploit the farmer and harm the public through hoarding, adulteration, playing the markets or cooking the books. It would be ironical if the FDI proposal made a hero out of the detested bania. But FDI might propel us from the frying-pan into the fire, replacing him by an omnipotent entity steering an item of food all the way from the field to the larder. In this larger-than-life scenario, the middleman is not simply a link in the distributing chain: not a ‘man’ or humanly definable entity at all, but an economic machine ruling the lives of the humans at each end, the producer and the consumer.

That may sound overwrought, but the system allows no other description. The supermarket (how much more the hypermarket) reshapes the basic societal process of food supply, fine-tuning every minute detail to meet abstract market demands (which can be utterly remote from consumer needs) to a degree unknown in history — a difference in degree amounting to a radical difference in kind.

By its control over the total process, the supermarket leaves no room for manoeuvre to either producer or consumer — no alternative to which they can turn, exercising the elusive freedom of choice touted by apologists of capitalism. The occasional chance of buying a loaf of bread a rupee cheaper at outlet X than at outlet Y does not alter the general picture. Even the real competition (where it exists) between the outlets brings no benefit if one holding corporation eventually buys up another. We are no longer surprised by that great capitalist principle: competition begets monopoly.

In fact, the principle is already in evidence. To achieve total control, the FDI lobby begins by offering lavish incentives to producers and consumers. It digs into its deep pockets, even at short-term loss, to win over its clientele (which includes its primary suppliers) till the traditional trading channels are driven out of business. Once the market is cornered, it may desist from such philanthropy. British pig and dairy farmers, to say nothing of real and metaphorical banana republics, might wager that it will.

Another factor now comes into play. Only the prospect of retail FDI, we are told, will allow the kind of investment that India requires in agriculture. This may prompt us to ask what form the investment would take. It would surely favour suppliers linked to the FDI houses. Further, it would favour the technologies benefiting that corporate front, whether or not they best suited the nation’s needs, economically and environmentally. It would probably push the case for genetically modified foods, bypassing the debates on this deeply controversial issue. It would very likely influence national decisions on land use and irrigation, enhancing, let us say, the priority given to upmarket crops vis-à-vis basic foodgrains. These are the radical economic consequences to weigh.

We are also promised an abundance of new jobs in FDI retail. What the projection suppresses is that a far greater number is already employed in the nation’s supremely efficient though formally ‘unorganized’ retail network. Besides the actual shopkeepers, armies of people, in small vehicles or on foot, carry wares to markets and corner shops not only from small producers but also from big corporate manufacturers. As long as the outlets are many and small, with modest individual order-books, it is not feasible to arrange bulk transport from the latter, such as supermarket clients would require. As for the small producers, their volume of production is too small to meet the volume of supermarket demand. The law might initially ordain them a 30 per cent share, but they would soon be eased out, or at best clubbed together — creating a new category of middlemen.

Total employment in a super-retail system would probably be lower than in the current network. And beyond the numbers, we must consider the quality of employment. A grocer’s shop seldom fails. Its owner is his own master, with a low-profile but steady, often substantial income. The invisible anthill supplying such shops is a favourite resort for humble but active young people who make their way up to a better living. By contrast, in most societies, a supermarket stacker or till operator has a dead-end billet. Some chains may offer a marginally better deal than others; but increasingly, such jobs attract either students and other part-timers, or the growing number despairing of all other jobs. Such employment marks economic and human stagnation for the people it hires.

But, the proponents of retail FDI argue, we already have Indian supermarket chains, and the heavens have not fallen. True, though the clouds may lour. But foreign money makes for a qualitatively different proposition. However imperfectly, Indian corporate organizations are amenable to Indian law. They are likely to have a greater and more balanced stake in the Indian economy and even the popular well-being. They are also less likely, at least in the short term, to draw on global supply chains.

This last factor undermines any argument that retail FDI will benefit Indian farming. There are economies far smaller, more helpless and (though we may rhetorically dissent) more corruptible than India. If the global corporate organizations find it advantageous to import cheaper goods from other countries, they will do so. There can be many arguments favouring such a practice, but we must be convinced of them.

Nor should we tell ourselves that in our burgeoning society, the FDI outlets will only cater to the metropolitan sector (read: corner the most intensive and lucrative market), while the rest of India sticks to the local sethji. In fact, suburbs, district towns and even prosperous rural belts offer the fittest clientele for large outlets with uniform downmarket wares. The metropolitan elite is more likely to dilute supermarket patronage by visiting select upmarket shops. The initial law might confine FDI retail to cities of a million plus, but they will soon be ensconced in the districts. This is specially likely with downmarket chains like Walmart.

The secret defence of supermarket culture is that, being derived from the sahibs, our Australia (or was it Canada?)-sized middle class cherishes it as a social facelift. We love new community toys like the shop trolley, the electronic label and the check-out till. More seriously, we appreciate the superior hygiene, the reliable weights and measures, the visible orderliness of the place. We are gratified to feel we are sharing a globally ‘advanced’ experience with our friends abroad. This tickling of middle-class fancies affords retail FDI its cachet in many Indian circles.

In societies more seasoned to this culture, there is a low groundswell of dissent, expressed in the toehold obtained by organic farming and Fairtrade practices, even as a niche demand in the supermarket sector. More cynically, those societies have decided to extract what they can from a system they cannot beat. Two months ago, Cambridge University elected the head of a celebrated grocery empire as its new chancellor. Chairpersons of several faculties issued circulars exhorting their colleagues to vote for him. Cambridge may benefit as a result. The tower blocks are unlikely to change their view of their food supply chain.

The author is Professor Emeritus, Jadavpur University

The Telegraph, 8 December, 2011, http://www.telegraphindia.com/1111208/jsp/opinion/story_14850223.jsp

Tagged with: FDI Retail



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