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LATEST NEWS UPDATES | What about the farmers?

What about the farmers?

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published Published on Apr 5, 2010   modified Modified on Apr 5, 2010


While the government's recent clarification on the policy on foreign investment in wholesale trade is welcome, it needs to be complemented with a policy to empower our farmers to interact with modern, organised retail productively. Organised retail can catalyse a second green revolution in India when farmers become empowered to negotiate prices for their produce with retailers.

The industry ministry's recent guidelines for wholesale trade, known as cash and carry, signal a cautious approach to further liberalisation of foreign investment in retail. The new rules, meant for foreign retailers that form joint ventures with domestic companies for wholesale trade, define wholesale trade with greater specificity, and lend clarity to the existing FDI policy. Further, they prevent foreign retailers from entering the domestic retail market in the garb of wholesale trade.

Whether domestic retail needs to be thus sheltered from external competition is debatable, but clarity definitely is better than confusion. Foreign investment in retail will change the dynamics of agribusiness in India. Retail chains bring in technology to develop logistics and supply chains, helping farmers and the food processing industry. Competition would enhance the benefit to producers and consumers. Middlemen control the food trade; and farmers and consumers end up getting a raw deal. This is unacceptable. Food retail chains provide an opportunity to break the stranglehold of middlemen. Contract procurement can work to farmers' advantage if they are a part of a larger body capable of negotiating and standing up to organised retail.

A producer company like Amul has shown results in the dairy sector. Cooperatives have also been successful, to some extent, in the sugar and plantation sectors. Foodgrain and vegetables too need organised farmer bodies. Retailers, in turn, can help farmers access not just the market, but also technology and credit to raise productivity. Modern retail will do well to highlight this aspect of their operations.


The Economic Times, 5 April, 2010, http://economictimes.indiatimes.com/opinion/editorial/What-about-the-farmers/articleshow/5761338.cms
 

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