Big retail and Indian markets

13 February, 2012

This article is a comment on the ill-informed articles on either side of the FDI in retail debate. One need not be for FDI or against FDI to see the trash published in newspapers about the issue.

REMARKABLE IGNORANCE is paraded as expert opinion. I refer to an article “Big retail’s fight for the Indian pie” (Mint, February 10, 2012). It is written, according to Mint, by Grain, “a small international non-profit organisation that works to support small farmers for community controlled and biodiversity based food systems.” Just what work this small organisation does is not clear, except maybe write some ill-informed articles in papers that do not read what is submitted to them. Unlike Outlook, Mint does not encourage debate, so it is important to show these articles in their proper light.

There are several inaccuracies and unsubstantiated statements in the article. More serious, it appears that the authors have never taken the trouble to see the rotting grain in FCI godowns or followed a farmer in his travails of bringing his produce to the market. The article also ignores several facts about supply of milk by small-scale farmers and traders.

First, the article dwells upon the jobs argument. It quotes an economist saying that 17-18 jobs will be lost for every job that a retailer generates. The basis of this claim is not mentioned. An ICRIER study, on the other hand, points to a very different story. It says that when a big store opens, there is a marginal impact on small retailers but after a while they recover their lost business.

Regarding milk, the article mentions that 85% of the milk is supplied by the informal sector, which should be protected. However, newspaper reports also point out that 70% of the milk available in India is adulterated by such precious ingredients as detergents and urea (The Times of India, 10 January 2012). The effect of this on the health of babies and adults can only be imagined. In these circumstances, how can anyone argue against providing safe milk being provided to the population by protecting these small adulterating farmers/traders? In the garb of protecting traditional retail, shall we expose people to large scale adulteration that takes place in milk and other commodities? Consumers would certainly like to buy from large farms if they know that products are safe.

Similarly, the authors have not specified what they have against companies following good agricultural practices. I have seen farmers who have switched to producing crops for multinationals under their guidance and all of them are doing well. On the other hand, traditional farmers are forced to abandon their crops and take losses year after year. As an instance, this year farmers in Punjab left their potatoes to rot on roads as the prices were not remunerative – they were less than Rs 1 per kg. Such practices then lead to farmers’ suicides, which I am sure the authors of your article are well aware of. Would it not be better if these farmers are assured of regular markets and prices as modern retailers are able to offer?

Modern supply chains will also help save some of the agricultural produce that rots away: the Planning Commission says that Rs 7000 crore per annum could be saved through modern channels. Yet, there are these “small non-profit organisations” who argue that they are helping farmers by fighting tooth and nail against modern retail. The situation is: we can't save our grain and curse anyone who wants to save it for us. Take a tour of the farms, of the PDS system, rural mandis and FCI godowns before you argue against modernising retail. The editor of Mint is also advised to read the articles it publishes!