Claims for foreign investment in retail refuted by Devinder Sharma


Following an earlier post, Devinder Sharma discusses the ‘fake dream’ offered by Wal-Mart and other big retail giants – the foreign investment in retail, projected as a panacea for all the ills plaguing Indian agriculture. He refutes these claims:

It will lay out backend infrastructure:

There is no evidence that big retail creates backend infrastructure. In US and Europe, rural infrastructure has been created through government support which came in the form of agricultural subsidies.

It will bring in a chain of cold storages and improved transportation thereby reducing crop losses:

To say that 40% agricultural food that goes waste in India will be drastically reduced is also an illusion. In US also, 40% food is wasted and much of it is after processing where Wal-Mart’s should have played a much important role.

It will remove middlemen which rob the farmers of profits and provide him with higher prices:

It is the new battery of middlemen – quality controller, standardiser, certification agency, processor etc—who walk away with farmer’s profits. Studies show in America, before 1950, when farmers would sell their produce for one dollar, 70 cents – 70% – was his income. In 2005, it had fallen to 4%.

And of course it will create millions of jobs:

A 2004 study at Pennsylvania State University, by Stephen Goetz and Hema Swaminathan, showed how higher poverty prevailed in areas where Wal-Mart stores had come up compared with those states where big retail was absent.

He continues:

“We are told that Wal-Mart, Tesco, Sainsbury, Carrefour and a host of other big retail players are expected to increase farm income. In the US, where Wal-Mart has completed 50 years, if farmers were getting a better income, why has the farming population plummetted to less than1% of the population?

It is not big retail, but direct income support that keeps farmers in agriculture

“Farmers in US survive on the farm not because of Wal-Mart but the massive subsidy support, which includes direct farm income. Between 1997 and 2008, Rs 12.60 lakh crore was provided as income support to farmers. A UNCTAD-India study shows that if these subsidies, classified as Green Box in WTO parlance, are removed, the American agriculture collapses.

“In Europe, despite the dominance of big retail, every minute one farmer quits agriculture. Europe provides the highest amount of subsidies, including direct income support. But because 74% of these subsidies are cornered by corporations and big farmers, small farmers are quitting farming. In France, farm income has come down by 39% in 2009, down from 22% in 2008. In OECD, the richest trading block comprising 30 countries, Rs 14 lakh crore was the farm subsidy support in 2009 alone. It is not big retail, but direct income support that keeps farmers in agriculture.

Yes, there is a need to improve rural infrastructure, provide a sophisticated supply chain, and provide better income to farmers. The milkman of India, late Dr Verghese Kurien, had shown us the way.

The cooperative dairy structure, which led to the evolution of the Amul brand, is the right approach. If he could do it for milk, which is a highly perishable commodity, there is no reason why it can’t be replicated in fruits, vegetables and other agricultural commodities. From a milk importer, India has now become world’s biggest producer of milk.

It is therefore obvious that solutions to the plethora of problems on Indian farms do not lie in the west, but in our own backyard.

Read the whole article here:



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