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Expecting higher returns on produce, farmers all for deep-discount stores

The math is stark: Six hundred million versus five million. The farming population outnumbers the traders by 120 times.

india Updated: Dec 02, 2011 00:26 IST

The math is stark: Six hundred million versus five million. The farming population outnumbers the traders by 120 times.

And large sections of farmers have welcomed the government's decision to permit 51% foreign direct investment (FDI) in retail. Reason: greater competition between Indian and foreign retailers will lead to them getting better prices for their produce, they say.

They cite the examples of farmers in Punjab and Haryana, who are getting 25-50% higher prices for produce ever since Indian retailers like Reliance Fresh began buying from them a year ago. The entry of a Walmart, Tesco or Carrefour, they feel, will only improve the situation.

"We support FDI in organised retail because it will bring investments in the farm sector," P Chengal Reddy, secretary general of the Consortium of Indian Farmers' Association, one of the largest farmer lobbies in the country, told HT.

The implied message: parties opposing FDI risk losing the support of farmers.

The choice: kisans or kirana storeowners.

Other farmers' lobbies also welcomed the government's decision, but with caveats. "Only big farmers will benefit from FDI in retail. Smaller players may not be able to afford the technology required to meet the high standards that MNCs will demand," said Balbir Singh Rajewal, president of Bhartiya Kisan Union, another influential farmers' association.

But experts said even marginal and small farmers will benefit. "FDI will be a game-changer. Large retailers typically provide better seeds, fertilisers and superior technology. So, even small farmers will benefit from higher yields, which will lead to more profits," said MM Goel, professor of economics at Kurukshetra University.

Then, about 40% of India's food and vegetable production goes waste due to poor storage and transport technology. "The entry of foreign investors will bring in state-of-the-art storage technology for perishable commodities and, thus, benefit farmers," added Manjit Singh Kang, former vice chancellor of Punjab Agricultural University at Ludhiana.

Not surprisingly, the ruling Shiromani Akali Dal in Punjab, which draws its support mainly from Punjab's peasantry, broke ranks with BJP, its alliance partner, to support the UPA government's move. Despite this, it later said it would vote with the rest of the opposition in case the issue came up for a vote in Parliament.

Everyone, however, emphasised the importance of formulating strict laws to govern contracts between farmers and MNCs.

First Published: Dec 02, 2011 00:24 IST