Farming out a revolution
From Punjab, the land that gave us our wheat granary and then contract farming in tomatoes, comes the farm-fresh news of how organised retail stores are touching — and changing — lives in remote corners of the country. Long known as the happy abode of middlemen, India’s economy is now changing colours. Reliance Retail, promoted by Mukesh Ambani, is buying fresh vegetables directly from the farmers and helping them get higher returns while lowering their transport costs and communicating with them on mobile phones. ITC has already spearheaded its e-choupals to benefit farmers while getting raw materials for its edible oil business at cheap rates through a mechanism similar to that of Reliance Retail. Years ago, PepsiCo championed contract farming for tomatoes in Punjab.
Corporate investment and technology are certainly proving to be not threats but opportunities for villagers, though there is still a long way to go. Reliance has only just begun, and depending on how it all pans out, Food Bazaar (an affiliate of Big Bazaar owned by Kishore Biyani’s Pantaloons), Bharti group’s joint initiative with Wal-Mart, and other ventures such as Subhiksha, More (from the Aditya Birla Group) and Spencer’s, are already changing the ways and lives of traders and consumers alike. It is pertinent that Reliance is trying to co-opt rather than confront the so-called mom-and-pop shops by enrolling them as partners. Such efforts could mitigate protests, some of which are ill-informed, about what foreign investment and corporate activities do in a sector historically dominated by millions of small traders.
But just as railways had to learn to live with the coming of aeroplanes and jets, traders will have to re-invent themselves in the age of organised retail. Apart from the convenience of offering one-stop shops to busy urban consumers, organised retailers tend to use supply chain software and working capital from banks cleverly to cut costs and boost efficiencies on the one hand and come up with discounts and make dedicated offerings to customers on the other. The convenience and surpluses generated by improved efficiencies can help fuel more economic activity in the country. That is what economic growth is all about. Farmers need a piece of that action, and traders need to learn new ways to adapt, survive and then thrive in a new age.