Wednesday 14 December 2011

Author(s): Latha Jishnu

‘FDI will increase farmers’ earnings by 40-50 per cent’

‘FDI will increase farmers’ earnings by 40-50 per cent’

P Chengal Reddy is general secretary of the Consortium of Indian Farmers Association (CIFA)—an organisation that claims to represent 40 million farmers. He is also part of the league that supports FDI in retail sector. He spoke to Jyotika Sood on how FDI can help Indian farmers.

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  • Retailing in India is one of

    Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail market in the world, with 1.2 billion people.
    India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population).
    Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process.
    In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple. The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus.
    In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India. Indian government continues the hold on retail reforms for multi-brand stores.

    In a pan-Indian survey conducted over the weekend of 3 December 2011, overwhelming majority of consumers and farmers in and around ten major cities across the country support the retail reforms. Over 90 per cent of consumers said FDI in retail will bring down prices and offer a wider choice of goods. Nearly 78 per cent of farmers said they will get better prices for their produce from multi-format stores. Over 75 per cent of the traders claimed their marketing resources will continue to be needed to push sales through multiple channels, but they may have to accept lower margins for greater volumes.

    Dr.A.Jagadeesh Nellore(AP),India

    Posted by: Anonymous | 3 years ago | Reply
  • no doubt fdi will give

    no doubt fdi will give oppurtunity to choose oftheir choice
    since india is developing country smallmanufacturers like toys, plastic items, specially garments will hit
    there are number of workers in india in garment industry our rates comparitivesly normal
    how ever if garments are imported from taiwan bangadesh. china etc which are glitering with no quality inian garment industry which is feding lot of
    workers wil hit
    governent should should make clear that sourcing should be from india tomaximum extent

    Posted by: Anonymous | 3 years ago | Reply
  • Yes get ready for OLIGARCHIC

    Yes get ready for OLIGARCHIC CONGLOMERATES to rule your lives dear Indians.

    Posted by: Anonymous | 3 years ago | Reply
  • Reading through the article,

    Reading through the article, it shows how decision on "FDI in retail" will raise more quetions than the answers the farming community has long been seeking to cast off distress, stangant growth and social respect to every one: the policy makers, the researchers and ,of course, the mass media. More and more indepth countrywide analysis are needed to be done by the public funded research orgainsations so that the farmers could become able to guage good and bad effects of this giant step of the goverment. The farming community should have their own voices, though some organisations have been raising their concerns.

    Posted by: Anonymous | 4 years ago | Reply
  • Allowing 51%FDI in retail

    Allowing 51%FDI in retail sector, we directly talk about Wall Mart world giant in retail whose sales was $422 billion in 2010 and its growth was 20% outside of US & 3.8% in US in last quarter,2011. This shows it will wipe out small retailers within a year.

    Despite of this,increasing jobs may be a reason to allure the people and decision's makers. But price cut, i don't think it will work effectively. As we consider the example of potato and chips. chips are made of potato. it is produced by others not retailers. Then how much they can reduce the price of any items which are prepared by main source, directly available from farmers, INDEPENDENT or non creamy layers. Price cut of food may be due to reduction of wastes. But in other sectors how much it will work effectively in lowering the price, is to think of, not only for food. But we can not deny that food consumption is maximum than other consumable things.

    Posted by: Anonymous | 4 years ago | Reply
  • Allowing FDI in retail, will

    Allowing FDI in retail, will give positive results in short term. Both farmers and consumers may feel happy for some time. But in long time both will become losers.
    Here, I would like to quote PEPSI example. At the time of introducing They offerd less prices, but now rates grown up. Wall Mart recently opened its store (not retail) in Vijayawada (A.P) as per my information farmers are now feeling happy, because they are getting reasonable prices, similarly consumers (whole salers) also. Wall mart is purchasing directly from farmers, and selling to wholesalers. Once it took upper hand, then definately situation will change. Farmers may face lot of conditions, whole salers thrown out on roads finally prices of goods are determined by the wallmart.
    Rytu Bazars are really good. But this depends on Govt.s commitment.

    Posted by: Anonymous | 4 years ago | Reply
  • The way to pay more to

    The way to pay more to producer that is the farmer is to removal of many layers of middle men - starting from farm level commissionagent/broker upawrs the warehouse where the produce is stocked by the super market (say Reliance or Wal;mart etc) for marketing by their outlets, be it vegetables/fruits/grains / cereals/ spices so on and so forth. This is likely to give scope to Retailer market to pay more to the producer nthat otherwise would have got distributed among several layers. But the question is will removal of these layers allow the retailer have a comfortable markup of say 20% or so?

    Posted by: Anonymous | 4 years ago | Reply
  • Yes, FDI has become ht topic

    Yes, FDI has become ht topic at all levels to decide ACCEPT or REJECT. In this connection, i have already expressed my concern and reflections form the stakeholders. It has to seen from two angles as:

    1. The non producers, creamy urbanites who comes under the category of "DEPENDABLE" whose percentage is very less may get the benefits as there is no alternative.

    2. The producers, non creamy layer who comes under the category of "INDEPENDENT" whose percentage is very high will be the looser as they have got other options.

    In view of these two opinions or groups, the decision to be taken on FDI is very clear to the one who has take the decision.

    If the business is in the model of Business to People (B2P) rather than Business to Business (B2B), certainly people will accept as they are going to be the beneficiary.

    Coming to the conclusion, there exist several myths in respect of FDI like who is the gainer and looser. In any case the farmers or the producers who comes in the second category of INDEPENDENT certainly are not going to be the beneficiary.

    Today's media brings an innovative concept like:

    " Alu (potato) costs Rs.1 per Kg but the chips which using only half a kg costs Rs.10. This is what exactly the FDI is going t give the befit".

    Can it be understood that water is freely available and one liter of water comes to Rs.12 which is possible through FDI.

    The question is who is taking the cream or the waste.

    Once again it can be put forward the concept of Rythu Bazar initiated in the state of Andhra Pradesh as the best innovative and creative platform for the producers to get better price for their time, energy, inputs and product.

    The choice should be given to the producers and the non creamy layer with better participation to decide what they want.

    Posted by: Anonymous | 4 years ago | Reply
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