|Farmes versus kiranas|
|Saturday, 03 December 2011 08:59|
Farmer groups supporting FDI gives new twist
Now that leading farmer groups have come out in support of FDI in retail, the debate has got a lot more interesting. After all, if the imagined travails of 3 million retailers can stall the FDI proposal, then the possible benefits to farmers have to be weighed against this. While the BJP lot are now of the view FDI will finish off kiranas, the fact is that even if Big Retail's market share jumps from 6% today to an impossible 20% in a decade, that allows kiranas to grow at 12-13% annually. Pitted against this is the 30-35% loss that farmers are supposed to suffer in terms of shrinkage/wastage as their produce moves between one middleman and the other—once Big Retail purchases directly, a part of this will accrue to the farmer. You can quibble on the amount, but with 140 million farmers in India—and around the same number of agriculture labourers—versus just 3 million retailers it's obvious where the balance should lie. The first farm group to come out in favour of FDI was the Consortium of Indian Farmers Association which has 300 farmer associations including the Maharashtra Shetkari Sangathana as members; next was the All India Vegetable Growers Association which claims 2,200 farmer organisations as members, and then the Bharat Krishak Samaj with more than 75,000 members … watch equations change as more farmer associations add their weight to the pro-FDI side and ask for allowing direct procurement by abolishing the Agriculture Produce Marketing Committee (APMC) Acts that are anti-farmer and pro-middlemen.
The larger issue is why does it even matter if kiranas shut down, unlikely though that is—after all, the proportion of farmers has steadily declined but no one has argued that industry or services need to be shut down. The reason is simple: the farmers got more money by switching to industry or the services sector, and the same will happen to the kiranas who find their business affected – and given the low margins, many may even like to make the shift. In which case, the real pain point is how to get retailers to make the shift, and that's where none of the crocodile-tear politicians are making the right demands – that governments make it easier for entrepreneurs to set up businesses so that jobs creation rises and that the government work hard on setting up re-skilling institutes to facilitate this. So far, sadly, no one's spotted the crocodile-tears.