The Hindu Business Line : For a healthy food chain

The "development package" of the Prime Minister rooted in the three I's of investment, infrastructure and implementation must find acceptance across the broad spectrum of producers and consumers. If the rural production scene is to change, the proposed investment plan in India of the global food conglomerates requires modifications and Indianisation.

The food chain flows two way. How do the retail giants plan to compensate the small holder-producers? While the business plan does talk about bottomline and break-even point for the processing and retailing aspects, what of the resource-starved producers?

Volume-value matrix

The volume-value matrix differs with the type of food item. But there is a tendency to disregard the value chain and overplay the supply chain. The small holder/producer-driven models are economically feasible because they are designed to be more sensitive to the value rather the supply chain.

Then there is the changing consumer profile. Lifestyle-related health consequences are the price consumers in developed countries are paying. They are trying to rediscover "slow food" chain along with differentiated products in the organic category. Here it is important to note that the food expenditure accounts for a mere 9-20 per cent of the total in these developed countries.

In India, two-third of the population surviving on farming as the main economic activity spends 56-60 per cent of its income on food. The share of food expenditure is much higher in the segment below the poverty line.

Several recent studies underline the importance of nutritional security and the changing size and composition of the average food basket. The unorganised food chain plays a critical and yet significant role in ensuring access and availability of food items to a vast majority of the population. To change this model to concentrate the supply chain in the hands of a few runs counter to the `growth with social justice' doctrine.

Will the food producing and retailing giants value efficiency and stakeholder equity in the agri-food system? Evidence seems to suggest a negative response. Witness the cola and mineral water experience. Therefore, the government has a role in regulating the system for a fair and transparent food chain. It must satisfy itself that a consumer- and producer-friendly agri-food chain specific to the Indian context is in place. The `common man' has more than lexicographic significance in the Indian milieu.

(The author is Head, Faculty of Economics and Development Planning, Gurgaon. The views are personal.)

More Stories on : Retailing | Foods & Food Processing

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Failure on the farm

Statistics may not tell the real tale

Of a leader and a hero

Doctors' strike

Saving the Serendip

Is IPO scam a thing of the past?

For a healthy food chain

Toning up `private morality'

Dividend tax