Farmers open to FDI in retail

The maligned and almost comatose United Progressive Government's decision to allow 51 per cent FDI in multi-brand retail has kicked up a huge storm. The biggest argument against it is that the entry of foreign retail giants such as Walmart and Carrefour, will wipe out millions of kirana shops all over India. There is also much breast-beating about how the many layers in the delivery of farm produce to our markets, providing employment and sustenance to millions more, will get wiped out as the big bad foreign wolves (Walmart and company) will buy directly from the farmers.

Most of this was expected. That the Opposition parties would oppose the move was a given; the Left has done it on ideology and there are no surprises here.

The BJP has come out strongly against the move and there was some confusion when the Commerce Minister, Mr Anand Sharma, said that BJP-ruled States such as Gujarat and Karnataka had welcomed the move in initial discussions. As an embarrassed BJP leadership looked on, the Gujarat Chief Minister, Mr Narendra Modi, came to its rescue by tweeting last Monday: “My stand on FDI in retail is the same as that of my party, BJP, and which is in the interest of the nation.”

Forget the Opposition, allies such as Ms Mamata Banerjee's Trinamool Congress and the DMK are bitterly opposed to the move. In her characteristic style, Mamata Didi even made an announcement, to the great embarrassment of the UPA, particularly the Finance Minister, Mr Pranab Mukherjee, that he had assured her that the FDI-in-retail decision was being kept under “suspension”. On Monday, Mr Mukherjee confirmed her clout when he told Opposition leaders exactly what she had claimed: “The government is willing to keep the decision in suspension,” he said. A section of India Inc, which had lambasted the UPA government on its “policy paralysis” status, has spoken up welcoming the move and urged opponents to understand its positive implications.

Farmers's take

But in the middle of this hailstorm, what are the farmers saying about this move? Let's take a simplistic view of the entire debate from the viewpoint of farm products. And weigh it against the common refrain that our farmers get only a fraction of the price the market actually pays for their produce because the middlemen take away the cream.

For a long time now, the Indian farmer has been groaning under the burden of spiralling input costs, shortage of labour that is getting costlier and little choice when it comes to getting a fair price for his toil.

Devendra Mishra, a farmer from Gonda district in Uttar Pradesh, who owns 16 acres of land, about 120 km from Lucknow, on which he grows wheat, rice, maize, etc says only the actual experience of foreign players on the ground will prove if this move will benefit farmers or not. “But from my understanding of it, and considering that our government only pays lip service to farmers, I would say let foreign companies come. We, the farmers, will get more choice about who we sell our produce to. The government may set up any number of centres lekin kaun dekhta hei ki yeh dhang se chaltey hei ya nahi (who is to monitor whether these work well at all).” He and Lakshmi Narayan, who also owns 16 acres of land in Mathura in UP, point out that they were at the mercy of the traders at the local mandi to sell their produce till ITC Choupal came along in 2002 to pay them better prices for what they grew.

Cautious optimism

While Mishra is only cautiously optimistic about a Walmart improving the income of farmers like him, Narayan is much more optimistic. “The government may fix some rates but who is to ensure that we get it,” he says. He grows wheat, rice, mustard and jowar and says that while consumers might complain of high food prices, just “10 days ago, I got only Rs 1,300 for a quintal of rice. You may pay Rs 50 a kg for the same quality rice; so where is the justice in my getting only Rs 13 for a kg? People say foodgrain prices are going up, but I can tell you that two years ago, I had got Rs 2,500 for a quintal for the same quality rice.”

He blames his tribe for its “absolute lack of unity. Isi liye hum baar baar pitatey hei (That is why we get trounced again and again). When ITC came on the scene, we were given a choice of whether to sell to them at a better price or to the local mandi . Now if there are more players, we will sell only to the one who gives us the highest price. So let's welcome more competition.”

But what about the concern that a giant player such as Walmart might bamboozle farmers into selling to it at beaten-down prices because it would have the volume advantage on its side?

Narayan chuckles before coming out with this great response: “ Ab pehley jaisa zamana tau nahi raha ki East India Company yaha aayi aur desh par kabza kar liya. Aaj hum mei itni taakat hei ki Walmart jaiso ko maar ke bhaga saktey hei! (Its not like the olden days when an East India Company could come in and rule the country. Today, we have the power to drive out Walmart-like companies!)

But Purushotham Bapu Mahajan, another farmer from Wadhwa in Mahrashtra, has a different take. He does only organic farming and apart from chillies, fruits such as papaya and sitafal , his main crop is organically-grown turmeric. “There is so much demand for it in the domestic market that I am not able to meet it,” he says.

State of confusion

So would he welcome FDI in retail?

“Right now it is 50:50; we might get much better prices from the foreign companies. But, then, we might lose out too. The turmeric I grow is like 24 karat gold but my packing is absolutely ordinary, because I can't invest big money in getting packaging machinery.” His dilemma is that Walmart will offer products in fancy packaging which appeals to youngsters. So why would people buy his product?

He mirrors the doubts in the farming community when he says there is “total confusion in our minds on this issue. If we listen to Baba Ramdev, he says this is not good for the country. But Sharad Joshi, who is a friend to farmers, has welcomed this move. We don't know who we should trust.”

But if they are to trust their instincts, it tells them to give up farming altogether. Take Narayan; he has four sons and not one of them wants to be in his vocation.

His first son and daughter-in-law work in Jet Airways as engineers, his second son works for another airline, the third does ticketing in a travel agency and the youngest is studying B.Sc Biology. “None of them wants to do farming… aur yeh bhi theek hei ,” he shrugs.

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