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Farmers reap benefits from organized retail

Farmers reap benefits from organized retail
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First Published: Mon, Oct 29 2007. 02 00 AM IST

Changing scenario: A Reliance Fresh store in Noida. The growth of  such stores, along with others in organized retail, is encouraging more people to take up vegetable cultivation in Kerala.
Changing scenario: A Reliance Fresh store in Noida. The growth of such stores, along with others in organized retail, is encouraging more people to take up vegetable cultivation in Kerala.
Updated: Mon, Oct 29 2007. 02 00 AM IST
Kochi: Murukesh, a worker in the Kannan Devan Hill Produce Co.’s tea estate at Munnar, Kerala, grows carrots, cabbage and cauliflower on a little piece of 3,500 sq. ft land. For years, this has been an additional source of income for Murukesh, who uses only one name. He used to sell his produce to local vegetable vendors or agents (where the latter were involved, he would pay a commission of 15-30% of the value of the transaction).
He claims that the weighing machines used by the agents were not always perfectly calibrated and that the money due to him would come in instalments.
Changing scenario: A Reliance Fresh store in Noida. The growth of such stores, along with others in organized retail, is encouraging more people to take up vegetable cultivation in Kerala.
Since June, things have changed for Murukesh.
Once a week, staff from Reliance Retail come to his field to take delivery of his vegetables. The price offered is at least Re1 more (per kg) than what Murukesh used to get; he pays no commission because no agent is involved; the produce is weighed electronically; and the payment is made immediately.
Even as opposition to organized or formal retailing grows across?the?country, farmers such as Murukesh are benefiting from the entry of firms such as Reliance Retail Ltd into the business. At Munnar alone, there are more than 200 farmers who either take their produce to a Reliance Retail collection centre or, like Murukesh, have the staff come over to their fields and pick up their produce.
India’s retail market is valued at $328 billion (almost Rs13 trillion), according to a study by industry lobby Federation of Indian Chambers of Commerce and Industry, but only 4% of this is accounted for by formal retail. The business is dominated by small stores, called kirana stores. The potential in the market—it is estimated to grow to $427 billion by 2010, with the share of formal retailing expected to grow to 22%—has attracted deep-pocketed firms such as Reliance Industries Ltd (Reliance Retail is an arm of it), the Aditya Birla Group, and Bharti Enterprises. Early movers such as RPG Enterprises, the Future Group,?and?Shopper’s?Stop continue to grow their businesses.
The growth of organized retail has attracted the ire of small store owners, with stores of Reliance Retail being trashed in several cities and towns across the country. Some state governments have imposed curbs on chains run by such firms. The ruling Left Front in West Bengal recently said that firms such as Reliance would not be allowed to operate in the business of selling agricultural produce. In Uttar Pradesh, Reliance stores were ordered closed by the state, which has instituted a committee to study the impact of the entry of large firms on small store owners.
The Union government has outsourced a similar study to a New Delhi-based think tank and will use the findings to finalize its policy on foreign investment in retail—currently allowed only in single-brand retail and in the cash-and-carry or wholesale business.
In Kerala, a state ruled by a Left Front government, farmers say they are benefiting from their transactions with Reliance Retail. P. Palanisami, an estate worker who sells produce from his vegetable farm to the firm, says that a senior agriculture officer and two of his assistants at the collection centre suggest planting patterns that are aimed at phased harvests and a steady income for the farmer. It also ensures steady supply for the company.
Reliance Retail, which began its collection operations in Kerala in June, runs four collection centres at Kurupanthara near Kottayam, Muvattupuzha in Ernakulam, Kozhinjampara in Palakkad and Sultan Bathery in Wayanad.
From tapioca and yam to cowpea and cucumber, Reliance Retail sources fruit and vegetables from around 2,000 farmers in Kerala. These are sold through the 12 Reliance stores within the state and 318 stores across India. In the past four months, the firm has sourced around 1,000 tonnes of vegetables from the state.
K.G. Jyothirghosh, general manager, corporate communications, Reliance Retail, and the agriculture officers of the firm at various collection centres refused to comment on the firm’s sourcing plans. A.V. Jayaraj, who once ran a farmers’ cooperative venture called Sangha Maitri and now plays a pivotal role in coordinating vegetable and fruit collections at Wayanad for Reliance Retail, says the firm is also looking at bulk purchases of pepper, the harvest of which is expected to begin in a few months.
Farmers have even started taking land on lease to cultivate vegetables. Sethumadhavan and Prabhakaran in Palakkad district have taken land on lease and engaged workers from nearby Tamil Nadu to tend their crop. With paddy cultivation becoming unviable on account of high costs and lack of labourers for harvest, several fields are being converted into vegetable farms.
The promise of an assured market for the produce may encourage more people to take up vegetable cultivation. People familiar with the development who did not wish to be identified say that Reliance Retail is considering encouraging people to start vegetable gardens on terraces.
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First Published: Mon, Oct 29 2007. 02 00 AM IST