Traders and shop keepers across the country went on strike last week to protest against any move to increase foreign direct investment in the retailing sector.
Consumers who could benefit from the coming of large stores do not have the political heft to support the government on this. So it is good to see farmer organizations making their voice heard over the weekend. A few farmer organizations from North India met the government to offer support for the opening of the retail trade to global giants such as Walmart and Tesco. Earlier this year, groups such as Bharat Krishak Samaj, Shetkari Sanghatana, Consortium of Indian Farmers’ Associations and All India Vegetable Growers’ Association have offered support for such a policy. In a way, large farmers are now in opposition against small retailers.
The Indian farmers are a victim of outdated policy. They end up selling their produce at select markets that are often controlled by trading cartels. Selling across state borders is still very costly. The lack of cold chains means that farmers have little holding power; they have to offload their fresh produce quickly. This web of restrictions ensures that farmers get too thin a slice of the final price paid by consumers.
The trading cartels that control agricultural markets are politically well connected. That is one reason why most states have not yet amended laws relating to their Agricultural Produce Marketing Committees (APMCs). Their reform is central to the attempts to modernize the rural supply chain.
Indian farmers are already facing cost pressures, thanks to the rising prices of labour and inputs. They have a stake in a more efficient supply chain that would reduce the number of middlemen and give them a higher proportion of the final price paid by urban consumers. The farmer movement has been in retreat since its glory days in the 1980s, as the politics of class has become more powerful than the politics of economic interests.
Indian farmer organizations seem to understand better than political parties who pretend to represent their interests: modern retail chains are good for farmers with marketable surpluses.