Pune/Mumbai: Spurred by the explosive growth of organized retail, farmers are planning to set up their own chain of supermarkets to sell their produce.
The Confederation of Indian Horticulture, an association of fruit and vegetable growers, will set up a company to run the supermarkets and corporate houses will be offered stakes in it.
Farm fresh: The Confederation of Indian Horticulture plans a one-stop shop for all products, like this retail outlet by ITC, and along the lines of those found in parts of Europe and the US. (Photo: Hemant Patil/Mint)
The confederation will seek to provide a one-stop destination for all farm fresh products, along the lines of those found in parts of Europe and the US. And products at these markets will have traceability. For instance, customers will know that the mango on the shelf is from the Devgad region of Maharashtra, known for its Alphonso variety of the fruit.
“If corporate houses can do brisk business selling what we produce in our farms, there is no reason why we cannot do it on our own and get ourselves a better bargain,” Sopan Kanchan, the confederation’s president, says.
Grocery and food retail could be fastest growing segment in organized retail, according to a report from Man Financial, a Mumbai-based brokerage.
Several big industrial houses, including ITC Ltd, Reliance Industries Ltd and the Aditya Birla Group have set up supermarkets in the last two years and many of them procure farm products directly from farmers rather than from the government-controlled wholesale markets. This has helped get better prices for farmers and encouraged them to reach customers directly.
The confederation is doing a national survey to study the agri-produce retailing by large companies. It will meet early next month to take the plan forward, Kanchan says. According to him, the confederation will also seek help from the government.
Balasaheb Thorat, Maharashtra’s agriculture minister, says there is a need for an alternative retail chain that is separate from what the corporations have put on ground. “If farmers’ co-operatives come together and want to set up a chain, it will benefit both the farming community and the consumer. It will be a win-win situation, since the farmer gets more for his sweat and labour, and the consumers gets fresh produce at much more affordable prices,” Thorat says.
But sceptics say a farmer-run chain may not work. “Let us not be enamoured by this,” says Devinder Sharma, a writer and activist on farm issues. “Farmers are being used to justify big retail.”
Others say it will be hard for Indian farmers, who typically own a couple of acres of land, to run and own stores apart from manage their farms.
“There is so much to do on farms and farmers can barely make ends meet even after working all the time. So, how will they do anything else?” says Bhasaheb Jadhav, who is a farmer and runs a cooperative that supplies vegetables to modern retailers in Pune and Mumbai.
But Kanchan says not only will they run stores, but also provide inputs to farmers to improve productivity.
“The first major task will be to get the farmers to pool their land to make them large enough to apply good farming practices that will give them standardized, high-quality produce in large-enough quantities,” he says.
The size of the Indian retail industry is $320 billion (Rs12.61 trillion).
Organized retail accounts for just 3% of the market and it has been growing at 30% every year.