New Delhi: Farmers in India and other developing countries stand to gain up to 50% more when they sell their produce to supermarkets, where consumers also get the products at a much cheaper price compared to traditional retail shops, a new study says.
“When farmers enter supermarket channels, they tend to earn from 20-50% more in net terms,” an International Food Policy Research Institute (IFPRI) study found.
The study, conducted by IFPRI’s Asia Director Ashok Gulati and a Michigan State University professor Thomas Reardon, added that food price savings from supermarkets first accrue to the middle class, but as supermarkets spread into the food markets of the urban poor and into rural towns, the benefits are extended to poor consumers also.
“For example, in Delhi, India, the basic foods of the urban poor are cheaper in supermarkets than in traditional retail shops,” the study said, adding rice and wheat are 15% cheaper and vegetables 33% less costly there.
In most countries supermarkets offer lower prices first in the processed and semi-processed food segments, it said.
However, farmers can earn from supermarket chains provided they make more up-front investment and meet greater demands for quality, consistency and volume compared with marketing to traditional markets, the study pointed out.
Pointing supermarket revolution as ‘two-edged sword´, the study suggested that it is important for governments of developing-countries to build policies and make investments that prepare farmers and retailers to face the challenges and meet the requirements of the modernised food markets.
The IFPRI study noted that:”This revolution will present opportunities for small farmers who have access to infrastructure and posses needed non-land assets, but it will present a challenge for asset-poor farmers and traditional retailers”.
Nevertheless, governments need to supplement private efforts with public investments in improving farmers’ access to assets, services, training and information, it said, adding that some countries are already taking such steps and their experiences offer lessons for others.