Jayachandran/Mint

Jayachandran/Mint

Big retail’s fight for the Indian pie

Big retail’s fight for the Indian pie

The stand-off over the entry of multinational retail firms in India is being watched around the world. Wal-Mart and other retail giants are desperate for a bigger slice of India’s $400 billion market. They nearly got their wish last November when Prime Minister Manmohan Singh and his cabinet opened the door to 51% foreign control of multi-brand retailers. But India’s 44 million small shop owners and retail workers staged protests across the country, forcing the government to retreat for the time being. Big retail sees it as a minor setback to its inevitable conquest of new markets. Others are hoping that it was a turning point in a global struggle over who controls food.

Jayachandran/Mint

It is easy to see why India’s small retailers and workers are so upset. Economist Jayati Ghosh says that for every job a foreign retailer creates, around 17-18 will be lost and many others will be hit hard too along the food chain.

India’s food supply is still largely in the hands of peasants and small cooperatives, wholesalers and hawkers. They will not be welcomed into the procurement networks of the multinationals. Supermarkets deal with preferred suppliers that source and ship food from around the globe. Indonesia was one of the first Asian countries to liberalize its retail sector. Today over 70% of the fruits sold in its supermarkets are imported.

Supermarkets also insist that their suppliers follow standards that they set themselves with other multinational corporations. Wal-Mart works with Germany’s largest seed and pesticide company, Bayer, to establish “good agricultural practices" on the few Indian farms it sources from.

The farming practices of most of India’s farmers, as safe and sustainable as they may be, simply don’t match with the checklists of the supermarkets. The economics don’t fit either. One UN study put the cost per farm for GlobalGAP certification, the dominant standard for global retailers, at over €1,200, far beyond what the average Indian farmer can afford.

Big retail’s expansion into India will be especially deadly for dairy, where 85% of the market is supplied by an “informal sector" of small-scale vendors selling milk they collect from small farmers. The system is a source of income for millions of families and a safe and affordable source of nutrition for millions more.

Multinational supermarkets and food companies such as McDonald’s want nothing to do with this informal sector. They want the milk produced on large farms and packaged and pasteurized milk by big processors. So as supermarkets expand, industrial dairy does too. Danone is now constructing new processing plants in India. Cargill and the Kiwi dairy giant Fonterra are pouring millions of dollars into megafarms, as are Indian companies such as Reliance and the Apeejay Group. And the same EU-India FTA being used to open the door to retail FDI could also open the door to imports of subsidized milk powder, with deadly consequences for India’s dairy farmers.

The issue here is not about increasing production to match growing consumption. India is already self-sufficient in milk, thanks to India’s small farmers tripling national milk production between 1980 and 2006. There’s no reason why these farmers cannot meet today’s growing demand. The real issue is that corporations are moving to steal the dairy market from the poor. It’s a situation transpiring around the world, from Colombia to Kenya, putting at risk the livelihoods of the 15% of the global population involved in dairy production.

Indians struggling against FDI in retail and FTA with the EU are in fact facing off against an unprecedented expansion of the corporate food industry in the South. To keep their profits growing, corporations, fuelled with cash from banks and financial houses, are making an aggressive play for every piece of the food chain they can grab in “emerging markets".

The battle around retail is crucial. When big retailers enter countries they expand rapidly and take away markets served by the poor—hawkers, farmers, pastoralists, fisherfolk, and workers. The gains for the big retail food chain translate directly into losses for these people, who simply have no place within it, not even as consumers.

This is why the struggles playing out in India are being watched so closely around the world. A billion people refusing to make room for the corporate tsunami is a huge boost for everyone trying to turn the tide when it comes to who controls food.

GRAIN is a small international non-profit organization that works to support small farmers for community-controlled and biodiversity-based food systems.

Comments are welcome at theirview@livemint.com

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