FDI in Retail

[Capt M Kumar]

Foreign Direct Investment = FDI in retail to the tune of 51% is the most emotive subject which I have come across after the imposition of emergency in India way back in 1975. Though reaction to it is not in anyway equivalent to 1975 but it has been described as another act equivalent to inviting East India Company to an act of sedition. Here is what I got an email on it;

We are plummeting headlong into a cauldron of our own making by the day . First the argumant attributed to PM, if that be correct, that foreign companies cannot be stopped from entering, if not sedition then what else? Do we know what ramifications this will have for times to come? Does the bureaucracy not have one member with any spine? After this what else cannot be stopped from entering? It took more time for the Britain to consolidate her gains of 1857 than what has been achieved by their cousins in a decade. Proving, slaves when free can give better service! Creeping back to balkanization by the blinding passion for money and greed the affliction of Indian psyche now bordering reckless abandonment, thanks also to the model of democracy we practice. It sanctifies money bags as the only legal tender; the world cheers. Bags are getting ready in Washington and ‘pause’ may soon become ‘play’ as new bids are met elections approaching With FDI in retail, penetration of our vast pliant markets will open flood gates of foreign owned cash flow, gobble up our small and middle scale industry, real estate business next and soon H’ble Pratibha Patel’s bungalow may revert to the original owners. The Army is already looking like the East India Company Force. Money growth in market alarmingly disproportionate to common needs.No spending in critical areas of education , science ,technology , agriculture . Governance seems numbed every activity getting privatized generating vast corruption in tandem quite unnoticed (Is the Govt packing up to go in exile?). We arent anywhere as manufacture exporting country then how so many rich around? Despite increase in energy costs BMWs and Mercedes seem to only grow in numbers. Panic military purchases only prove how NDA and UPA have collaborated to keep us in strangle hold of arms markets, now to bail out West from its woes as gesture of charity from rising India. The whole concept of 'Rise' is skewed in Indians A small American outpost such as Israel is feeding 30-40% of our military imports! We are dumping sovereignty by the road to feed greed of bad breed at home bent on selling out the nation to forces of globalization. Introduction of FDI in retail, along with so many cascading measures already taken , the nuclear deal, the SEZ policy and more awaiting, such as GM food, corporatization of agriculture , taxing water, etc can only spell doom for common man for whom basic food is becoming unaffordable. Reminiscent and mirror image of how the once an ill provided buccaneering Island emptied our rich country resources and gold into their coffers, built an Empire shedding no English blood but only ours! A remarkably exceptional plunder with no parallel in modern times qualified by equally remarkable plundered exuberantly partnering for their own destruction this partnership seemingly ever stronger; now flying tricolor under the star spangled banner . It is to be seen how far this will carry on!

[Guest]

Very bad idea.

How come without any vote Moron Singh can decide these thing? Is India is a democratic country or soft dictatorship?

India is a joke, appointed Prime Minister, corrupt ministers, majority of ministers are in Tihar Jail or just released. Italian is having fun and Babus are working day n night to keep this corrupt regime so that they can loot.

[sumishi]

[url="http://www.thehindu.com/opinion/columns/Chandrasekhar/article2672067.ece"]The retail counter-revolution[/url]: The Hindu, Nov 30, 2011

--C.P. Chandrasekhar (Professor of Economics at Jawaharlal Nehru University, New Delhi)

Massive comments/viewpoints following the article.



[indent]

[floatright]

[size="2"]The players displaced would consist of not only smaller retailers but also medium and large wholesale dealers

who would be rendered irrelevant by the ability of large conglomerates to contract with and procure directly

from producers. File photo [/size][/floatright][size="4"]With deep pockets and international sourcing capabilities, global retail chains will outcompete domestic players, displace jobs, and undermine livelihoods[/size].



In predictable fashion, the Manmohan Singh government chose to ignore voices of opposition and implement its agenda of permitting foreign investment in the retail trade. While Parliament was in session, the Cabinet met to approve the hitherto prohibited foreign direct investment in multi-brand retail, with a cap of 51 per cent on foreign equity that ensures majority ownership. Simultaneously, the cap on foreign equity investment in single-brand retail has been enhanced to 100 per cent, offering sole ownership rights to foreign investors.



Large international retailers are bound to use the opportunity to get a share of the large Indian market. Foreign sales have been an important source of revenue for many of them amounting in 2007 to as much as 74 per cent in the case of Ahold of Netherlands, 52 per cent for Carrefour of France, 53 per cent for Metro of Germany, 22 per cent for Tesco of the United Kingdom and 20 per cent for Walmart of the United States. Walmart's 20 per cent too has to be seen in context: with $379 billion of revenues in 2007, it stood way ahead of Carrefour, which came in second with $123 billion in the global league table for revenues.



Power of the chains



The power of these chains has been amply illustrated in other contexts, where they have been in operation. With deep pockets and international sourcing capabilities, they exploit economies in procurement, storage and distribution to outcompete and displace domestic intermediaries in the supply chain. This occurs not in one or a few centres, since each retail chain tends to establish procurement, warehousing and distribution facilities across regions and cities. Once the smaller middlemen are displaced, we have a few large firms and their agents dealing with a multitude of small, medium and relatively large producers on the one side, and a mass of consumers, on the other.



The relationship with producers is that of an “oligopsony,” with a few buyers and a large number of sellers. With consumers, it is one of an “oligopoly” with few sellers and a large number of buyers. Structurally, this provides the basis for an increase in margins at the expense of prices paid to producers or charged to consumers. The new “middlemen” appropriate these higher margins. That a part of the margin may be shared with the producer or consumer to increase retail volumes and market shares does not take away from the fact that the distribution of power within the supply chain benefits the large intermediary. In the medium term, it is the dominant position of these large players that would influence the size and direction of margins.



Thus, on the production side, the danger is that the prices paid to and returns earned by small suppliers, especially in agriculture, would be depressed because a few oligopolistic buyers dominate the retail trade. Given the precarious viability of crop production even at present, that shift could severely damage livelihoods. On the other hand, once the retail trade is concentrated in a few firms, retail margins themselves could rise, with implications for prices paid by the consumer, especially in years when domestic supply falls short.



Within the supply chain itself, it is to be expected that the players displaced would consist of not only smaller retailers, stretching from kirana stores to street vendors, but also medium and large wholesale dealers who would be rendered irrelevant by the ability of large conglomerates to contract with and procure directly from producers. The immediate and direct effect would be a substantial loss of employment in the small and unorganised retail trade as well as in segments of the wholesale trade displaced by the big retail chains.



The potential significance of this impact can be judged from the role of the retail and wholesale trade in generating employment in the country. According to the National Sample Survey Office's survey of employment and unemployment in 2009-10, the service sector category that includes the wholesale and retail trade (besides the much smaller repair of motor vehicles, motorcycles and personal and household goods) provided jobs for 44 million in the total workforce of 459 million.



It is no doubt true that the impact of foreign-invested retail would be restricted to the urban areas since entry as of now is permitted only in cities with a population of more than one million. But this is where the employment in trade would be the highest. Twenty-six million out of the 44 million employed in the sector are located in urban areas. Many of these workers find themselves in the services sector (especially in the retail trade) because of inadequate employment opportunities in agriculture and manufacturing. Out of 71 million jobs in services in the urban areas, around 36 per cent are in the retail and wholesale trade and repair services. In sum, from an employment point of view this is a sector that is central to livelihoods, however precarious some of those jobs can be. It is a poor substitute for the missing social security programme.



Questionable claims



The government's claims that the entry of large retail led by transnational firms would not make a difference to net employment and would, in fact, augment it substantially are questionable. They exaggerate the direct and indirect employment that large retail would create and ignore the number of jobs they would displace. The requirement that the foreign investor should bring in a minimum investment of $100 million implies that the FDI being sought is in units that are more technology- and less labour-intensive. On the other hand, the attempt to temper the adverse impact on employment by restricting entry to cities with populations exceeding one million is without substance. It does not change the source of the competition (giants like Walmart, Carrefour, Tesco and Metro) nor the locations in which such competition is most likely to be faced.



Yet, the Commerce Minister's claim is that the policy has a “unique Indian imprint” that would make its impact here very different. This is a poor effort to obfuscate issues. Consider one aspect of the unique imprint: the requirement that 30 per cent of manufactured or processed products sold should be sourced from small and medium enterprises. This requirement based on a process of self-certification that is to be monitored would be difficult to implement even in India. But it becomes meaningless because it applies to such producers from anywhere in the world. As a briefing paper from the Commerce Ministry notes, in order to ensure that there is no violation of World Trade Organisation norms, “30 per cent sourcing is to be done from micro and small enterprises which can be done from anywhere in the world and is not India specific.” This would be impossible to implement and will only encourage international sourcing at the expense of domestic producers.



Rushed decision



In sum, there is little to justify the rushed decision to open up to FDI in retail. As of now the retail chain works well, there are no noticeable shortages, and a large and diverse country is well serviced. None but the government argues that FDI in retail is a remedy for the relentless inflation the country faces. The weak segment of the supply chain is the public distribution system created to ensure remunerative prices for farmers and reasonable prices for consumers. That and productivity enhancing public investment are what need the government's attention.



Not surprisingly, the decision to permit FDI in multi-brand retail has not been received well domestically. An Opposition, which was already engaged in highlighting the failure of the government to rein in inflation, corruption and the generation of black money, has responded with anger. Parliament remains stalled and non-functional, keeping in suspension other important issues and bills that need to be debated. Some allies of the Congress in the UPA have also had to express their opposition to the move.



Whether those deciding the economic policy of the UPA would budge and retract is yet to be seen. Given the on-going debate on the subject, the government must have anticipated opposition to its executive decision. But it possibly presumed that it can hold its position and win out at the end. The tussle is, therefore, likely to be long and socially wasteful.

[/indent]

[sumishi]

[url="http://www.countercurrents.org/dsharma301111.htm"]Allowing Retail FDI In India: Lies, Lies And Damn Lies[/url] : Countercurrents.org, 30 November, 2011

-- Devinder Sharma

[size="2"]Devinder Sharma is a food and agriculture policy analyst. His writings focus on the links between biotechnology, intellectual property rights, food trade and poverty. His blog is [url="http://devinder-sharma.blogspot.com/"]Ground Reality[/url][/size]



[indent][quote name="Devinder Sharma"] At a time when Prime Minister Manmohan Singh is refusing to rollback the decision to open the retail sector to foreign direct investment saying it will benefit our country, the American President Obama thinks otherwise. In a tweet on Saturday (Nov 26), President Obama wrote: “support small businesses in your community by shopping at your favourite local store.”



While President Obama is talking of what is good for America, Manmohan Singh too is adamant on protecting American interests. It is primarily for this reason that Manmohan Singh’s assertion that retail FDI will benefit our country and ‘improve rural infrastructure, reduce wastage of agricultural produce and enable our farmers to get better prices for their crops’ is not borne on facts. In the midst of the rhetorical contests in the TV studios, the real facts have been sacrificed for the sake of political partisanship.



A lot has been said and written about the virtues of allowing FDI in retail into India. Let me make an attempt to answer some of the bigger claims that Commerce Minister Anand Sharma as well as the Prime Minister have repeatedly made. Frankly, their arguments seem to be driven more by political expediency rather than any economic understanding, and that is more worrying. It only shows how economic facts can be twisted, tailored and manipulated to justify the political agenda of the ruling party. There can be nothing more damaging for the future of a country.



First, the biggest argument in favour of multi-brand retail is that it will create 10 million jobs by the year 2010 . There is no justification for this claim. In the United States, Wal-Mart dominates big retail. It has a turnover of US $ 400 billion, and employs 2.1 million people. Ironically, the Indian retail sector too has a turnover of US $ 400 billion, but has 12 million shops and employs 44 million people. It is the Indian retail which is a much-bigger employer, and any effort to allow retail FDI will only destroy millions of livelihoods.



Take the case of England. The two big retail giants are Tesco and Sainsbury. Both had committed to create 24,000 jobs between them, in the past two years. A British government enquiry found out that instead of creating any additional job, these two big retail companies had actually thrown out 850 people from existing jobs. The big retail units which failed to create jobs in their own countries cannot be expected to create additional employment in India.



Second, Anand Sharma says that retail FDI will provide 30 per cent more income to farmers . There can be no bigger lie than this. In the US, for instance, if Wal-Mart was able to enhance farm incomes there was no reason why the America government would dole out a massive subsidy of US $ 307 billion under the US Farm Bill 2008, which basically makes a budgetary subsidy provision for the next five years. Most of these subsidies are clubbed in the category of Green Box under the WTO. And as per an UNCTAD-India study, if the Green Box subsidies are withdrawn, American agriculture faces a collapse.



Agriculture in America is therefore sustained with agricultural subsidies. In OECD countries, a group comprising 30 riches countries, the situation is no different. A latest 2010 report states explicitly that farm subsidies rose by 22 per cent in 2009, up from 21 per cent in 2008. In just one year in 2009, these industrialised countries provided a subsidy of Rs 12.60 lakh crore to agriculture. Despite this, every minute one farmer quits agriculture in Europe. This is happening at a time when farmer’s incomes are dwindling. In France alone, farmer’s income has fallen by 39 per cent in 2009.



Third, big retail helps remove the middlemen and therefore provides a better price to farmers . Again, it is a flawed argument and is not borne on any evidence. Studies show that in America in the first half of 20th century, for every dollar worth of produce a farmer sold, 70 cents was his income. In 2005, farmer’s income had fallen to 4 per cent. This is despite the presence of Wal-mart and other big retailers in America.



In other words, the middlemen are not squeezed out as is the general understanding but in reality their number actually increases. A new battery of middlemen – quality controller, standardiser, certification agency, processor, packaging consultant etc – now operate under the same retail hub and have been walking away with farmer’s income. Moreover, due to the sheer size and buying power, big retail generally depresses producer prices. In England, Tesco for example paid 4 per cent less to producers. Low supermarket prices in Scotland have forced irate farmers to form a coalition called ‘Fair Deal Food’ to seek better price for their farm produce.



Fourth, retail FDI will source 30 per cent from the small and medium enterprises and therefore will benefit Indian manufacturers . This is an afterthought, especially after a section of the media highlighted the discrepancy. Even though Anand Sharma says 30 per cent products would be sources from within the country, the facts remains that under the WTO agreements, India cannot limit the big retail from outsourcing its products from anywhere in the world. This is against the WTO norms, wherein no member country can apply any investment restriction that is inconsistent with the provisions of Article III or Article XI of GATT 1994.



Using the WTO provisions, multi-brand retail will flood the Indian market with cheaper Chinese manufactured goods thereby wiping out the domestic SME sector. At the same time, the ‘Indian Stamp’ on multi-brand retail that Anand Sharma claims will have at least 60 per cent investment on ‘back end’ systems is also not based on facts. As per the definition of ‘back-end’, anything that is not ‘front-end’ becomes ‘back-end’ and has to be self-certified. Which means even the expenses on the corporate headquarter becomes ‘back-end’ investment. In any case, 51 per cent FDI in cold storages etc is already provided and yet no investment has come. Let us be very clear, big retail is not coming to India to provide a network of food storage silos and cold chains.



Fifth, more importantly, in an eye-opening study entitled “Wal-Mart and Poverty”, Pennsylvania State University in the United States has clearly brought out that those American states that had more Wal-Mart stores in 1987, had higher poverty rates by 1999 than the states where fewer stores were set up. This is something that the government is not talking about but should ring an alarm bell for a country which is reeling in poverty, hunger and squalor. [/quote]

[/indent]

[dhu]

[size="3"]A political article but with a few notes on the potential impact of FDI upon agriculture..



[url="http://www.dailypioneer.com/columnists/item/50599-historic-chance.html"]Historic chance[/url]

....

The last original thinker in the RSS, Dattopant Thengadi, who enjoyed respect even in Left circles, had predicted the BJP's doom as early as 2001 when its ministers took to wearing tuxedos to the CII's luncheons, and stripped the middle class Indian of his job, savings, investments and finally, self-esteem through public sector disinvestment. ...

...

The attack on retail FDI must focus on the history of Walmart, a corporate entity larger in scope and logistical complexity than any other in human history. It's 9,700 stores, says Orville Schell in the latest issue of The Atlantic, is supplied by a network of 100,000 sources in 60 countries, are staffed by some 2.1 million employees serving 200 million customers. Walmart's annual revenue equals the GDP of the top quartile of nation. In many ways, Walmart is a country, says Schell. Its CEO, when abroad, is treated like a visiting head of state. Senior executives in charge of overseas operations function like diplomats, signing agreements with governments.



In the West, Walmart has the reputation of a rapacious, anti-labour, un-environmental "big box" which destroys small towns and independent businesses. People are unable to resist its seductive bargains. In 2005, a documentary film by Robert Greenwald, Walmart: The High Cost of Low Price, exposed the unscrupulous tactics played against small firms and medium-to-large farms (after killing the small ones) to extract their produce at low rates. A deeper look brings out the absurdity of the Manmohan Singh government's argument that mega retail firms help farmers get just prices. Actually the opposite happens and in India there is a real threat of distortion of the existing government efforts to raise farm incomes. It’s indeed tragic that after ignoring agriculture all these years, the UPA should outsource problem solving to retailers.

[/size]

[Capt M Kumar]

All articles related to FDI are welcome! Here is purely political;

Behind all these efforts, the government's parliament floor managers were working overtime to ensure that the Congress has its full strength of 207.



A vote on an adjournment motion in parliament is not a vote of no-confidence in the government and hence the government is not unnecessarily hassled, but it wants to avoid an embarrassment at a time when its stock is low on the corruption and inflation front.



The BJP, which has been in the forefront of disruption of parliament on the issue, will in all likelihood move the adjournment motion. It is unwilling to water down the content and has ignored the government's feelers to do so. The Left parties and several other non-UPA and non-National Democratic Alliance (NDA) parties may go with the motion.



The Congress said "there was no question of roll back" of the government decision to allow 51 percent foreign equity in multi-brand retail.



Party spokesperson Raashid Alvi said the UPA allies were on board on the issue.



Source: IANS http://news.in.msn.com/business/article....id=5639701

[Capt M Kumar]

http://timesofindia.indiatimes.com/india...970559.cms

KOLKATA: The central government has decided to keep on hold the decision to allow 51% foreign equity in retail till a consensus emerged on the issue, West Bengal chief minister Mamata Banerjee said on Saturday after talking to union finance minister Pranab Mukherjee.

[Guest]

[quote name='Capt M Kumar' date='03 December 2011 - 07:26 PM' timestamp='1322920115' post='113931']

http://timesofindia.indiatimes.com/india...970559.cms

KOLKATA: The central government has decided to keep on hold the decision to allow 51% foreign equity in retail till a consensus emerged on the issue, West Bengal chief minister Mamata Banerjee said on Saturday after talking to union finance minister Pranab Mukherjee.

[/quote]



There are a few things that have to be kept in mind. First, in this session of parliament what we all knew was that the BJP is to target PC to highlight his corruption just as the Congress targetted George Fernandez during the NDA rule. The kept press was insisting that the BJP is trying to waste the parliament by not allowing to transact any business. Second, no one had an inkling that the FDI in retail is to be introduced in the current session. Third, the parliament got paralyzed not by the BJP but by the Congress party for the sole purpose of thwarting BJP's attempt to target PC and they truly succeeded! As much as the idea of FDI in retail was not mooted before the parliament's meet and there was no grave pressure from the western countries either to enter into Indian retail, postponing consideration of it to another parliamentary session wasn't difficult at all. After all it exhibited to the politicians that the UPA is in tact!

[ravish]

If the BJP was really interested in targeting PC, it had been wrong on their part to disrupt Parliament. They should have allowed Parliament to function as that would have given them the opportunity to implement their original plan. There can be a possibility that the friends of PC within the BJP may have ensured that the situation of targeting PC within Parliament does not arise. One should always keep in mind that our political leaders generally ensure help for each other, although they may keep a different political posture in public.Nothing can be ruled out in Indian politics.

[ramana]

B Raman implies that FDI in retial is a new version of the 2G scam by INC to raise funds for the upcoming State elections. The corporate majors who would benefit would have contributed the needful.



Now BR is quite a INC supporter.

[Guest]

[quote name='ravish' date='05 December 2011 - 08:08 PM' timestamp='1323095405' post='113956']

If the BJP was really interested in targeting PC, it had been wrong on their part to disrupt Parliament. They should have allowed Parliament to function as that would have given them the opportunity to implement their original plan. There can be a possibility that the friends of PC within the BJP may have ensured that the situation of targeting PC within Parliament does not arise. One should always keep in mind that our political leaders generally ensure help for each other, although they may keep a different political posture in public.Nothing can be ruled out in Indian politics.

[/quote]



You got it right! I agree with you. BJP has been happily playing the role of punching bag for these global secularists to carry on the loot of the country. Unfortunately we have deceived ourselves thinking they are our friends. I am talking about the national BJP only. The BJP in the states are quite patriotic.

[rhytha]

[size="4"]S Gurumurthy on the Indian Retail Sector[/size]



The ongoing debate on the FDI in retail is intolerably superficial at times. For a rational debate, the fundamentals of conflicting alternatives must be understood. Here are some basic truths about conventional Indian retail. For thousands of years, retailing in India has been local community business - selling retailers and buying households being familiar with each other. Even now Indian retailing is mostly neighbourhood, relation-based business.





There are 15 million retailers in India, including hawkers and pavement vendors. This translates to the greatest retailer density anywhere in the world - more than one retailer for 8 Indians! In contrast, China, more populous than India, has less than a twelfth of India’s retail density; just 1.3 million retailers - one for 100 Chinese.





In India, one retailer does not stock all needs of all customers. Several neighbourhood retailers - hawkers, roadside vendors, bunks and kirana shops - taken together stock and meet all their needs. The Indian retail business is estimated at $400 billion. Of which the share of corporate is now 5 percent; the rest 95 percent is handled by traditional retailers. The wholesale-retail trade in India has evolved as part of its social milieu over millennia, organised and linked by local relations. According to an FCCI study, food - read agriculture - accounts for 63 percent of retail trade. Here, some 74 million strong small farmer-wholesaler-small retailer combine - a social inheritance of generations - works, not hierarchically, but laterally through neighbourhood relations.





Some 58.8 million small-marginal farmers from 6.8 lakh villages sell their produce at 47,000 haats/shandies to some 15 million wholesalers-retailers. It is the largest decentralised business in the world. They all operate within a radius of 16 km of where they are. Yet, only 40 percent of the food produced is traded; the balance 60 percent is barter-shared by social relations within villages. This [60 percent] sharing and [40 percent] trading keeps rural India alive.



The Parliamentary Standing Committee Report on the FDI in retail [June 2009] says that traditional retail employs 40 million people; and finds the corporate retail claim to 20 lakh job “highly exaggerated”. The Committee is right. Walmart, with $422 billion global turnover, employs just 2.1 million people.



That is, with more than India’s retail business in its balance sheet, it provides less than 5 percent of India’s retail jobs! So the organised retail’s proven job potential is less than 1/20 of the performance of traditional retail. Where from did Anand Sharma get his maths that the FDI in retail would generate 10 million jobs then?





This stentorian noise for the FDI in retail makes four claims. One, the organised retail would avoid the huge - `50,000 crore - waste of farm products due to lack of efficient supply chain; two, with middlemen eliminated the farmers would get better prices; three, Walmarts and Tescos would procure farm products and export them like they do from China, which traditional retail cannot. Four, it will yield more employment.



The claim about employment is bogus. What Walmarts and Tescos could not do elsewhere, they would not do here. The next claim, namely, like in China, Walmarts and Tescos would ramp up India’s exports ignores the basics of Indian and Chinese economies. China’s domestic consumption is low, just 35 percent of its GDP; the balance 65 percent is its exportable surplus. It has built this huge surplus over decades. India with a high domestic consumption of 58 percent has no such exportable surplus. Actually, it is sensible for Walmart to bring in goods from China, made cheaper by cheap yuan, into India.





Already Chinese goods are outselling Indian goods in India. India’s annual trade deficit with China, now $20 billion, is estimated to reach $278.5 billion by 2014! Far from making India prosperous, Walmarts and Tescos may impoverish it.





The claim that the FDI in retail will eliminate middlemen and enrich farmers is not borne out by facts. See the record of Tesco, the largest retailer in the UK, in contrast. It “exploits small farmers in the UK and worldwide”; “hastens their replacement” with monoculture plantations; “poses serious risks for developing country farmers” who have traditionally supplied to local street markets.



Further, “rather than growing their produce and taking it straight to a market, they have to deal with a chain of middlemen, supermarket’s standards of uniformity in shape and size, risking rejection of lot of their produce”. Farmer-friendly FDI in retail is contradiction in terms.



The campaign that the FDI in retail would prevent waste by efficient supply chain management ignores two vital facts. One, the national highway forms only 2 percent of India’s road network, but handles 40 percent of the road traffic! The other roads can handle only trucks smaller than 20’; and link only local markets.



Walmarts and Tescos can’t build roads. The government has to. If it does, Walmart or Tesco are not needed. Two, on storage, a recent MIT paper says that as “demonstrated by the case study in rural India, the solution to food storage needs to be a bottom up approach. Communities need to be identified where the people have access to fresh food that is currently wasted and who are willing to put in the time to store it properly. Farm cooperatives are potential candidates.”



So, bottom up society, not topdown Walmarts or Tescos, is the answer.



Finally, the debate on the FDI in Indian retail misses out the most crucial point. Not only Indian retail, the whole of Indian economy functions more on relations, less on contracts. That is why 60 percent of the farm produce is socially shared. The trade in the rest are based on neighbourhood relations. When contracts replace human relations, it yields not “market economy” but “market society”, where even families function on contracts.



Margaret Thatcher once said: “There is no such thing as society. There are individuals and families. That is all.” But, the experience of the US/West has proved that traditional families cannot survive without functioning traditional society. As the US Bureau of Economic Research had foreseen in 1970s, now family functions have been effectively taken over by corporates and the State! Unbridled market first dismantles the relation-based society, then disturbs families, to yield a purely contract-based ‘market society’ finally.



The relation-less retail model of Walmarts and Tescos fits the contract-based US/West. But, of late, even in the West, debate on “market economy” vs “market society” has begun - “market society” being derided as Anglo-Saxon. QED: The real issue is not the FDI in retail, but what does the Indian Government, economists and elites want in India finally? A relation-friendly “market economy”? Or, a relation-less “market society”?

[Guest]

[url="http://www.hindustantimes.com/India-news/NewDelhi/Resolution-passed-to-suspend-FDI-Parl-stalemate-over/Article1-778866.aspx"]Resolution passed to suspend FDI, Parl stalemate over[/url]

The deadlock in parliament over the government's decision to allow foreign direct investment (FDI) in the retail sector ended on Wednesday after an all-party meeting passed a resolution to suspend the move till consensus is reached.

<img src='http://www.india-forum.com/forums/public/style_emoticons/<#EMO_DIR#>/biggrin.gif' class='bbc_emoticon' alt='' />

[rhytha]

FDI in retail suspended to avoid mid-term polls: Pranab Mukherjee





Addressing the Congress Parliamentary Party, Mukherjee also apologised to members who had supported the government in allowing FDI in retail but said going ahead with the decision could have created a "crisis" for the government.



"I am sorry to those members who had supported FDI in retail and might be feeling let down. But if we had gone ahead it could have created a crisis for the government," he said.



A member quoted Mukherjee as saying that had the government gone ahead, it could have led to mid-term polls.



It was the responsibility of the Congress to take allies on board, he said in an apparent reference to Trinamool Congress which had opposed the decision.



Trinamool Congress, a UPA constituent and partner in the government, had said it would vote in favour of an Adjournment Motion against FDI in retail.



<img src='http://www.india-forum.com/forums/public/style_emoticons/<#EMO_DIR#>/biggrin.gif' class='bbc_emoticon' alt='' /> <img src='http://www.india-forum.com/forums/public/style_emoticons/<#EMO_DIR#>/biggrin.gif' class='bbc_emoticon' alt='' />



[media]http://www.youtube.com/watch?v=KUH7-L5FWGo[/media]

[Guest]

Didi was very popular in early 90s.



Anyway, Didi is very powerful and Manmohan and Babus will eat crows for sometime. Not sure whether they had received hafta before announcement or its still due. ?

[rhytha]

Little differnt insight on the existing retail supply chain



[size="4"]FDI in retail: Are commission agents really that bad?[/size]



A few days before the government stopped foreign investment in retail dead in its tracks, ET on Sunday caught up with A Mohammad, a commission agent or arthiya at the fruit and vegetable mandi in Okhla in south Delhi.



Such agents are essentially dealers, who buy produce from the farmers and then supply them to everyone, from hotels to the neighbourhood vegetable seller. An executive in an agribusiness company who deals with Mohammad described him as one of the two biggest dealers of carrots in the mandi. "Together, these two arthiyas dominate the trade in carrots," said the executive.



Okhla mandi is much smaller than the giant Azadpur mandi situated in north of Delhi, but it still handles thousands of kilos of vegetables and fruits per day, which pour in by trucks from all parts of India. But to look at him, you wouldn't think Mohammad (everyone in the business calls him Pappu) dominates much of anything. He's the kind of person who you would pass by on any street without a second glance.



When ET on Sunday asked him about his thoughts on the new policy on FDI in retail (still undead at the time), Mohammad said: "I am illiterate. I don't know much about these things." When prodded he did confess to being worried about the new FDI policy, but he actually seemed barely concerned.



Squeezing Both Sides



It is Mohammad, and his fellow arthiyas in Okhla, Azadpur and hundreds of other agricultural markets in the country who are the poster boys for much that is wrong with the trade in agricultural produce, and the reason why foreign investment in retail, or organised retail is needed.



They are accused of contributing to an enormous wastage of produce, and underinvesting in critical market infrastructure such as cold chains which prolong the life of otherwise perishable commodities. They are also seen as squeezing both sides, paying farmers a low price for their produce, holding onto a fat margin, and forcing consumers to pay high prices (officially, the arthiyas in Delhi take a 5% commission on what they buy, with a further 1% being paid as tax to the mandi).



By reaching out and procuring directly from the farmer, by investing in the necessary infrastructure, and by the ability to process large volumes, the big retail chains, whether a Reliance Fresh or a Walmart, would be able to cut out the many intermediaries (anywhere between four and seven) in the current flow of food from farm to a consumer's plate. Farmers would get a higher price and consumers would still be charged lower prices for the goods they buy.



If there is one aspect of the retail trade where this vision of the future will probably be most tested, it will be in the marketing of fruits and vegetables. It is here that the problems of the agricultural trade are starkest, sharp price spikes in one year (or even over a few months), followed by sharp price falls, and high levels of perishability and wastage of produce.



There is little government intervention in this market, unlike that of cereals such as rice or wheat, where the government is the biggest buyer. If the arthiyas were to be got rid of from the fruit and vegetable trade, how easily could they be replaced? And what are the benefits? What are the costs?



Incidentally, criticisms of the 'inefficiencies' in the country's agricultural trade were being made precisely at the time when inflation rates for fruits and vegetables were at their lowest level in years. Consumers may be rejoicing, but farmers are staring at huge losses in the coming months.



Domain Knowledge



Fruits and vegetables account for 6-8% of the average consumer's monthly budget, and about 14-16% of the food budget. And whether you are eating cabbage, or tomatoes or onions, and whether you live in Bangalore, or Mumbai, or Patna or Kohima, there is a significant chance that at some point in its journey from the field to your plate, that vegetable spent some time in Azadpur Mandi.



There are over 7,000 agricultural markets across the country which form the backbone of agricultural trade, and Azadpur is the nerve centre when it comes to fruit and vegetables. Apples from Kashmir, lemons from Gujarat, onions from Nashik, and potatoes from Punjab, all come here to be bought, sold and trucked to customers across the country, only a relative small amount is traded for customers in Delhi. On a single day, December 1, Azadpur handled 4,200 tonnes of fruit and over 8,000 tonnes of vegetables. That's 2.2 mt per year, assuming just half that amount is traded on average every day.



"There are times when apples come from Himachal [Pradesh], are sold here [Azadpur], and then trucked back to Himachal to be sold to customers there," says the agribusiness executive. "Such is the crucial role performed by Azadpur."



ET on Sunday couldn't confirm this from the arthiyas themselves, but even a brief acquaintance with any one of them, throws up a very simple reason why they are so dominant, they have a deep level of what a management consultant would call domain knowledge.



Mega Retail Comes to Mohammad



Agricultural markets are enormously complex, and each commodity has its own dynamics of where it's sown, when it's sown, and the way demand fluctuates with the seasons. Surinder Kohli, an arthiya who deals in taro root (arbi), ticks off the next few months of supplies: "My supply now comes from near Dehradun," he says.



"Then the source of supply will shift in February to Khandwa [Madhya Pradesh]. In the summer, it will come from Moradabad [UP]," he says. Arthiyas have to be constantly on top of where their next source of supply is, and they have, over the years, developed deep relationships in the far corners of India's countryside.



A person like Mohammad may be illiterate, but it is his knowledge of the carrot and capsicum trade, learned over many years and from his father, who was also an arthiya, which makes him more than a little contemptuous of the agribusiness companies. "I've seen a lot of the companies over the years try to make it in this business and almost all of them are in losses," he laughs.



Like many arthiyas, he points to the fact that many agribusiness companies now actually buy from him, rather than try and reach the farmer on their own, something which should be food for thought for those who think the agribusiness giants will replace the arthiyas. And it's not just a knowledge of how market conditions shift.



"I can place two onions in front of you," says Sanjay Kumar, who works for an arthiya in Okhla. "Both seem completely similar in look and feel to you, but I can tell which one will go bad first and therefore has to be reduced in price to get it out on the streets and into the household by this evening."



"This business needs a lot of investment and lot of knowledge," says Gokul Patnaik, chairman of Global AgriSystem, an agribusiness firm. "The gestation period for your investment to break even is at least 7-8 years."



The Financiers



But even the arthiyas admit that pure knowledge of market conditions or prices prevailing in the mandis can hardly be a competitive advantage anymore, in an age, when even the small farmer, armed with a cellphone, can call around among local mandis to find out the best price for his produce, and newspapers and websites carry the best prices on offer at local markets in the day. The arthiyas are often described as 'agents' or middlemen but that barely does justice to the second and perhaps most important role why they are so dominant, their control of the credit system.



"Every single aspect of this system works on credit," declares Kohli. "The farmer comes to me for credit to buy seeds and fertilisers," he says. Arthiyas say they are tapped by farmers for finance to buy everything, from seeds to sacks to bag their produce, and even to finance weddings and homes. "Lakhs can be given in cash to a farmer many months in advance to finance their farming cycle," says Mohammad.



The aggregate amounts of such agricultural credit given by arthiyas can be enormous. Kohli points to a rumour doing the rounds that the big apple traders in the Azadpur mandi have several crores of rupees in outstanding dues (he claims it is "hundreds of crores") from apple growers in Kashmir and Himachal Pradesh, which have still not come through.



The understanding is of course, that a farmer indebted in this way, will sell his produce only to the arthiya who funded him in the first place. But the arthiyas at least, claim that even this doesn't happen, and lament cases where farmers have taken money only to be never heard from again, even at harvest time. "And god forbid if the harvest fails," says Kumar. "Because then the money is gone. These are huge risks that we bear."



But the funding extends right up to the other end of the supply chain as wel, to the so-called mashakhors or super-wholesalers (who distribute vegetables to wholesalers and retailers in a city), and even the vegetable seller who goes house to house with his cart.



"I give three-day credit on green vegetables and one-week credit on 'dry' vegetables," says Kumar. As he talked, seller after seller walked into his office with little bundles of cash to repay their credit. These were entered into a register. No bank would dream of dealing with such people. But even large agribusiness companies and hotels buy from arthiyas on credit. "Mashakhors refuse to deal with you till you offer credit," says Mohammad.



It is the dual connection between farmer and agent (who is both buyer and lender) that complicates the seemingly simple relationship between the farmer and the arthiya. Mekhala Krishnamurthy, an anthropologist who researched mandis in Madhya Pradesh, says the state government had carried out a series of reforms to reduce farmers' dependence on arthiyas. "The reforms have worked better in grain markets, but have proved much harder to implement in vegetable mandis," she says.



They Buy Everything



A key reason is the different degrees to which market participants depend on arthiyas for credit in different agricultural markets. "In the grain markets that I studied, efforts to free farmers from commissions coincided with interventions to improve productivity [especially irrigation] and the availability of credit from other formal and informal sources."



However, she says, in the case of vegetable markets, perishability of the produce and the relative poverty of both the sellers and buyers in the market affect power equations and increase dependance on the intermediary. "Arthiyas remain vital sources of credit both for small farmers and small vendors and retailers, running sabzi mandis on credit advanced and recovered, often on a daily basis."



Perishability of produce means, in effect, that farmers are more dependent on arthiyas to sell their produce, within a short period of time. But the arthiyas say this benefits the farmer. "I stand ready to buy everything the farmer has to sell, whatever the quality," says Kumar.



"I pay an average price which takes into account all the variations in quality. The big retail chains will only cherry-pick the best of the produce and leave the farmer holding the rest, he will then be forced to sell that in the mandi at a huge discount." This is a view echoed by many other arthiyas, but there is a flipside.



It is hard to walk in Azadpur mandi without being struck by the piles of tomatoes or other vegetables left to rot, either because they were brought to the mandi that way, or because their price is so low and their quality so bad that they are unsaleable.



The Culture of Agriculture



Will the large agribusiness players replace the arthiyas? Now that foreign investment in retail is dead, that seems unlikely anytime soon.



"All the domestic companies make big losses, they were all waiting for foreign investors to come in so they could sell out," says Surendra Budhiraja, an arthiya who deals in onions and garlic. He feels that foreign investors will have much deeper pockets and the staying power to compete with the arthiyas. As of now though, the companies have preferred to work through the arthiyas rather than compete with them.



But any company which does take them on will have to fulfil the roles arthiyas currently perform, providers of credit (in cash, on sight, and with little more than an entry in a register), as well as the roles they don't perform, such as investing in cold chains.



The mere fact that there are gaps to be filled points to problems that have more to do with the way agriculture functions, than with whether people will get tomatoes a few rupees cheaper from Walmart rather than the local vegetable seller.



http://economictimes.indiatimes.com/news...ms?curpg=1

[rhytha]

"This business needs a lot of investment and lot of knowledge," says Gokul Patnaik, chairman of Global AgriSystem, an agribusiness firm. "The gestation period for your investment to break even is at least 7-8 years."

The 7-8 years is for new enterants, for existing retailers who already have a matured process, unlearning thier existing process and bootstrapping to the indian process will take longer time. Not many business will wait for a 7-8 yrs(looking more like 10 yrs) ROI, they will either collobrate with arthiyas for the short term and try to replace them in the long term if all things go right.



We need to see if the relationship contracts between the arthiyas and the farmers can be replaced with a business contracts between retailers and farmers.

[Guest]

We need to see if the relationship contracts between the arthiyas and the farmers can be replaced with a business contracts between retailers and farmers.

I think in India it will be very difficult for Western retail to control every aspect of business as they do in Western world. My guess is they will quit very fast.

[sumishi]

[url="http://www.thehindu.com/opinion/open-page/article2704622.ece"]It may end up as foreign direct interference![/url] : The Hindu, Open Page, December 11, 2011



[indent][quote name="A. Faizur Rahman"][size="4"]FDI is an instrument of corporatocracy through which it seeks to enslave us.[/size]

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The government's suspension of its decision to allow 51 per cent Foreign Direct Investment (FDI) in multi-brand retail must be welcomed. Undoubtedly, the executive order that allowed FDI was issued in haste, and it also gave the impression that India was bending over backwards to appease India Inc. But the most hypocritical aspect of this entire exercise was the sophistry with which FDI was justified and presented as the unique nostrum that would cure the infrastructural, inflationary and agrarian ailments of the country. Not to mention the crocodile tears that were shed for the farmers losing billions of rupees annually due to lack of proper storage facilities and the presence of multiple intermediaries in the supply chain. The FDI-obsessed corporate honchos did not hiss a whimper of lament when P. Sainath wrote a series of damning articles which brought to light the fact that (an average of 15000 a year) a quarter of million Indian farmers had committed suicide since 1995 ([url="http://www.thehindu.com/opinion/columns/sainath/article995828.ece"]www.thehindu.com/opinion/columns/sainath/article995828.ece[/url]). Even when Sainath provocatively described this calamity as “the largest wave of recorded suicides in human history,” the only sound that emanated from the corporate world was a deafening silence.



Nevertheless, there is no truth in the assertion that the decision to put on hold FDI would hurt India's economy. It is unabashed self-interest that motivates western mega corporations to look for gullible markets in developing countries. This was ruthlessly brought out by John Perkins in his book Confessions of an Economic Hit Man. Coining the term corporatocracy for the nexus between corporations, banks and governments, Perkins writes that the ultimate goal of this triumvirate is to integrate all national economies in the world into a single global “free market system” through the modern international financial system controlled by the World Bank, the IMF and the WTO.



Similar views were expressed by Joseph Stiglitz in his book Globalization and Its Discontents. He said, “The problem is not with globalization, but with how it has been managed. Part of the problem lies with…the IMF, World Bank, and WTO, which help set the rules of the game. They have done so in ways that, all too often, have served the interests of the more advanced industrialised countries — and particular interests within those countries — rather than those of the developing world.”



We have every reason to believe Perkins and Stiglitz as post-World War II history is evidence to the fact that few nations have been able to escape the “structural adjustments” and “conditionalities” of the World Bank, the IMF and the WTO for it is they who determine the rules of economic globalisation and decide which nation is to be rewarded for toeing the line and which punished for transgression. Is this what the supporters of FDI seek to perpetuate?



The truth is that the Indian government does not suffer from any pro-corporate policy paralysis. It is actually afflicted with a social security paralysis, which when overcome will eliminate the need for FDI in any sector let alone retail. The visionary framers of our Constitution had wanted the Indian state (in Art. 45) to provide, within a period of 10 years from the commencement of the Constitution, free and compulsory education for all children till they complete the age of 14. But it was only in April last year — more than six decades later — that the Right to Education Act was passed. Had this been done half a century ago, 40 million Indians would not have been forced to seek refuge in the unorganised 96 per cent of our retail industry. India would have been one of the most advanced nations of the world and no corporate huckster would have dared to peddle FDI to us.



In sharp contrast, Japan shrugged off its twin atomic bombings to become an economic superpower in a short span of time. In his 1979 book Japan as No.1 Ezra F. Vogel attributes Japan's tremendous success to its insatiable hunger for knowledge and its accent on training which it achieved by bringing in foreign consultants and sending its own teams to centres of advanced knowledge across the globe. Perhaps, India is paying the price for not adopting a similar strategy. Literally!



A recent newspaper report quoting finance ministry sources says that large borrowers who took loans of Rs.10 crore or more from public sector banks have defaulted on payments to the tune of Rs.47, 000 crores. And it was hinted that many of the defaulters had actually defrauded the banks in collusion with the bank officials who allowed them to go scot free by failing to attach their assets or file suits against them.



According to a report just released by the Organisation for Economic Cooperation and Development (OECD), inequality in earnings has doubled in India over the last two decades with the top 10% of wage earners now making 12 times more than the bottom 10%. The report drew attention to the growing concentration of wealth among the elite by informing that the consumption of the top 20% of households had grown at 3% annually in the last decade compared to 2% in the 1990s. On the other hand, the consumption of the bottom 20% of households remained unchanged at 1%. Interestingly, the opposite was true in the case of China and Brazil. In other words, the poor in these countries are benefiting from the economic growth of their nation while in India a handful of capitalists are grabbing all the wealth. No wonder India spends less than 5% of its GDP on social security schemes compared to Brazil's more than 15%.



What India needs is not FDI but equitable re-distribution of its wealth now concentrated in the coffers of a few. FDI is an instrument of corporatocracy through which it seeks to enslave us, and therefore, the people of this country have every right to protest.



[size="2"](A. Faizur Rahman is the secretary general of the Forum for the Promotion of Moderate Thought among Muslims. He may be reached at faizz@rocketmail.com).[/size][/quote]

[/indent]

[sumishi]

[url="http://www.thehindu.com/opinion/lead/article2706988.ece"]FDI in retail — UPA ‘retired hurt’[/url]: The Hindu, December 12, 2011



[indent][quote name="P Sainath"][size="4"]Here's the wonderful thing about the FDI-in-retail debate: never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork.[/size]

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Foreign direct investment in retail may be on hold, but Hillary Clinton can stop worrying about Anand Sharma and Pranab Mukherjee. “How does (Commerce Minister) Sharma view India's current Foreign Direct Investment guidelines? Which sectors does he plan to open further? Why is he reluctant to open multi-brand retail?” Those were among the questions U.S. Secretary of State Clinton posed in a cable to her embassy in New Delhi in September 2009, some months after Prime Minister Manmohan Singh began his second term. ([url="http://www.thehindu.com/news/the-india-cables/article1547377.ece"]See: Hillary checks out Pranab, and the competition, from The Hindu-Wikileaks India Cables series: March 18, 2011[/url]).



Note her pointed query on opening up ‘multi-brand retail.' She had other worries, too. “Why was (Pranab) Mukherjee chosen for the finance portfolio over Montek Singh Ahluwalia? How do Mukherjee and Ahluwalia get along?” And “does Sharma get along with Mukherjee and Prime Minister Singh?” They get along fine, Hillary, and they're all in it together, as a team.



Hillary has reason to be concerned about FDI in retail. There's the tens of thousands of dollars she earned from serving as a director on Walmart's board. And the other thousands of dollars contributed to her 2007-08 campaign by Walmart executives and lobbyists. An ABC News report on that in 2008 also observed that as a director, Hillary Clinton remained “a loyal company woman” (Clinton remained silent as Wal-Mart fought unions: ABC News, January 31, 2008).



And she surely knows the UPA's FDI retreat is tactical. Pranab Mukherjee put it with disarming candour: we don't want mid-term polls. Hillary too had flip-flopped during her election campaign, going by the ABC News report. (While on its Board of Directors, she had said: “I'm always proud of Walmart and what we do and the way we do it better than anybody else” — June 1990.)



Yet, Hillary's campaign website of 2007-08, points out the ABC News report, omitted “any reference to her role at Walmart in its detailed biography of her.” As the race heated up, she recanted: “Now I know that Walmart's policies do not reflect the best way of doing business and the values that I think are important in America.”



Perhaps Hillary's FDI concerns are loftier. She must be worried about the poor Indian farmer. The wonderful thing about the FDI-in-retail debate is the explosion of concern for agriculturists. Never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork ever since the FDI announcement. From Deepak Parekh to Ratan Tata, they've suffered sleepless nights, agonising over the small farmer.



They might want to take a look at the American farm population. At their family farms, especially smaller ones, wrecked by corporate monopolies at every level, from giant agri-businesses to mammoth retail chains. Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s.



With what credibility does our regime, on whose watch farm suicides crossed the quarter-of-a-million mark, speak of helping farmers? Who knows what windfalls the deals struck with retail giants have brought to individuals in this most corrupt government in our history? We need to embrace that old journalistic principle: Follow the money. (Hillary does, though in a very different way.) Meanwhile, look at our government's claims.



Who it affects



Doing away with the ‘middleman': The first to be devastated will be that poor ‘middlewoman' — the vendor who daily provides our towns and cities with fresh produce. She did not push up the prices and has her modest margin squeezed each time they rise. That woman carrying that huge basket to your doorstep, on her feet 14-16 hours a day to feed her family. She's the first ‘middleman' target.



The more exploitative middlemen in the chain will be co-opted by giant retail which needs collectors and contractors, though not so many. It will slash their numbers after a while. This is The Mob taking over from the little guys on the block. You're looking at massive displacement in the agricultural supply chain. Only, the new ‘middlemen' will be Cardin-clad and Gucci-shod, with better access to government than the farmers everyone's dying to save.



That poor woman vendor, whose life we need to improve, not destroy, brings you fresh produce. She has to, or she can't sell it. (Tip: big retail operators pasting the words ‘natural' or ‘fresh' against their names are selling you stuff that could have been refrigerated, even frozen, for days).



Ten million jobs: Try not to die laughing. This comes from a school of economics that has gifted the world jobless growth for three decades now. We worked hard for two of those, making a big expansion of jobs impossible within our policy framework.



From the early 1990s, fantastic claims have been made of small farmers gaining from neo-liberal globalisation. For instance: farm incomes would rise 25 per cent if Indian prices were aligned to global prices; purchasing power would shoot up.



Many steps were taken on such claims, including 100 per cent FDI in sectors like seed. All achieved the opposite. These moves helped double the indebtedness of the peasantry and further spurred the worst-ever recorded wave of suicides. Apart from which we've seen seven-and-a-half million people abandon agriculture in a decade, many driven out by policies to ‘benefit the farmer.' Now we should believe that FDI in retail will undo all the damage that these policies — from the very same authors — caused? And these guys predict 10 million jobs within a year?



The UPA wants to open up a sector that for all its awful flaws and hardships presently employs 44 million people and has total sales of close to $400 billion. (That's about 20 times the number Walmart employs on roughly the same turnover.) And gives some sustenance to many millions more if you think families. Small shops and ‘big box retail' can co-exist, so croons the corporate choir. Sure, after wiping out countless thousands of tiny shops, the survivors can ‘co-exist' with the big guys, who might even have minor errands for them to run. India's powerful will run the more important errands. That was clear from 2005 when then Walmart International Division chief John Menzer told his company's annual meeting: “In our six government meetings, we created a very positive image [of Wal-Mart]…” And: “We've energized the FDI lobby and preempted the anti-FDI lobby in India.” (Wal-Mart's Hot in India, CNNMONEY.COM, June 6, 2005)



Efficiency: The giant chains can never match the efficiency of farmers' markets selling food produced locally or nearby. Their sourcing of produce from all over the world, central warehousing systems, giant transport operations — all these are hugely energy intensive. Which means a lot of what you get is old and much-refrigerated or frozen. Know the other costs of what you pay for.



Benefitting farmers: Here's a paradox. Just when we march determinedly towards super markets, people in the homeland of Big Retail are buying more and more from “farmers' markets.” That is, the oldest form of direct marketing by small producers. More and more Americans seek decent produce not drowned in chemicals, pesticides and preservatives. Growing numbers of that nation's small and family farms are selling through farmers' markets each year. In India, every market was once a farmers' market. Over time, farmers have lost control of such markets to traders and moneylenders. Now comes the coup de grace.



The coming of Big Retail is not simply about shops in the towns of over one million. It brings a radical restructuring of the entire agri-supply chain. The kind of investments — above $100 million — will obviously not go towards labour-intensive operations. The new structures that will confront farmers are stronger than any they have ever known. As a paper on the “U.S. Farm Crisis” from the Kerr Center for Sustainable Agriculture, Oklahoma, puts it: “large corporations have in recent years moved to curtail farmer independence through production contracts and other forms of vertical integration. These moves have included establishment of huge corporate-owned Confined Animal Feeding Operations, where animals are raised without farmers.”



The new middlemen the government welcomes have no regard for village and community. Maximising their own profit is their sole concern. As the number of buyers shrinks to a handful of corporations, farmers will have fewer places to sell their produce. What kind of bargaining power will they have against these mega-middlemen, some of whose worth would place them, if treated as nations, amongst the top ten economies in the world? The “contracts” in the new dispensation will reflect that power equation. The National Commission for Farmers headed by Dr. M.S. Swaminathan had observed that rushing into contract farming without ensuring the needs, safety and bargaining power of the farmer would result in major displacement in the sector. But not to worry, Hillary, your team is still out there batting. Only retired hurt for the moment.[/quote]





[/indent]