As reported Reliance Industries has started the retail spree. And as it’s other projects and enterprises, the business is going to be bold and big. It opened nine retail outlets in the NCR last week. By the year-end, the number will go up to 250 stores in NCR. And the company is aiming at opening 6,000 outlets in 784 cities and towns by 2010-11 with revenue hitting Rs one lakh crore. Is it not aiming to become Indian Wal-Mart?
However, the best part of the business model with these big retail enterprises will be its mission to connect farmers to end consumers without involving any middleman. As per the plan, the company will have 6,400 procurement centres all over the country. Each centre will have a cold storage to store the vegetables and dairy products. At the district level towns, the procurement centres will have food processing facilities where seasonal fruit and vegetable will be processed to enhance their self-life. The vegetable and fruits collected at the procurement centre would be aggregated at the district level to supply them to the big cities as per the requirements and process the rest. This will push up farmers’ income, as they would get better price of their seasonal products, and the end customers would be paying less. It will also work out the most efficient logistics and inventory management to cut the cost down.
However, my concern is about its real impact on the prosperity of the farmers. Will it help the marginal farmers? Can they get the best price or exploited by the retail company? Will the other retail companies be following the same model without the middlemen with the social responsibility for the best price for the farmers?
I wish the retail companies would go for contract farming with small farmers and producers providing all sorts of help- credit at low rate, fertilizers, insecticides, and seeds of the best quality, and also the technical support during farming. This is the expectation from the big business houses such as Birlas, Ambanis, Mittals, Godrej, and so many others that are mushrooming in the organized retail sector.
However, there must be some regulator in retail sector too. The big retailers with huge resources must not get tempted to source the commodities from the cheaper foreign producers on the pretext of free market instead of encouraging the local farm producers, food processors, and small as well as big manufacturers of the commodities. Only if these big retailers acquire and own the retail companies in foreign countries, they can help in encouraging and developing the commodities by the Indian manufacturers as per the demand in those markets. At one stage, the organized retail sector can help manufacturing sector grow and expand too. The coming of big business houses in organized retail will be beneficial only if it helps the agriculture and manufacturing sectors to expand fast. Let them not get all the wares and produces on the racks imported from China and other cheaper sources that are happening now.
P.S>India is the world’s second largest producer of fruits and vegetables. But 40% of the produce is wasted due to poor infrastructure. The fresh produce business is estimated to be worth Rs 1,00,000 crore in India. Total Produce with Tata Chemicls in a new venture is expected to help farmers realise better returns on their produce, besides cut wastage of perishable farm products