Organised Retail Sector and Social Responsibility

Organised retail sector is regularly in news these days. All big business houses including Reliance, Tata, Birla, Mittal, and many others are trying to cash on its potentials. As a commoner is made to believe this may mean a better price for the farmers or producers for their produce and a lower price to the consumers.

One wonders, why a popular fruit such as ‘Babugosha’ that sells at Rs 10 per kg at Kullu in Himachal where it is grown, comes at Rs 30 per kg in Delhi. However, the fruit grower may be getting hardly Rs 2 to 5 per kg at auction. A farmer gets Rs 8.5 per kg for his wheat, but ITC claiming excellent social responsibility charges Rs 17.5 per kg for the wheat flour if bought in package of 10 kg, and more in smaller packages. Parwal, another common vegetable, sells at Rs 12 or less a kg at Patna, but Safal, the Mother Dairy’s outlets for vegetables and fruits sells it at Rs 24 per kg or more. And the poor vegetable grower gets hardly Rs 4-5 a kg. Milk is better. The cattle owner gets about Rs 9 a liter, when the end user buys it at Rs 20 a liter. Is the difference of price between the producers get and the end users pay due to the cost of transportation and other expenses or because of excessive margin charged by the middlemen and the final sellers? Should the consumers and farmers expect that the big business houses coming in organised retail sector will cut down these cost by incorporating efficient transportation and storage in the system cutting delays and wastages, that causes the difference and share the margin by paying more to the farmers and charging less from the end consumers as advocates of social responsibility?

I look at the trays of imported fruits displayed in Reliance Fresh and get a feeling that even these big retail players will also hardly do anything to assist and develop better fruits by proper input to the growers. Instead, they will take the easiest route to import the cheapest from all and odd sources taking advantage of the excuses of globalisation and sell at the best possible margins to the consumers.

And that is what is happening for all the other items in new retail stores big and small. They are importing the cheap Chinese goods and taking the maximum advantages of the craze of Indians for foreign goods. Why can’t at least the big retail players take lessons from Maruti Udyog, who developed many auto component manufacturers that have become today world class and are competing with the best in the world? Big Bazaar and Vishal are at least the ones where at point of time, I found selling mostly Chinese goods.

Chinese manufacturers are having the advantages of developing these household items to the tastes of the people of western countries that are flashy and latest in design. And Wal-Mart and other big retailers got them developed from China because of the high cost of those in US.

Indian manufacturers can certainly compete in many cases, if assisted by the big retailers. The big business houses through its presence in retail sector in big way will help manufacturing sectors to transform itself to a world class taste through product innovations and manufacturing practices that can make them competitive too. The biggies can help agriculturists, floriculturists, horticulturists, and SMEs in manufacturing to produce the quality products at the cost to enhance and sustain the global demand for Indian goods.

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