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FDI in retail for Karnataka - I say NO! Can wait.
Written By silkboard - 28 November, 2011
Bangalore Retail governance Complaint Economy liberalisation FDI
Retail, FDI - don't stop reading here please, its not as geeky a topic as it sounds. Lets talk our state for a moment. Refer TimesofIndia Bangalore, page 15, "Karnataka industry mostly supports FDI in retail". Refer this, a quote by Mr J Casta:
J Crasta, co-chairman of Assocham (southern chapter), said middlemen, in the last 50 to 70 years, have taken manufacturers and consumers for a ride.says even when tur dal prices peaked at Rs 250 a kilo, farmers could get only Rs 20 a kilo. Every agriculture produce passes through 7 to 12 middlemen before it reaches the consumer, each one taking a margin, leaving hardly anything in the hands of farmers and consumers paying a huge price.
Rs 20 a kilo in the farmer's hands, to Rs 250 a kilo. No government PR, or newspaper so far has explained to us as to how 100% FDI in Retail will put more in the hands of the farmers. What exactly will the FDI in retail do?
- Raise farmer's income on Tur dal Rs 20/kg to Rs 50/kg ?
- Lower this peak price from Rs 250/kg to Rs 150/kg ?
Now, what are the safeguards to make sure that this doesn't happen
- Raise farmer's income on Tur dal Rs 20/kg to Rs 50/kg, while peak price we pay remains the same (Rs 250/kg). Meaning, that some middlemen may go away, farmer's benefit a bit, but the consumers don't.
- Lower this peak price from Rs 250/kg to Rs 150/kg, but farmer's income stays at Rs 20/kg. Meaning, consumers benefit, but farmer's don't, and half of the middlemen may go away.
- Farmers get Rs 20/kg, we pay Rs 250/kg, middlemen may go away and be replaced with the "Retail industry"!
What safeguards does the bll have to make sure that none of of these three (above) happen? Now, the final argument.
- Let's say the bill has safeguards to make sure the above three do NOT happen.
- Why do we need "foreign" money to give more to the farmers, and yet make consumers pay less? Why is it that Reliance, Titan, Big Bazaar, More, Spencer etc etc can NOT ensure that, but Wal Mart & Tesco can?
If the problem is with middlemen inflating prices, give me a bill to clean that up first. If the gap between farmer's income and consumer outgo is huge, I want a REGULATOR who would publish and keep tab on the "difference" numbers every month.
FDI in retail can WAIT!
Why shouldn't it? I don't understand.I am either too dumb to follow the debate, or the proposal is not designed to guarantee benefits to either the farmers or the consumers like me.
COMMENTS
silkboard - 28 November, 2011 - 04:48
See this for the argument (http://www.thehindubusinessline.com/industry-and-economy/article2659843.ece?homepage=true&ref=wl_home)
Opening up the retail sector to foreign direct investment is a welcome move that represents significant benefits to farmers, according to Mr Manikam Ramaswami, Chairman, Agriculture Forum, CII Southern Region. Mr Ramaswami said entry of large multinationals into food retailing will help address major concerns for the farmers — marketing, right pricing and market information. Multinationals have the capacity to provide adequate support, pricing and supply chain management, he said.
First tell me why is it that right pricing and right information can NOT be guaranteed by domestic players, or by government itself. Why not fix those hurdles first? And when our information technology companies build supply chain tech for most of the developed world, why does anyone think that we can't do it ourselves? Why?
Only argument that can be made would be about "money", that all this supply chain and tech information tech needs money. Clear the hurdles that Domestic retail players face today in connecting farmers with consumers, and then see if they can raise more money on their own.
If information tech is the problem, let there be 200% FDI in supply chain info tech area. I think the Wal Marts and Tescos can wait.
Suhas, in most states you can't
silkboard - 6 December, 2011 - 06:38
Search for APMC Act. In most states, you can't.
Most states don't want you to buy directly from Farmers mainly because they fear that you may not pay them the minimum procurement price.
Ravi_D - 28 November, 2011 - 05:36
+1 SB.
While I do love the convinience of shopping at a well planned, diversely stocked store carrying genuine products (think IKEA), I'm not sure we are informed right. It is mostly FDI for the sake of FDI.
Typical twisted argument, right? We support it - as farmers get more out of it! OTOH, multi-Brand retail is what the name suggest - multi-brand. Includes agri products, but that is not necessarily the only (or even the largest) component of retail business. Visit any big box global retailer, and you'll see first hand. Typical wallmart store in the US probaly has about a 5th of its shelf space filled with fresh produce and food articles.
silkboard - 28 November, 2011 - 06:29
The examples floating around in quotes that are getting prime coverage in all newspapers talk about Agri, so used Agri. The point about SME is also getting a lot of coverage. There, I havn't see any numbers at all (like the Rs 20 to Rw 250 bit on Agri).
Either way, is FDI in retail 'supposed' to help SMEs and Farmers, or will it kill inflation and ease my pockets? I don't know. And I am sure so do many. So please say NO to this, and to anything else where you don't know the "outcome".
Government PR has to do a MUCH BETTER job of explaining what these proposals do. They can't have media play proxy for them all the time.
Public Agenda - 6 December, 2011 - 05:59
These are the days of post Wikileaks.
and the sooner the way we look at information changes the better for all of us
Wikileaks this time last year mentioned how the FM of India ws chosen and the lobbies backing him? the statement was in a communique from the Secretary of state, US. It seems like the lobbies were clear now. And if there were not any then there certainly are now. They have already stood up to be counted
2 press statements from the White House during last week on FDI in retail in India.
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