The move will help establish backward-forward linkage, says Consortium of Indian Farmers Associations

The Federation of Indian Export Organisations (FIEO) and the Consortium of Indian Farmers Associations (CIFA) have welcomed the decision of the UPA-II Government to allow 51 per cent foreign direct investment (FDI) in multi-brand retail sector stating it would increase exports and benefit the farmers.

In a statement issued here, Chengal Reddy, Secretary General CIFA, said he believed that this move of the government would help in establishing backward-forward linkage. It will help farmers in establishing producer groups and supplying to retailers directly leading to elimination of middlemen at four or five different levels.

Mr. Reddy said currently 30-40 per cent of all farm produce gets wasted due to an efficient link between the farm and the consumers. Infusion of new technology and funds would enable farmers to get inputs on best practices and help them in getting extension services.

The statement said producer groups would be able to get assured price as they have to enter into agreement with the retailers for continuous supply and said the fears of small traders being affected were unfounded as large retail outlets would be established only in mega cities covering perhaps 10-15 per cent of the population.

He said CIFA felt that this move would encourage farmers to become producer groups and have better bargaining power in future and competition among Indian and foreign retailers would increase competitiveness and fetch better price and services to farmers.

He said crop holiday and farmer suicides were directly related to failure of marketing which was a glaring failure of the agriculture sector. FDI in multi-brand retail will help in finding a solution.

On the other hand, Ramu S. Deora, FIEO President, said the 30 per cent sourcing from domestic small units, artisans, craftsmen and cottage units would provide further boost to exports. Units supplying to large retailers will achieve requisite quality and price competitiveness to graduate to exports. This will largely benefit exporters of textiles, leather, gems and jewellery, handicrafts, jute, coir and other lifestyle products. “This will also create jobs in these sectors and enhance their capabilities as retail buyers buy in bulk for their global re-distribution. Chile has been largely benefited with multi-brand retail in pushing its exports of wine and fruits across the globe,” he said.

He said farmers would be able to access the world market as efficient producers-sellers linkage would be established which would be more remunerative for producers. Indian farmers receive only 30 per cent of the price paid by consumers as compared to 50-70 per cent in developed markets. A structured retail would, therefore, enable better price discovery, he said.


U.S. welcomes FDI in retail November 30, 2011

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