Enter, farmer with an FDI query

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  • Published 30.11.11

New Delhi, Nov. 29: Farmers, a holy-cow constituency considered more valuable than small traders to the political class, have begun to ask uncomfortable questions to those opposing foreign direct investment (FDI) in retail.

Several farmer groups, some of them led by politicians with ties to the Congress, have asked why some parties are standing in the way of a measure that is expected to reduce the clout of middlemen and increase farm earnings.

Although Prime Minister Manmohan Singh also underscored the same point today while stoutly defending the cabinet decision to liberalise FDI rules in retail, it is not clear yet whether the murmurs from the farmers are stemming from active political intervention.

The government and the Opposition, whose misgivings are also shared by key UPA ally Mamata Banerjee, are now locked in a stand-off over the wording of a motion Parliament can discuss in order to end the legislative impasse that entered the sixth day today. ( )

If the latent mood reflected by farm lobbies gathers depth and sweep, the parties opposing FDI will have to choose between the small trader and the farmer. Almost all parties, including Mamata’s Trinamul Congress, arrayed against the retail reforms describe themselves as the best friends of farmers.

“Not only will FDI in retail eliminate four to five middlemen at different levels, it will also enable farmers to get quality inputs,” said Changal Reddy, the secretary-general of the Consortium of Indian Farmers Association (Cifa).

Reddy has a Congress background but his federation’s views cannot be ignored as it has many affiliates spread across the country.

His assertion tallies with that of commerce ministry officials who have been trying to hammer home the message that FDI will help lift farmers’ incomes.

Few political parties will deny farmers are now being ripped off. (See chart)

A CPM-affiliated farmer outfit betrayed that dilemma. “Agro business would no doubt flourish if FDI is allowed in retail. But there is a rider: it would not benefit the marginal farmers; they hardly produce anything. It would only benefit the big farmers,” said Biplab Majumdar, assistant secretary of the CPM-affiliated Pradeshik Krishak Sabha.

Another farmers’ body referred to another likely dividend from FDI.

“FDI is expected to roll out cool chains that will bring the market closer home, reduce the number of middlemen and enhance returns to farmers,” said Prakash Thakur, the chairman of the People for Environment Horticulture & Livelihood Himachal Pradesh.

“Highly perishable fruits like cherry, apricot, peaches and plums have a huge demand but are unable to tap the market fully because of lack of a cool chain and transport infrastructure. All this should see a boost with the opening up of retail for large investments through FDI,” he said.

Thakur has a point. Although India is the second-largest producer of fruits and vegetables at 200 million tonnes, its storage infrastructure is grossly inadequate. Of the 5,386 stand-alone cold storages, 80 per cent is used to keep potatoes.

The cabinet kept this in mind while taking the FDI decision. Each foreign investor will have to invest at least $50 million (Rs 250 crore) in back-end infrastructure that will include cold chains, refrigeration and transportation.

Bharatiya Kisan Sangh general secretary Prabhakar pointed to entrenched interests in the existing system. “The farmers are not getting the right price for their produce. The authorised agents of APMC (formed under the Agriculture Produce Market Committee Act) do not give us the right price, nor do we get it from the agents of Indian organised retail firms. What is needed is a regulatory mechanism which would ensure that farmers are not cheated and all their produce is bought, not selectively,” he said.

This does not mean that all farmers support FDI or those who are less antagonistic are expecting matters to improve dramatically.

Krishan Bir Chaudhary, president of the Bharatiya Krishak Samaj, expressed the fear that the global giants could force the farmers to “dance to their tune”.

“Once they establish monopoly in the sector, they will force farmers to buy their recommended seeds and all this could affect the food security of the country,” he added.

Some onion farmers in Maharashtra, the base of Sharad Pawar’s NCP that is supporting FDI, are also sceptical but feel nothing can be worse than the current system.

“If a giant like Walmart would give its products cheaper to consumers, how can farmers expect to get a better price for their produce? The government regime on onion pricing is itself so exploitative of the farmer that the FDI can’t be worse,” said Changdeo Holkar from Nasik.

Swabhimani Shetkari Sanghatana leader Raju Shetty said: “We are not saying FDI in retail would bring happier days of prosperity for farmers but, at least, it may not directly harm them in a worse manner. The big retailers will give tough competition to the middlemen.”

Vidarbha Jan Andolan leader Kishore Tiwari added: “Farmers are already being looted by the middle men. So what more harm can FDI do? Big malls and hyper-markets already exist. As long as fundamental rights of the growers and interests of rural life are protected by the government, we don’t see a problem with FDI in retail.”