Pushed into a corner over the economic slowdown (amidst the plethora of scams besieging the regime), the Congress-led UPA has shown a keenness to push through 51 per cent FDI in multi-brand retail in the hope that it will pull the economy out of its current morass. This has triggered fears amongst farmers and retailers alike as these sectors will bear the impact of this measure, so far stiffly opposed by political parties across the spectrum. The experience with FDI in the food processing sector has left many farmers dissatisfied with contract farming; in Punjab, nearly 50% of the farmers who engaged with this model refused to re-enter contracts.
It goes without saying that all talk of ‘safeguards’ in multi-brand retail is a PR pitch as the UPA is considering removing the pre-condition of 30 per cent local sourcing. In August 2012, Minister of State for Commerce and Industry Jyotiraditya Scindia, admitted in a written reply in the Rajya Sabha, that a study by the Switzerland-based UNI Global Union “Wal-Mart’s Global Track Record and the implication for FDI in multi-brand retail”, showed that increased FDI will cause “widespread displacement and poor treatment of Indian workers in retail, logistics, agriculture and manufacturing.”
Enhancing FDI is misconceived at a time when traditional retail has quietly emerged as a sunrise sector of the economy, providing opportunities for unemployed youth; it contributes 15 per cent of the national GDP. Indeed, renewed interest in ‘reforms’ like FDI in multi-brand retail are surely linked to Wal-Mart’s expenditure of a whopping Rs. 60 crore for lobbying in India on this issue, as per its disclosure to the US Senate.
For a generation that remembers the humiliation of PL-480 and is witness to declining soil fertility on account of the ‘Green Revolution’, food security is a major issue of national security. Here the much-maligned retailer plays a role in linking the rural farmstead to the domestic kitchen in rural and urban areas.
An unspoken but critical aspect of the FDI debate is the link between attempts to push Genetically Modified seeds of multinationals which seek to monopolise control of the entire food chain from farmstead to end consumer.
Due to FDI in retail farmers will be placed at the mercy of MNCs which will dictate the crop to be sown, the seed used, the fertiliser and pesticide [which can affect long-term soil fertility]. They can force farmers to switch to cash crops, which can endanger their livelihoods (the misery of debt-driven cotton farmers was compounded by the need to buy food, and could have impacted the suicide rate).
Corporates generally favour certain crops for commercial viability, such as staples like rice and wheat, and shun nutritious grains like ragi, maize, millet, bajra, which are most suited to certain types of soils and climates. This calls for unnatural intervention in the form of fertilisers and irrigation and affects both soil fertility and crop diversity in the long run.
MNCs dictate the price at which the harvest is purchased, and control farmers through long-term contracts banning sales to other buyers. Ostensibly contract farming is supposed to guarantee the purchase of the produce and ensure quality, but experience worldwide shows that MNCs insert clauses that permit them to reject produce in the name of ‘quality’, or depress prices on some pretext, leaving individual farmers with no choice in the matter.
Farmers’ interests are protected only when there are multiple buyers. They would benefit from ending deleterious practices like Octroi which cause trucks to pile up at the borders of States and damage the produce, causing huge losses to farmers year after year. Farmers also need good roads to connect to multiple markets, and adequate cold storages, which should be built at district level. Above all, government should ban futures trading in commodities, which triggers price rise and benefits speculators.
Even in America, the record shows that until 1950, the average American farmer earned nearly 70 per cent of every dollar spent on food. In 2005, this declined to 3 to 4 per cent, though it should have risen with the elimination of middlemen. But the large corporates purged the intermediaries and cornered all the profits. Multinationals that have saturated profits in their existing turfs are pushing for FDI in retail. The UPA, more specifically the Congress, must explain why it is playing ball.
September 9, 2012
http://www.niticentral.com/2012/09/congress-trying-to-sneak-in-multi-brand-fdi.html