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Farmers and consumers favour FDI in retail: ASSOCHAM survey A random survey by industry body ASSOCHAM early this month earmarked that an overwhelming majority of consumers and farmers in and around ten major cities across the country support the government’s decision to allow 51 per cent foreign direct investments in multibrand retail while 80% traders and middlemen are against it. Over 90 per cent of consumers said FDI in retail will bring down prices and offer a wider choice of goods. Responses of over 2,000 people (500 each) covering farmers, consumers, kirana store and traders across ten major cities like Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Chandigarh and Lucknow were gathered earlier this week by The Associated Chambers of Commerce and Industry of India (ASSOCHAM). With increased competition, stores will offer heavy discounts to increase their sales, according to 85 per cent of consumers. When a large number of micro, small and medium enterprises move to the organised sector, quality standards will improve and lead to good shopping experience, they said. The entry of large retailers like US-based Wal-Mart, British giant Tesco and France’s Carrefour will bring in branded goods in apparel, footwear, electronics, home appliances and various other sectors, said 86 per cent of consumers. Food retail will get a massive push
evry where. The current situation calls for development of Agrisector with fragmented farm holdings.Lack of infrastructure and technical knowhow and knowledge of improved and innovative agri practices is holding back growth.Absence of commitment from stake holders in supply chain ,lack of market access to sell their produce directly to consumers without routing through mandis and middlemen are the pain areas resulting in sluggish growth, price rise and inflation. Lack of support to farmers,lack of proper post harvest technology,storage facility (around 5500 stand alone cold storage) results in generating wastage of 30% of fruits and vegetables and around 7% of food grain and the loss is estimated to be around Rs 230 billion. India is the world’s second largest producer of food next to China.There is huge opportunity for large investments in fruits and vegetables,milk and milk products, meat and poultry, packaged food, alcohol beverages and soft drinks.Value addition to food products is a necessity now due to diversity in socio economic conditions and globalization. Food processing sector is gaining importance due to consumer preference for ready to cook and ready to eat foods. Market size of processed food is
as supermarkets start sourcing products directly from farmers. Nearly 78 per cent of farmers too said they will get the right price from multi-format stores with the number of intermediaries being cut. Fruits and vegetables currently pass through five layers of greedy middlemen and each adds a margin, leading to substantial difference in farm gate prices, wholesale prices and what the consumers ultimately pay at the retail store. Electronic weights, quality specifications and improved yields will also benefit the farmers. Foreign retail majors will set up their cold storage facilities, bring in investments in back-end infrastructure, reduce the huge wastages and ultimately benefit end-users. However, over 82 per cent of the kirana stores said big stores cannot offer the convenience of kirana stores. The mom-and-pop stores sell products in the neighbourhood, offer free home delivery and offer monthly credit to regular customers. Over 75 per cent of the traders said the companies producing consumer items depend on their marketing infrastructure and network to push sales through multiple channels. So the influx of foreign funds into multi-brand retail will change the rules of Indian industry as large retailers bring the new technologies, processes to bring down the costs. Many companies may have to accept lower margins for greater volumes, traders said.
about 5000 billion which requires an investment of about Rs. one lakh crore from private sector. Govt. has proposed fiscal measures to attract investment. But supply chain issues, lack of farmer processor link, poor infrastructure, fragmented retail distribution and regulatory hurdles have affected inflow of investment in food processing. Retail sector in India is the largest employer after agriculture. Committee of Secretaries, Govt of India have recommended $100 million as minimum FDI and 50% of this in building back end infrastructure. It has also been suggested that multibrand stores source 30% procurement for manufactured items from small and medium enterprises. Further,this will tame inflation and create large scale employment. FDI in front end retailing is imperative to fund cold storage for farm produce and reduce the present annual loss of farm produce of around Rs 40,000 crores per annum. Substantial investment in backend logistics such as cold/supply chains, warehousing and infrastructure building will create employment pan India and reduce post harvest losses and bring growth synergy in supply chain from farmers to consumers due to technology investment,best practices and LOGISTICS TIMES December 2011