Note of Caution to Government to Protect Farmers from MNCs Nuisance

(Dr. krishan Bir Chaudhary)

The Government has opened the doors for foreign direct investment (FDI) in the multi-brand retail chain in the country, totally unmindful of the harm likely to be caused to the farmers. While pushing for what is called the “big ticket reforms”, it ignored the voices of the Opposition parties and some of its allies. The Government also turned a Nelson Eye to the widespread resentment of farmers and consumer organizations across the country.

The big ticket reforms was undertaken at the behest of powers outside the country – the mighty food MNCs and their patron, the United States of America. With the backing of these mighty forces, the Government conveniently ignored the opposition at home.

The hopes of the Government are that a lot of foreign capital will flow in which would facilitate the growth of the GDP to the magic 9% and above. FDIs and technology transfer are needed for the growth of the economy in select sectors which are capital and technology intensive like heavy industries, aviation, railways, shipping and others. FDIs are definitely not required in retail chains. The traders in this country have enough money and knowledge at their disposal to run the business.

Handing over the retail business in the country to the mighty MNCs would lead to the exploitation of farmers and consumers. Developed countries where this trend of  corporatization of retail chains began, experienced the distress of farmers and consumers. The UK Government had to appoint the Competition Commission to undertake a study. The report of the UK Competition Commission reveal awful distress to farmers, but the Government was helpless as it had no elbow space to deal with the situation.

In India, the Government while opening the doors to FDIs in multi-brand retail chains has made some cosmetic safeguards, but not enough to safeguard the interests of farmers.

The Government should establish a National Authority to act as a watchdog with majority representation of farmers. This Authority needs to have the power and resources to directly intervene and take action against malpractices and misdoings of the retail chains without waiting for a written complaint.

All the MNCs and domestic corporate houses in the retail chain should reveal their sources of supply and buying prices. Maximum Retail Price (MRP) must not be left open for retailers and there needs to be a reasonable cap on MRP in proportion to the input cost. The retail chains should ensure minimum 60% share of retail price to producers of milk, fruits and vegetables.

There is a need to regulate and monitor contact farming to protect farmers’ interests and see their land is not consfiscated. Payment to farmers should be within a month of procurement and no unreasonable rejection of farmers produce in the name of quality and standard should be made.

The watchdog should ensure that no single retailer monopolizes procurement operations in an area. It should prohibit verticle agreements between retailers or intermediaries and seed and fertilizer companies.

Food retailers or other agribusiness companies should not be allowed to corner and hoard foodgrains stocks under any circumstances. To prevent cornering of stocks by corporates, there should be rules for public disclosure of stock holding levels. Public agencies should be empowered to purchase foodgrains from the private holders at  pre-specified prices.



(Editorial : Kisan Ki Awaaz Magazine)