Organised retail is going to change the fortunes of farmers!

Yes, organised retail can ensure better prices for farm products, say the leading consultancy.

McKinsey is a big name in consulting. But consulting in agriculture is almost nil.
We have our own in-house consultancy (Vadamalai Consultancy Services-VCS) and we know from our experience that in Indian agriculture innovation and change wont come so easily. Not in our own lifetime, it seems!

Why?

First, the government is sitting pretty in the agriculture sector and you can see the results of this overwhelming presence of the government in the primary sector. If we can accuse the UPA government we can point out the failure of the government to tackle the unprecedented farmer’s suicides and the more ironical aspect of the farmer’s suicides is that the tragic numbers come from Vidarbha and it is from there our President of India, Pratibha Patil hails from. Also, the strong man of Maharashtra, Sharad Pawar, the agriculture minister also hails from the state where the largest number of farmers suicides has taken place.

So, with all the political power and authority and all the expertise of men like Dr.Singh, we in India couldn’t tackle the agriculture crisis.

We simply repeat, parrot-like, the rate of growth of the food production statistics and leave the sector at that.

We concentrate on urban consumers and this only added to the crisis in the producers sector.

So, now what we know we have don’t it. By just raising the MSP of all major foodgrains items we are satisfied that the production would go up and we can all feel relaxed?
No, the agriculture and food issues are changing and the way the consumers are getting segmented needs much study and policy options.

One is the very growth of the consumers. The middle class prefers to shop in organised retail outlets for various reasons; convenience is only one of these.

So, we see a boom in malls and retail chains.

McKinsey says that the organised retail segment would grow from the current 5 per cent to the expected 18 per cent and the retail market size is also expected to reach an astounding Rs.18 lakh crore by 2015.

Like all consultants, consulting is all about projecting a future growth potential! If we project, if we in India, from our in-house consulting expertise give a future projection, no one believes!

So, if an American company and that too with such hyped name like McKinsey comes out with a future projection, everyone sits up and takes notice!

McKinsey has don’t this sort of exercise for so many segments. In the last instance, McKinsey came out with a projection for the food market in India. Has that projection come true?

No one asks. Even the food processing industry or for that matter the very agriculture ministry, Krishi Bhavan, which is in charge of the various agriculture marketing activities, don’t seem to be  very much bothered about doing anything about initiating new innovative solutions to farm marketing.

So, all the private sector efforts to change the agriculture development paradigm has not taken off for the simple reason, the government is tightly controlling the sector, bureaucrats wont allow any new changes and there are so many vested interests in the agriculture sector. ICAR to private experts, high profile talkers, the so-called economic experts are all also experts in agriculture policy. We Indians don’t have any sense of shame or modesty when it comes to giving advice at government expenses! That is why we have too many ex-bureaucrats turned experts crowding the New Delhi power corridor!

Now, as for the McKinsey report, it says that organised retail would help the farmers directly sell their products and that is perhaps the next best revolution that can take place in agriculture and enable farmers to free themselves from the various agriculture marketing committee regulations.

Farmers freedoms would come only if the private sector organised retails takes off in a big way.

So, we welcome the McKinsey report’s findings and also endorse their analysis and future projections.

So many other findings are interesting. One, of the current 204 million households in India that only 13 millions is having the incomes that could patronise the organised retail. Still this itself is a big number and it would only grow further.

The report, titled, “The Great Indian Bazaar: Organised Retail comes of age in India” comes with many insights to make the Indian one uniquely suited to the Indian ethos and ethnic preferences and sensitivities. These are all fine suggestions and worth a study in some depth.

We fully endorse the McKinsey report on the retail segment and how it would only strengthen the farmers negotiating powers to sell directly to big retail companies and also would help to eliminate the middle men and the large scale corruption in the official and unofficial elements that are now entrenched strongly.

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