Managing 700mt Foods- Why FDI in Retail, How to Implement It?
India produces over 700mt of Foodgrains, Fruit & Vegetables and milk, eggs & meats that may double by 2050 but there is not even 2% scientific Storage and Processing facility developed in 65 years since independence. High cost low quality foods directly affect health and nutrition intake of all Indians.
In fact India doesn’t have Experience, Technology & Inclination to upgrade to Scientific Food Storage and Process in next 100 years, this alone is justified to allow 100% FDI in retail. Priority as given in the end ought to have been Mega Wholesale Stores directly procuring foods from farmers & manufacturers in bulk and for first ten years exclusively serve local retailers allowing minimum Rs.1000 per day sales.
GOI provides over Rs.3,00,000 crores Bank Credits to Traders & Retail, more than to all 800m farmers yet there is no infrastructure developed even as 100% to 500% profit margins are realized by traders without any value additions.
Examples - Till yesterday we were talking of Potato selling for Rs.10/- to Rs.20/- per kg in Delhi while farmers in Punjab, UP and Haryana were getting not even Rs.1 per kg – old and used jute bags alone cost 0.30p per kg. Today we learnt Onion prices have also crashed to Rs.2/- per kg that retails for Rs.20/- per kg presently to Rs.50/- per kg recently.
Why FDI in Retail?
i) FDI in retail is essential to ensure farmers get maximum price for their produce,
ii) to ensure Consumers get essential commodities at lowest stable prices,
iii) to involve farmers in Scientific Storage & Processing of Foods and to more than double farmers income and also double purchasing capacity of foods by consumers.
iv) Co-operatives & State programs failed to make impact due to Corruption & Politics. Markfed paid 0.55p per kg for green Mustard Crop that was cooked and canned – 450g till of plain Sarson Ka Saag was retailed for Rs.50/- in 1995. Mother Dairy though procured directly from farmers but farmers were not given Minimum Price for their foods – prices were linked to Azadpur Mandi fluctuating wholesale rates.
Last Decade: BJP NDA in order to provide food storage & management infrastructure allowed Corporate India in to food RETAIL & also partly allowed FDI in retail to provide Super Stores to serve Retail Stores.
iv) But there is limited investment to improve infrastructure – just 9 Best Price stores had opened so far by Walmart-Bharti JV.
v) Corporates started major programs to install thousands of Retail Shops mainly with an eye on cashing in on Real Estate boom than bridging the gap between farm gate prices and retail prices.
- These merely added cost to the supply chain without seriously challenging the Gross Mismanagement and Exploitation by multi level trade. Except few items rest of the items are charged at MRP.
Politics Opposition Sabotaging FDI Plan – GOI bungling
It is obvious Opposition Parties didn’t want any Government Initiate to succeed – even nuclear program is sabotaged.
GOI also bungled up when it didn’t squarely address the main issue of Safely & Scientifically managing distributing 700 million tones of foods produced in India as central objective and serving daily needs of consumers.
In USA a Pizza at Pizza Hut cost say $10 but for same money 5 pre-cooked Pizzas are retailed in Mega Food Stores.
Limiting FDI Retail to big cities where 90% of Retailers & Vendors operate was a blunder because this was to serve around 20% of food requirement when focus ought to have been Rural Markets directly serving all farmers procuring and managing 700mt foods serving retailers through these Wholesale Super Stores.
Mail Order and Nehru Place like wholesale markets are addressing the needs of non food commodities.
How to Implement FDI in Retail? – Two Middlemen Better Than Five
GOI ought to have opened up 100% of FDI in ‘Wholesale Super Stores’ that shall serve millions of retailers and vendors bypassing other middlemen in trade numbering not more than 100,000 in all. This alone would cut down average prices by 50% for most fruits & vegetables, packaged foods without three middlemen.
1.) GOI ought to promote FDI in Retail with priority on Investment in Rural & Food Infrastructure that shall serve retailers in cities. An acre in rural India cost Rs.1 crore in good locations but an acre in cities cost upwards of Rs.100 crores.
Ø This is essential from logistics point of view also – GOI can’t allow slow moving Bullock Carts and Tractor Trolleys to swarm our Highways by locating Super Stores near major cities.
2. GOI ought to give incentives to Foreign and India Big Retailers to open up Retail Stores to companies who shall install minimum 500 Wholesale Stores each in Rural India individually with automatic permission after 10 years to graduate to retail outlets. JV or Partnerships like Walmart-Bharti to install 1000 Wholesale Stores. This would safeguard against takeovers to qualify for Retail Outlets.
3.) Since cities have Traffic Congestions and fuel prices are very high – it was not prudent to locate Retail Superstores in cities. Street vendors therefore can’t be removed entirely.
4.) Cities ought to authorize Coffee Shops, Grocery Stores, Retail Outlets, Franchise Food Corners in ground floors for every block of 500 living units provided owners make available adequate parking. This shall address menace of illegal roadside vendors, reduce congestion in shopping complexes.
Ravinder Singh
Inventor & Consult
December08, 2011
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