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"RETAILERS WILL NOT EAT UP KIRANA STORES.
BOTH WILL COEXIST"

We are trying to ensure that markets will help a farmer sell not just today but also tomorrow and the day after

Till very recently, infrastructure was a crisis area. But large companies getting into agriculture are working both in the front end as well as in the backward linkages. itc has made news with its e-choupal initiative. When the futures markets was created in India, the wholesale market came together. MCX is working all over the country to link markets and create a national spot exchange on which commodities can be bought and sold between producers and large consumers. So the producers' territory is rural and the consumers'- the large corporates - is urban. We are erasing the multiple levels of intermediation. With the National Dairy Development Board (NDDB), we are trying to do this in fresh fruits and vegetables. These products are perishable so that buyers have to go to the production centre to buy and use them. NDDB already operates in this area under the Safal brand. This has been happening at the regional level, but we want to take it to the national level to ensure producers can put their price on an electronic exchange platform, and retail chains can access the market.

Is the middleman syndrome the bane of Indian agro-economy?

We are a less developed market and yet, our level of intermediation is eight times. In a developed country, the level is - at the most - two or three times. You cannot do away with intermediaries. The middleman must be there to ensure that the right transaction happens. But if you can shrink this, the buyer pays less and the producer gets more, and the nature of business increases manifold.

Safal is still seen as a failure and not a success model within NDDB.

The Safal project was the first of its kind. So it had to experiment, start from scratch, get the infrastructure in place and then push the business model. But NDDB got a tremendous learning experience from this model and now it needs to be applicable on a national level. We are putting these markets on the electronic format. Neither the producers nor the buyers have to move. The markets will help a farmer sell not just today but also tomorrow and the day after. This will be tremendous empowerment for the farmer.

Is that the way forward for Indian agriculture?

We need to look at the developed markets and realise what are the missing links. In developed countries, a small section of the population is associated with agriculture and the entire value and supply chains are institutionalised. We are still in the early stages of institutionalised process. The first big move towards this is that a large demand is getting created, thanks to exports and retail chains, and the government creating horticulture and processing industries. In the agricultural domain, the same thing is happening across the board. Gradually, prices across the supply chain are getting highly correlated as there are linkages to various cost elements that are common to all.

The extent of organised retailing that has happened till date is only the tip of the iceberg

Global products flooding the market will make consumers happy but create problems for local producers...

There may be some disadvantages for the consumers as earlier there was a domestic regime, but now they will be swamped by a global one. The classic example is that of Indian apples, whose price would earlier never oxalate between Rs 25-50 kg. And suddenly we saw US apples flooding the markets throughout the year, at Rs 90-100 a kg. So your upper limit got fixed. Now you had a choice. Gradually the price of the US apple remained constant but the Indian apple"s went up. When we start benchmarking our agricultural produce with the best, there is a change in the consumption pattern. The desire to get the best at a desired rate forces producers to produce the best. Price signals initiated this change. Your land cost is the same. Depending on the agro-climatic zone where one could grow, the cost structures are the same. The price structures will be similar because the costs of inputs are more or less becoming comparable across countries now.

Small-time stores India have been worried ever since the big bang started in agro-retail.

Look at the commercial hubs of Mumbai and Delhi. The extent of organised retailing that has happened is the tip of the iceberg. Would this move to a stage where kirana shops will be completely out? I do not foresee it happening because I think there is a cut-off level, beyond which the retail chains will not compete with the small stores. There is an issue of both ambience and experience associated with a person when he goes to a mall. That clientele and the one going to the kirana stores are different. We are a huge nation with a number of levels of economic indicators. The retailers will not migrate to that last mile to eat up the kirana stores. Both will coexist.

For how long?

For generations. We are seeing rapid, employment-generating growth. And it has started happening in the agricultural sector also. Slowly, farmers will feel happy to get rid of troublesome middlemen who have milked them for generations. And since this is a labour-intensive sector, the growth will reach desirable proportions in just three-four years. This will not create any great divide between the rich and poor. The Indian farmer is tense because he is under the fear of losing his land to industry. But in areas where he is getting the desired prices for his product throughout the year, he is the happiest. I admit that in India there is a growing divide between people who have (the owners of farmlands) and people who do not have enough (the workers), and that this divide is increasing. But what is important is that the workers at the lower end are also gaining in the process. Earlier, workers earned an income barely enough for a living but now they are earning enough to save. This increased saving is much less than the earnings of people at the higher end, but I see a distinct ray of hope.