Implications of New Supply Chains on the Indian Farm Economy: An Overview

  • N. Chandrasekhara RaoEmail author
  • R. Radhakrishna
  • R. K. Mishra
  • Venkata Reddy Kata
Part of the India Studies in Business and Economics book series (ISBE)


The agri-food chains in the country is in a rapid transformation stage and have been broadly moving in the historical patterns observed in the other developing and developed countries with some unique features. The gradual liberalisation of agricultural marketing coupled with the recent decision on foreign direct investment has the positive impact of correcting earlier neglect of agricultural marketing and encouraging private initiative. The present volume draws on some fresh evidences from both India and abroad to contribute to a more informed debate on the likely impact of supermarket diffusion on smallholders in the Indian context. All the case studies presented in the volume show that the farmers get higher returns by selling to the supermarkets. The problem however lies in inclusion of resource poor farmers. The evidence emerging from this volume is thus mixed, indicating that the question of whether smallholder cultivators manage to participate in the supermarket driven agri-food system is context specific and may well be conditioned by geography. However, all the case studies have taken note of continued dependence of farmers on traditional wholesale market. The small producer companies, encouraged by the government to strengthen the bargaining power of smallholders, could not effectively link them to the modern chains and need infrastructural and working capital support.

The government needs to tread cautiously and formulate policy framework using the lessons from other developed and developing countries in view of the issues of livelihoods of millions of small farmers. Direct procurement by supermarkets can be encouraged through other means like investment support for construction of distribution centres, cold storages and facilities for testing products procured. Government can also encourage cooperatives selling to supermarket through incentives like VAT exemption. Review of competition laws and strengthening the traditional retail sectors are the other important measures.


Supply Chain Foreign Direct Investment Gross Domestic Product Small Farmer Fresh Produce 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Ablett J, Baijal A, Beinhocker E, Boase A, Farrell D, Gersch U, Greenberg E, Gupta S, Gupta S (2007) The “Bird of Gold”: the rise of India’s consumer market. McKinsey Global Institute, San FranciscoGoogle Scholar
  2. Bakshi K, Roy D, Thorat A (2006) Small they may be and Indian farmers they are but export they can: The case of Mahagrape farmers in India: in plate to plough: agricultural diversification and its implication for the smallholders in India: report submitted to Ford foundation by international food policy research instituteGoogle Scholar
  3. BCG-RAI (2015) Retail 2020: retrospect, reinvent, rewrite: leadership perspectives on trends in Indian retail. Boston Consulting Group and Retail Association of India, New Delhi. Accessed 11 Feb 2015
  4. Bellemare MF (2012) As you sow, so shall you reap: the welfare impacts of contract farming’. World Dev 40(7):1418–1434Google Scholar
  5. Berdegue J, Fernando B, Luis F, Reardon T (2005) Central American supermarkets’ private standards of quality and safety in procurement of fresh fruits and vegetables. Food Policy 30:254–269CrossRefGoogle Scholar
  6. Chand R (2012) Development policies and agricultural markets. Econ Polit Wkly XLVII(52):53–63Google Scholar
  7. Chandrasekhar CP (2011) Retreat on retail. Frontline 28(26). Dec 17–30. Accessed 22 June 2011
  8. Cohen AJ (2013) Supermarkets in India: struggles over the organisation of agricultural markets and food supply chains, public law and legal theory working paper series no. 235, Centre for Interdisciplinary Law and Policy Studies, Moritz College of Law, The Ohio State UniversityGoogle Scholar
  9. D’Haese M, Van Huylenbroeck G (2005) The rise of supermarkets and changing expenditure patterns of poor rural households: case study in the Transkei area, South Africa. Food Policy 30(1):97–113CrossRefGoogle Scholar
  10. Dolan C, Humphrey J (2000) Governance and trade in fresh vegetables: the impact of UK supermarkets on the African horticulture industry. J Dev Stud 37:491–509CrossRefGoogle Scholar
  11. Hazell P, Poulton C, Wiggins S, Dorward A (2010) The future of small farms: trajectories and policy priorities. World Dev 38(10):1349–1361CrossRefGoogle Scholar
  12. Hernandez R, Reardon T, Berdegue JA (2007) Supermarkets, wholesalers and tomato growers in Guatemala. Agric Econ 36(3):281–290CrossRefGoogle Scholar
  13. Kohli R, Bhagwati J (2011) Organised retailing in India: issues and outlook. Columbia program on Indian economic policies working paper no. 2011–1, School of International and Public Affairs, Columbia UniversityGoogle Scholar
  14. Maertens M, Minten B, Swinnen J (2012) Modern food supply chains and development: evidence from horticulture export sectors in Sub-Saharan Africa. Dev Policy Rev 30(4):473–497CrossRefGoogle Scholar
  15. Mangala KP, Chengappa PG (2008) A novel agribusiness model for backward linkages with farmers: a case of food retail chain. Agric Econ Res Rev 21(Conference Number):363–370Google Scholar
  16. Michelson H (2013) Small farmers, NGOs, and a Wal-Mart world: welfare effects of supermarkets operating in Nicaragua. Am J Agr Econ 95(3):628–649CrossRefGoogle Scholar
  17. Michelson H, Reardon T, Perez F (2012) Small farmers and big retail: trade-offs of supplying supermarkets in Nicaragua. World Dev 40:342–354CrossRefGoogle Scholar
  18. Minten B (2008) The food retail revolution in poor countries: is it coming or is it over? Econ Dev Cult Change 56(4):767–789CrossRefGoogle Scholar
  19. Minten B, Reardon T (2008) Food prices, quality and quality’s pricing in supermarkets versus traditional markets in developing countries. Rev Agric Econ 30:480–490CrossRefGoogle Scholar
  20. Minten B, Randrianarison L, Swinnen JFM (2009) Global retail chains and poor farmers: evidence from Madagascar. World Dev 37(11):1728–1741CrossRefGoogle Scholar
  21. Minten B, Reardon T, Sutradhar R (2010) Food prices and modern retail: the case of Delhi. World Dev 38(12):1775–1787CrossRefGoogle Scholar
  22. Miyata S, Minot N, Hu D (2009) Impact of contract farming on income: linking small farmers, packers and supermarkets in China. World Dev 37(11):1781–1790CrossRefGoogle Scholar
  23. Natawidjaja R, Reardon T, Shetty S, Noor TI, Perdana T, Rasmikayati (2007) Horticultural producers and supermarket development in Indonesia, UNPAD/MSU/World Bank Report No. 38543. World Bank/Indonesia. JulyGoogle Scholar
  24. NCAER (National Council of Applied Economic Research) (2005) The great Indian market: results from NCAER’s marketing information survey of households. Accessed 9 Aug 2005
  25. Neven D, Reardon T, Chege J, Wang H (2006) Supermarkets and consumers in Africa: the case of Nairobi, Kenya. J Int Food Agribus Mark 18(1/2):103–123CrossRefGoogle Scholar
  26. Neven D, Odera MM, Reardon T, Wang H (2009) Kenyan supermarkets, emerging middle-class horticultural farmers, and employment impacts on the rural poor. World Dev 37(11):1802–1811CrossRefGoogle Scholar
  27. Pandey M, Baker GA, Pandey DT (2013) Supply chain re-engineering in the fresh produce industry: a case study of Adani agrifresh. Int Food Agribus Manage Rev 16(1)Google Scholar
  28. Patnaik G (2011) Status of agriculture reforms, workshop on ‘policy options and investment priorities for accelerating agricultural productivity and development in India’ organized by IGIDR and IHD, Nov 10–11, New DelhiGoogle Scholar
  29. Pritchard B, Gracy CP, Godwin M (2010) The impacts of supermarket procurement on farming communities in India, evidence from rural Karnataka. Dev Policy Rev 28(4):435–456CrossRefGoogle Scholar
  30. Purushotham P (2012) Small producer companies participation in retail and commodity markets: a case study of poor farmers’ SPCs in Madhya Pradesh’, paper presented at the international conference organised retailing vis-à-vis farm economy of India organised by the Centre for Economic and Social Studies, Hyderabad in association with Institute of Public Enterprise, Hyderabad and Indian Society of Agricultural Marketing during Sept 21–22, 2012Google Scholar
  31. Radhakrishna R (2008) ‘Economic well-being and deprivation in India’ presidential address, 44th annual conference, The Indian Econometric Society, Jan 3–5. Organised at the University of Hyderabad, HyderabadGoogle Scholar
  32. Rao EJO, Qaim M (2011) Supermarkets, farm household income, and poverty: insights from Kenya. World Dev 39(5):784–796CrossRefGoogle Scholar
  33. Rao EJO, Qaim M (2013) Supermarkets and agricultural labor demand in Kenya: a gendered perspective. Food Policy 38:165–176CrossRefGoogle Scholar
  34. Rao EJO, Brümmer B, Qaim M (2012) Farmer participation in supermarket channels, production technology, and efficiency: the case of vegetables in Kenya. Am J Agr Econ 94(4):891–912CrossRefGoogle Scholar
  35. Reardon T, Hopkins R (2006) The supermarket revolution in developing countries: policies to address emerging tensions among supermarkets, suppliers, and traditional retailers. Europ J Devel Res 18(4):522–545CrossRefGoogle Scholar
  36. Reardon T, Minten B (2011a) Surprised by supermarkets: diffusion of modern retail in India. J Agribus Dev Emerg Econ 1(2):134–161CrossRefGoogle Scholar
  37. Reardon T, Minten B (2011b) The quiet revolution in India’s food supply chains, IFPRI Discussion Paper 01115, Sept 2011Google Scholar
  38. Reardon T, Timmer P (2014) The economics of the food system revolution. Annu Rev Res Econ 4:14.1–14.40. 10.1146/annurev.resource.050708.144147Google Scholar
  39. Reardon T, Timmer CP, Barrett CB, Berdegue JA (2003) The rise of supermarkets in Africa, Asia and Latin America. Am J Agric Econ 85(5):1140–1146CrossRefGoogle Scholar
  40. Reardon T, Barrett C, Berdegue J, Swinnen J (2009) Agrifood industry transformation and small farmers in developing countries. World Dev 37(11):1717–1727CrossRefGoogle Scholar
  41. Reardon T, Timmer CP, Minten B (2012) Supermarket revolution in Asia and emerging development strategies to include small farmers. Accessed 10 May 2013
  42. Schipmann C, Qaim M (2010) Spillovers from modern supply chains to traditional markets: product innovation and adoption by smallholders. Agric Econ 41:361–371CrossRefGoogle Scholar
  43. Shepherd WA (2005) The implications of supermarket development for horticultural farmers and traditional marketing systems in Asia, revised version of the paper first presented to the FAO/AFMA/FAMA regional workshop on the growth of supermarkets as retailers of fresh produce, Kuala LumpurGoogle Scholar
  44. Shepherd WA (2007) Approaches to linking producers to markets: a review of experience to date, agricultural management, marketing and finance occasional paper 13, food and agricultural organisation of the United Nations, RomeGoogle Scholar
  45. Singh S (2012) New markets for smallholders in India—exclusion, policy and mechanisms. Econ Polit Wkly XLVII(52):34–44Google Scholar
  46. Stringer R, Sang N, Croppenstedt A (2009) Producers, processors, and procurement decisions: the case of vegetable supply chains in China. World Dev 37(11):1773–1780CrossRefGoogle Scholar
  47. Technopak (2013) E-tailing in India: unlocking the potential—the need for India to analyse e-tailing on its own merit. A white paper published by TechnopakGoogle Scholar
  48. The Economist (2014) Grocery retailing in India: a long way from the supermarket. Accessed 18 Oct 2014
  49. Vorley B, Cotula L, Chan MK (2012) Tipping the balance: policies to shape agricultural investments and markets in favour of small-scale farmers, research report, Dec 2012. International Institute of Environmental Development, London and Oxfam International, OxfordGoogle Scholar
  50. Wang H, Dong X, Rozelle S, Huang J, Reardon T (2009) Producing and procuring horticultural crops with Chinese characteristics: the case of northern China. World Dev 37(11):1791–1801CrossRefGoogle Scholar
  51. World Bank (2007) World development report 2008: agriculture for development. The World Bank, Washington, DCCrossRefGoogle Scholar

Copyright information

© Springer India 2016

Authors and Affiliations

  • N. Chandrasekhara Rao
    • 1
    Email author
  • R. Radhakrishna
    • 2
  • R. K. Mishra
    • 3
  • Venkata Reddy Kata
    • 2
  1. 1.Institute of Economic GrowthNew DelhiIndia
  2. 2.Centre for Economic and Social StudiesHyderabadIndia
  3. 3.Institute of Public EnterpriseHyderabadIndia

Personalised recommendations