Modern Organised Retail and Its Impact on Agriculture

Abstract

This chapter examines the impact of modern organized retail on agricultural sector and observes that the assessment of impact of modern retail often proves to be a difficult exercise given that a number of stakeholders is involved in the supply chain of agricultural produce that include suppliers, middlemen, distributors, retailers etc. On the whole, the consumers stand to benefit from the emergence of modern retail as the supermarket chain offers cheaper prices to the consumers. With a global and regional procurement network, the supermarkets can reduce transaction costs, and offer more diverse products in quality and standards demanded by the consumers. The traditional retail can co-exist with the modern retail because of certain inherent advantages of traditional retail such as personal touch with the consumers, as evident from the experience of other countries with higher share of supermarket sales.

The concerns regarding exclusion of small farmers can be effectively addressed through farmers’ organisations. Cooperatives like Amul and Mother Dairy have shown how the benefits of modern retail can bring benefits to farmers. Among the other benefits, contract farming initiated by the supermarket chains can reduce the transaction costs and link the farmers with more lucrative markets. The chapter concludes that the removal of agricultural produce such as fruits and vegetables from the purview of APMC Act, as envisioned in the 12th Plan Approach Paper, and better provision of post-harvest infrastructure such as cold storages for fruits and vegetables will go a long way in ensuring better remuneration for the farmers.

Inaugural address delivered at the international seminar on ‘Organized retailing vis-à-vis farm economy of India’ at the Centre for Economic and Social Studies, Hyderabad on September 21–22, 2012.