The prominent north India-based farmers’ organisation Bharat Krishak Samaj wants a mandatory 75 per cent direct sourcing from farmers as a condition for allowing foreign direct investment (FDI) in multi-brand retail. Not just that, Ajay Jakhar, the suave and articulate chairman of the organisation, says all big-league retailers in India should comply with this sourcing norm. The grandson of former Lok Sabha Speaker and Agriculture Minister Balram Jakhar talks to Nivedita Mookerji on his hopes and fears on foreign investment in retail. Edited excerpts:
What’s the farmer’s stand on FDI in retail?
Before I answer that question, I need to give you the context. For thousands of years, farmers have been suffering at the hands of those who have a monopoly on purchasing and selling agricultural produce. Agricultural produce can be divided into two categories — perishable and non-perishable. When you talk of non-perishable produce, a major component of that is rice and wheat, over which the government of India has a monopoly. On the other hand, you have perishables – fruit and vegetables – for which there is a market place. That market place is heavily regulated in favour of traders and middlemen. As a farmers’ organisation, we want a higher farmer share of the consumer price. We also realise that all stakeholders have to benefit for any policy to be successfully implemented. I think it is possible to share the benefits proportionally between farmers, consumers and even traders.
Coming specifically to FDI in the sector, what’s your opinion?
Farmers need choices and FDI could be a way to build competition for the current monopolistic practices. But that can only happen if there’s a conditional approval to FDI in multi-brand retail. The condition is that 75 per cent of the agricultural produce that is sold in stores must be procured directly from farmers. We have been advocating this for the past two years. Now, we have evolved a step further by asserting that this condition of 75 per cent should be a condition for all big retail. Every Indian retailer with an investment of Rs 5 crore must buy 75 per cent of the agricultural produce sold in the store directly from farmers. This condition will exclude all small kirana store owners, sweet vendors and so on. If you are a big-league player, then it is a social condition that you must meet. It may be a tough condition, but India is a huge market and if you want to tap the market to make profit, then such an investment commitment should be made.
So, on the whole, you are not against FDI if it creates competition. Right?
All of those who buy from us are here for profit. We are not saying don’t make profit. We are saying allow us to have a higher share in the consumer price. Hopefully, FDI will create healthy competition that will allow some profit to directly trickle down to us.
So, how do you explain the huge divide on the issue of opening up the retail sector?
I don’t think there’s a divide, it’s just a hue and cry in cities. Today, farmers are divided owing to frequent elections – which are based on a multi-party system – and village-level panchayat elections to the extent that they are not a force enough to dictate new policy. We are also divided on the basis of what crops we grow. So, someone growing wheat will not like to take up an issue for someone into fruit and vegetables. Sugarcane growers won’t like to take up issues that rain-fed millet farmers face. Even though we are over 55 per cent of India’s population, our say in policy making is much less than in the US where only two per cent of the population are farmers. In contrast, in urban areas, people are not so divided — for instance, traders, shopkeepers and middlemen mostly are a united lot.
What is the biggest concern that you have vis-à-vis FDI in multi-brand retail?
The concern is that it may destroy the livelihood of small businessmen; therefore, conditions for their safeguard are required… .
But you really don’t think that FDI is going to kill smaller players?
I think [takes a pause] it’s not going to happen anytime soon. We have survived thousands of years of monopsony of a community and I am sure they can survive the competition.
Apart from this sourcing condition, is there any other clause that you are looking for once FDI in multi-brand retail is rolled out?
No, we are not looking at any other condition. Maybe redefine and increase back-end infrastructure investment commitments. We are simply looking for a situation in which some more people come to buy from us directly. We can leverage that competition for a higher price for our produce.
Going beyond farmers, what’s your overall view on retail FDI?
FDI is not reform, it is a mere investment policy notification, but agriculture reforms are needed, deregulation and liberalisation of the sector is required. I’m only focused on farmer prosperity and choices. We need traders, shopkeepers and street vendors to co-exist but I would not want to comment further on their practices.
What about consumers — how will things change for them with FDI coming in?
Well, even farmers are consumers. On a serious note, if consumers get things at a cheaper rate, it’s good for them.
What’s your take on the Food Security Bill?
The Food Security Bill is tailored to give cheap food to people. Aid is given to tide over temporary crises like natural calamities. Around 70 per cent of the recipients of the Bill are going to be farmers. It’s absurd. Those who are responsible for growing food would now actually become the recipients of cheap food. That’s not the way to go about it. The government is taking a misdirected, easier route that is also populist in the immediate term. Investment has to be tailored to make farmers self-reliant and not remain perpetually dependent for survival.
Are you okay with the idea of the Centre asking states to decide whether they want to permit FDI in retail?
Yes, I think it’s the right approach to give freedom to the states to choose. Like it or not, it is inevitable that once five to six states allow it, in the next five to 10 years, other states will follow.
Who in the government are you in dialogue with regarding the inclusion of the condition on sourcing directly from farmers?
We have talked to Anand Sharmaji and various other functionaries. We are also communicating with members of Parliament and hundreds of other people who we think influence policy.
Is there any international model that India should follow in retail?
I don’t think so. You have to make your own model.
What about the location of foreign stores? Do you think they should come up on the outskirts of cities?
From a farmers’ perspective, it really doesn’t matter. Though, we have taken a stand on SEZs [special economic zones] that these should only be allowed in the hinterland, 100-200 km away from metropolitan towns. That’s how inclusive growth will materialise, not by giving such incentives in Gurgaon and Navi Mumbai.
How real do you think FDI in retail is this time around?
It is inevitable; but farmers, as I said earlier, are not in a position to influence the course of the FDI notification. Should the government decide to notify, then we hope our recommendations are incorporated.
