FDI in Food & Agriculture by Pani Panchayat & Organic Farmers’ Study Group

1. FDI in Food & AgriculturebyPaniPanchayat &Organic Farmers’ Study Group Page 1 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

2. Inside Stuff 1. Farmers’ Expectations (3)2. Claims about FDI (4) 3. Strengths of Global Retailers (14)4. Global Retailers’ Target (15) 5. Farmers’ Disappointment (16)6. Adverse Effect Of FDI (17)7. Experts’ Opinion (25)8. Our Opinion (26) Page 2 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

3. Farmers’ Expectations Infrastructure like Water, Electricity, Roads Market assurance Remunerative rates Freedom from marketing hassles Risk coverage against natural uncertainty Technical back-up in some cases Quick and assured payment Soft loan for capital investment in farm Advance for purchase of inputs Page 3 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

4. Claims about FDI More price for producers Prosperity for producers Middle man/chain elimination Lesser price for consumers Assured market for producers Lesser wastage New employment generation Improved infrastructure May led to growth in export Page 4 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

5. Claim #1: More price for producers Bulk buying, huge capital, better management & networking will give the Retailers bargaining power. Obviously it will not give “More” price to producers. Example: In India milk & its products are retailed by cooperatives, 60% goes to the producers & 40% to the retailers. In USA, its exactly reverse. Page 5 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

6. Claim #2: Prosperity for producers If claim #1 proves wrong, that obviously there will not be any prosperity for producers. Something which our government could not achieve in last 65 years, its expected that outside retailers will do, as if they are magicians !! Example: EU and USA subsidizes their farmers to about USD 400 billion, i.e. over INR 5000 crores per day. Is that economic growth? Page 6 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

7. Claim #3: Middle man/chain elimination Middle man will not be eliminated, only its type will change. New middle man will be more costlier. Retailer is the biggest middleman, who earns maximum profit. Example: There is no middle-man in Indian sugar industry, still farmers are not benefited inspite of government support. Page 7 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

8. Claim #4: Lesser price for consumers Huge investment, advanced technology, higher overheads & operating costs, cost of storage will need more energy. So price to consumer will go up. They can absorb initial losses, to make sure current Retail system is non-functional. And then will have monopoly to exploit the market. Example: % market share of organized retailers Sweden: 86, Germany: 75, Belgium: 79, Australia: 78, Canada: 69, UK: 60, France: 65, Mexico: 70, Thailand (within last 10 years) : 40 Page 8 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

9. Claim #5: Assured market for producers Retailers are allowed to import 70% of goods. So to reduce cost, they will import most of the items from anywhere in the world (like from China, Bangladesh, Indonesia) and Indian producers market will be lost. Example: USA more than 40% jobs in manufacturing sector were lost in 30 years. Page 9 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

10. Claim #6: Lesser wastage To advocate for FDI, Government has claimed wastages of 35-40% in fruits-vegetables & 10-12% grains which is highly exaggerated. No authority has claimed / taken ownership of this claim. Present system decentralized, whereas the newer system will be centralized. So wastages might be more. Page 10 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

11. Claim #7: New employment generation Present Walmart Sales = Rs 21.1 lakhcrore Present Walmart Employees = 15 lakh Indian retail market = 10.8 lakhcrore Walmart employment for India = 7.7 lakh But present employment in Indian retail is approx 4 crore. India would be a nation of sales boys and sales girls. Lakhs will be employed, and crores will be lost !! Page 11 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

12. Claim #8: Improved infrastructure Are the Retailers going to create new roads, generate electricity, produce water? NO !! Retailers will invest in Supply Chain upgradation like transport, warehouse, cold-storages etc. But basic resources like electricity, road network used will be existing one. It will put more strain on scare resources. Page 12 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

13. Claim #9: May led to growth in export Retailers have tendency to use usual suppliers (cheapest) which lead to increased imports. We may become dumping ground to goods manufactured in China, Indonesia etc. No chance of increasing export, but certainly increase in import. Even if export increases, it will be at cost of scarcity for deprived class. Page 13 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

14. Strengths of Global Retailers Huge capital Advanced technology Lean management Solid networking Infrastructure: Storage & Transport Improved Supply Chain Experience Page 14 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

15. Global Retailers’ Target The strengths will be utilized by Retailers to: establish brand by sustaining initial losses break current retailer system make people used to their brand source agro produce at lowest price sell at highest price after the current retail system is non-functional get maximum profit with minimum man-power Page 15 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

16. Farmers’ Disappointment Infrastructure like Water, Electricity, Roads Market assurance Remunerative rates Freedom from marketing hassles Risk coverage against natural uncertainty Technical back-up in some cases Quick and assured payment Soft loan for capital investment in farm Advance for purchase of inputs Not just disappointment, there will be more adverse effects … Page 16 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

17. Adverse effects of FDI Increase in global warming & carbon foot print Increased Mono Culture Increased Food Miles Increased GM food Stringent selection procedure Agriculture will become more non-viable & non-sustaining 7. Increased urban migration Page 17 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

18. Adverse Effect #1 Global warming & carbon footprint Large air conditioned stores, extended cold storage chains, the conversion of consumers from raw foods to packaged foods and high consumer commuting all contribute to high carbon emission. CO2 Page 18 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

19. Adverse Effect #2 Increased Mono Culture Retailers will seek bulk volumes of same type of agro product, it will obviously lead to mono-culture and loss of biodiversity, resulting in poor soil fertility. Page 19 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

20. Adverse Effect #3 Increased Food Miles Retailer will buy cheaper sources irrespective of the distance. For example Rice might be imported from China. But not necessarily will that variety suit and be good for Indian health. Page 20 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

21. Adverse Effect #4 Increased GM food GM is against the principles of Organic Farming. There will be adverse effect on Natural resources by GM. Import from outside may be GM food 4. GM food is not good for health. Page 21 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

22. Adverse Effect #5 Stringent Selection procedure Retailers will prefer and procure only A grade material, but in agro products that might not be the case all the time. So Grade B or C material may go waste, without any buyers. Page 22 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

23. Adverse Effect #6 Agriculture will become more non-viable & non-sustaining Presently Indian Agriculture is non-viable & non-sustainable due to various reasons. FDI will add more fuel to this, and led to worse conditions. Page 23 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

24. Adverse Effect #7 Increased urban migration Due to increase in risk and non-viability in agriculture, farmers will be left with no choice but to sell the land and also migrate to cities for livelihood. Page 24 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

25. Experts’ Opinion “Whether the FDI is a good thing or a bad thing depends on what kind of investment is tethered. Quite often it's a good thing, sometimes it's not.” Professor AmartyaSen on FDI Nobel Prize winner 1998, Economic Science in an interview to NDTV Page 25 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

26. Our Opinion “Considering the diversity in geography, climate, cropping, land holding, soil, cultivation, food habits, cultural, social etc in India, FDI will not be suitable. Chances are History may repeat itself, just that East India Company will be replaced by Walmart etc. So FDI will be win for retailers and loss for us.” PaniPanchayat Organic Farmers’ Study Group pbs@esd-india.com Page 26 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group

27. pbs@esd-india.com Jai Hind Page 27 of 27 16 Feb 2012 PaniPanchayat | Organic Farmers’ Study Group