18 Sep 2012

FDI in food retail is a slippery slope - to hell

I would like to refute the "FDI in food retail is good for farmers and consumers in India" line-of-thought that is being promoted on mass media in the country. The farmers, it is said, will have better access to markets and consumers will have better choice at a lower cost.

No doubt, there may be some initial positive change - but in the medium- to long-term, the ill-effects of giant retail chains are proven. Worldwide.

India sorely needs to enhance research, develop better farming methodologies and promote broader community involvement in the agri sector. We need to improve procurement, logistics, warehousing, safety, and distribution of food produce - in both public and private sectors... But to claim that giant retail chains are the ONLY ones that can accomplish it is presumptuous to say the least - and in my personal opinion, downright misleading.

This report from May 2011 is a detailed documentation of the detrimental effects of giant retail chains from several angles - it is a definite must-read.

Some of the points covered in detail within the report are:
1) Giant retail chains use corporate muscle to influence industry health & safety standards - creating costly certification processes that penalise smaller players, with opaque parameters that actually make food unsafe for customers. They can also set up legal barriers to silence their critics (for example, 'Veggie libel laws').

2) Giant retail chains open the flood gates to giant agri businesses like Monsanto, DuPont and Bayer. This in turn opens the flood gates to genetically modified (GMO) seeds and excessive chemical use (fertilisier, herbicide and pesticide) - because Monsanto, DuPont and Bayer are essentially CHEMICAL COMPANIES.

3) Giant retail chains quickly become the dominant buyers in a market and squeeze profitability for sellers. Falling profits force out small-farm owners in favour of mega-farms (like E L Rothschild-Bharti Enterprises-Del Monte) that leverage economies-of-scale.

4) Giant retail chains will eventually consolidate the entire food chain to become the dominant sellers in a market, and consumers become increasingly dependant on them - literally, for sustenance. For example, the above report says: "Traditional markets are disappearing fast in Central America. Already at least one in four quetzales spent by Guatemalans on food is spent in a Walmart-owned supermarket, while Costa Ricans spend 1 in 3 colones there."

Can you imagine your child being at the mercy of Monsanto for his or her food? Well, if Manmohan Singh, P Chidambaram and Montek Singh Ahluwalia have their way today - your child (or grandchildren) may tomorrow depend on companies like Monsanto for food.

Think about that for a minute.

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