[Reader-list] World Bank, FDI in India

[A. Mani]

  People's Democracy

December 11, 2011



The Retail Demon or a Mayamriga!



Shyamal Chakraborty



IN the last few years about two hundred and fifty thousand Indian
farmers have committed suicide. According to the newspapers, they did
so after failing to repay debt. Did these farmers allured by
consumerism buy goods in excess – a cause which was identified as the
main factor behind the worldwide recession? It is heard that the
consumption drive of Europe and the USA damaged the economy of their
countries as well as of the world by taking loans to maintain their
luxurious lifestyles. Can the Indian farmers be condemned for their
folly? No, that has never been the case.



BITTER

REALITY

The Indian peasants have to take loans for producing crops.
Fertilisers have become costlier. The costs of the chemicals needed to
produce agricultural commodities have gone up. But the farmers cannot
retrieve even the production cost by selling the produce in the
market. Banks do not lend them money. So the moneylender is their last
option and he lends at exorbitant rates of interest. As even the
government is refraining from buying their crops at profitable prices,
the farmers have to sell their products at minimal prices.



Agents of the hoarders lurk in the shadows. They eagerly wait to grab
the crops and hoard them in their masters’ warehouses when the farmers
are compelled to make distress sales. The stock is sold at sky-high
prices later when the demand goes up. Speculators of this kind are
setting traps all over the world.



Many farmers realise the debt trap after a considerable time, and they
see that even after toiling for the entire day with every member of
the family, they are bankrupt. Hence they opt for suicide.



At first suicides took place in only a handful of the states like
Maharashtra, Andhra Pradesh etc. But the farmers’ misery is increasing
even in the states where no such incident took place. The area of
farmer suicides now extends even to West Bengal after the recent
change at the helm. The food minister of the state has himself
admitted it.



The central government, its mouthpieces, bourgeois economists and
monopolistic media are screaming at their fullest that this situation
justifies the FDI in retail to save the farmers. The FDI would resolve
the farmers’ problems, they would get good-quality seeds, the crop
quality would improve, agricultural scientists would help the peasants
who can sell their products at good prices and agents and hoarders
would not be able to exploit the farmers. In a nutshell, it would be
all milk and honey for the latter.



However, these worthies are not satisfied with Indian capitalists in
retail. They demand FDI!



Union commerce minister Anand Sharma is not at all happy. He cannot
understand why some of the state governments are committing the crime
of not allowing the foreigners in retail. Hence his helpless
‘sympathy’ with the farmers of these states! If the billions of
gallons of tears shed by Sharma, his ilk, bourgeois economists and the
media owners could be poured into the Teesta river, it could have
resolved the water dispute between Bangladesh and India!



But the reality is that foreigners have already invaded our
agriculture sector. Farmers are being evicted from their land at many
places. They are being compelled to commit suicide or else get
immersed in a debt trap.



The MNCs of the developed countries are today effortlessly doing
business in the food and retail sectors of many an underdeveloped
country. Now companies like Monsanto, ConAgra and Walmart are knocking
at our doors; some have already crossed the border. Every year, India
produces 73 million tonnes of wheat at low prices but, yet, wheat is
being imported from the USA at higher prices. Walmart managed the
supply of 51 per cent, but even before that it had entered the Indian
market through a pact with Bharati. Back in 2007, Mariann Fischer
Boel, the European commissioner for agriculture and rural development,
had commented at a meeting of European agricultural trade experts
meeting that the Indian middle class is hungry for exciting food and
drink experiences that go beyond Indian cuisine. The number is
increasing by 30 million per year which equals the population of some
of the European countries.’



But this is not just business for Indians. It concerns India’s food
security, job generation and cultural and geographical balance. An
India Today article once commented that buying vegetables from the
small local market is 10 per cent inspiration and 90 per cent
perspiration. For the supermarkets, it becomes 10 per cent
perspiration and 90 per cent inspiration.



A MODERN VERSION

OF THE RURAL HAAT

In our childhood, we read Tagore’s poem Kumorparar gorur gari, bojhai
kora kolsi hari (cattle carts of Kumorpara going to the haat with
pitchers and pots).The poem describes a haat, a rural market, that
takes place once a week or twice. Pitchers and pots, vegetables and
all kinds of agricultural products are sold and bought at a haat. But
what about its latest version, the retail haat!



We see some carts coming by a muddy street that leads to a road ridden
with potholes and drains. A fleet of trucks is limping ahead;
everywhere the pungent odour of burnt diesel pervades; and peaceful
villages are reeling under the impact of sound pollution, the degree
of which beats even the cosmopolitan cities. If you walk along the
street, a 54,000 square feet building would welcome you. Some trucks
are garaged there; the drivers are taking rest. The cattle carts are
also garaged besides the trucks. Some lean farmers and their wives are
storing the cowdung in baskets; some have already started journey
back, with the baskets, so that the dung could be sold. Bony porters,
avoiding the dung and human excreta in that narrow allay, eagerly
stumble on the vegetable and fruit baskets. The one who can grab one
shall get some money, as it happens at Howrah railway station. Many of
them had land in the past, but have lost it. It is a building
surrounded with trucks, carts, cowdung and human secretion, claiming
to be a modern store of agricultural and other commodities. Our
country has to move along this track now!



We are told that the Indian distribution system is still in a
primitive stage, which foreign capitalists would modernise. Their
motto is: from farm to fork, which means a vegetable should come
straight from the field to the dinner table. It is being said that for
the sake of farmers neither cereals nor vegetables can be handed over
to the middlemen. Corporate companies will buy directly from farmers
and pass the goods to the people via their retail shops. A farmer has
nothing to do but produce. Corporate companies will buy it at good
rates.



The structure that seems to be like the haat in Tagore’s poem is a
modern storehouse of the Reliance, the biggest Indian company in
retail. They have opened many stores and have a plan to invest 250
billion rupees.



EXPERIENCE

TO LEARN FROM

Now let us go inside a storehouse at the outskirts of Bangalore. But
you cannot enter due to the line of baskets at the door. Plastic
baskets full of grapes are being closely inspected at the front of the
queue. Here is the quality control worker. If he gives the pass mark
to a product, it would be transferred to a big basket. The poor farmer
has to take home back whatever is not accepted. They are then carried
to the nearby villages for selling at low prices. If these are sold,
they would get rotten.



Thus we see here a queer logic. A foreign retailer claims to be saving
the farmers’ vegetables or fruits from getting rotten in their fields.
But his own mechanism makes the produce get rotten elsewhere. One may
even say that if getting rotten is the ultimate fate of these
products, then it is much better if they rot in the field. It would
save the transport cost at least.



Companies like Bharati-Walmart, Reliance and Future directly buy crops
from farmers. If crops are taken to a mandi or local market, it would
involve some transport cost. However, in most of the cases farmers get
the usual price fixed by market. Moreover, the new class of
businessmen and their representatives buy only the ‘best’ goods,
rejecting commodities even with minimal aberration from their quality
norms. This means only a small percentage of the goods is accepted;
the rest goes to the same old mandi. A survey conducted by the Indian
Institute of Management and Institute of Economic Growth states that a
very little portion of the total produced crops comes to retail
chains. Organised retailers do not at all buy crops direct from
peasants, especially small ones. The practice has been stopped even in
Gujarat and Punjab where it was initiated.



What can we learn from the experience abroad? The crop producer, once
starting to sell to an organisation like Walmart, cannot sell to
another company even at the offer of a higher price. Also, though
buying the best crop, these traders do not provide any extra help in
the risk period. The parameter of crop quality changes many times. If
for some reason a farmer cannot supply by the deadline, he faces a
harsh fine or removal from the suppliers list. The more the dominance
of big companies in agricultural retail, the more there evolves a
group of a handful number of consumers amid plenty of sellers, i.e.
farmers. Prices would gradually. The biggest British retail company,
Tesco, can afford to pay 4 per cent less than the market price.



The grape farmer is still happy as he has got better price than last
year. But now come inside. The temperature is 3° centigrade though it
is scorching sun outside. Unaccustomed of that cold, the Bangalore
mall workers toil hard, and put on heavy overcoats. They weigh the
goods, take the heavy bags from the weighing machine and carry them.
We must not ask them about their wages. This is the back-end chain of
organised retail.



The same is to happen to Indian crops. Do big companies, especially
the foreign ones, buy directly from farmers or small producers? Not at
all. They appoint middlemen. In Malaysia, Carrefour, the world’s
second largest retail company, buys 41 per cent of the produced goods
from retail organisations, 41 per cent from some semi-retails, and the
rest from producers. Here, the Giant Company previously bought
directly from 200 producers. The number has decreased to 30 now. This
is a universal example.



The big organised retailers are making much profit in India, but not a
bit of development has taken place in infrastructure. They have no
initiative in agricultural processing or distribution, save some
isolated cases of teaching developed technology to farmers or a
show-off of cooperatives. In such a scenario can the claim that
increase of foreign capital to 51 per cent is the panacea, be viable
at all?



Indian surveys prove that the supermarket chains do not at all trade
with small producers. They do it only with some big farmers or
retailers.



It is being tomtomed that the choice lies between “innumerable”
middlemen and a handful of foreign retails. Our point is clear. Today
the farmers still have some freedom to choose to whom they can sell.
With the invasion of the retail demon, no alternative would remain.
Where will a farmer would go with his family? In painful
circumstances, the list of suicides can only get longer.



It is being said that consumers can buy goods at 5 to 6 per cent lower
price, because a margin of profit is kept at every stage of retail
sale. So consumers will benefit if that profit margin is eliminated.
Indeed, a novel thing about FDI in retail is that some discount is
available at first. But after a the company establishes its monopoly
by destroying the traditional sector, no place of refuge is there for
a farmer, small manufacturer or consumer. They all are rendered
helpless.



Hence we demand stop to eviction from agricultural land. Farmers must
be provided profitable prices. There must be storehouses and air
conditioning to preserve their goods. Only government intervention,
government control and government organisations can do this. But,
alas, this government is shirking its responsibility!



THE PRICE

GAME

Earlier we said that a farmer is happy when he gets a better price
than last year. But the problem is that he cannot retain that smile
for long. This is not a wrathful contention but a description of the
farmers in the capitalist world of retail. The experience in our
country cannot be different. The foreign peasants learnt from
experience, and we have to learn from them.



What is the experience abroad? In the beginning the corporates kept
paying a bit higher but then began to impose conditions --- Use this
fertiliser, use that seed, and set this quality level at any rate.
Spend as much as you can to meet the requirements, however, the price
remains the same. This naturally increases the production cost. The
fertilisers or seeds chosen by companies are all foreign. The capital
is foreign; the profit is foreign; only the bleeding is
country-specific.



The price game does not stop here. New stores open. All agencies
between the fields and the shops are closed. New middlemen come to the
market, threatening to give lower prices. If a farmer does not agree,
his goods are not bought. This he cannot refuse as the traditional
middlemen have been eliminated. It does not matter to the retailers
whether a farmer is destroyed because a new farmer would fill the gap.
It is true that middlemen exploit the farmers at present, but the
latter have the option to choose from among a number of middlemen. But
this cannot happen under the MNC rule. For example, in Ghana, a cocoa
farmer gets only 3.9 per cent of the market price while the trader
makes a profit of 34 per cent. Similarly, a banana farmer gets 5 per
cent of the market price and the trader gets 34 per cent.



Before big companies invaded the retail sector in the world, coffee
producers used to get $10 billion for a market worth $30 billion. Now
the market has gone up to $60 billion, but the producers get only $6
billion. The same is true for the banana or milk producers of Latin
America.



Different surveys have showed that in supermarkets the prices of food,
vegetables and other primary goods are many times higher than in the
local traditional markets in countries like Mexico, Nicaragua,
Argentina Kenya, Madagascar, Vietnam, Thailand etc.



When the apologists of FDI in retail scream at their fullest, whose
interest they serve behind the screen?



Sita, in the epic Ramayana, was made to come outside her hut, allured
by the attraction of a golden deer which was actually a demon. Now the
demon is there in the garb of a new golden deer, in front of the
farmers.



FOREIGN CAPITAL

AND INDIAN FOOD

Both the Indian government and foreign capital are responsible for the
misery of Indian farmers. The Indian government paved the way for the
MNCs to invade the agriculture sector. The foreign companies are
destroying Indian agriculture through different pacts with the World
Bank.



The World Bank has been eyeing the Indian food system for long. One of
the main goals of structural reforms after 1991 was the elimination of
the security and sovereignty of Indian food system.



Indian farmers are facing grave challenges. Two hundred and fifty
thousand have committed suicide in the last two decades. Others are
facing a steady decrease in income. It is not enough to say that the
government has failed to help the farmers. The anti-peasant role has
its roots in the World Bank formula which transfers the farmers’
income to agricultural businessmen bank or agro-chemical industries.
Farmers are going bankrupt; corporates are brimming with profit.



The disaster started from 1990, when the World Bank wanted the state
intervention removed. The World Bank investment had played an
important role in the Green Revolution. The National Seeds Institute
was formed in 1963. The World Bank lent $13 million in establishing
the Tarai Seeds Organisation in 1969. The National Seeds Planning
(NSP) came next with a two-phase loan. The first phase in 1976 and the
second in 1978 consisted of $25 million each. The purpose was to
institutionalise the system that could help produce branded seeds and
build structures to market them. The World Bank lent a fourth phase
loan in 1988 to make the seeds industry more market oriented.



The $150 millions of third phase loan mainly involved individually
owned industries and the MNCs. It was then said to be very important
because the expected rise in demand of seeds did not take place. So
the MNCs needed to be called to push the demand.



Hence the arrival of Monsanto. But the areas with wide use of the
Monsanto seeds are experiencing the highest number of farmer suicides.
It is no coincidence that 20 public sector fertiliser units were shut
down after the arrival of Monsanto, including two each of Haldia and
Durgapur.



As per this World Bank formula, monopoly seeds and monopoly market
grabbed the income of Indian farmers. Monsanto had to be taken to
court for introducing monopoly seeds. Everyone knows about the BT
Eggplant. Kargil, Lever and ITC increased wheat prices by doing
monopoly business of seeds. The universal public distribution system
had to be ended under the World Bank’s pressure. Every such policy is
putting our food security at stake. Anti-hoarding laws and regulations
are being diluted to benefit the monopoly capital. Its main components
are: 1) Deregularisation of land ceiling laws; 2) Withdrawal of cess
from irrigation, electricity and loan and business rights in
irrigation; 3) Destroying food security; 4) Removal of ban from
futures trade; 5) Removal of cess from cooperatives. And the like. The
result is extra burden on Indian farmers.



The government and the corporates are of the opinion that there must
be no centralised control in a country with diverse agricultural
commodities. But in practice the opposite is happening. Centralised
control stays, but in the foreigners’ hands. Monsanto, Kargil, Pepsico
and others are set to grab the entire agricultural business. They are
soon to be our neo-landlords.



The World Bank is commanding India to divert attention from cereals
production and concentrate on exportable flowers, vegetables, fruits,
prawns etc. The main theme of a recent World Bank report is flower
farming. This is disastrous; it not only reduces farmers’ income but
also threatens our land, jobs and bread.



Some independent surveys clearly showed that these giant MNCs are
reducing the market value of agricultural goods. Naturally, Indian
farmers would be deprived if Walmart or Tesco is involved with Indian
agriculture.



WORLD BANK IS

‘ANXIOUS’ FOR US

According to the World Bank, Indian food business suffers from three
problems: (a) geographical problems, (b) problems related to transport
and preservation, and (c) problems related to the multi-divided
structure of food supply to the market.



The explanation of the above is startling. The World Bank says India’s
geography is a big obstacle to food business. Importing foreign apples
in Chennai is far easier than transporting apples from Himachal to
Chennai. They provided the same logic for wheat. It was then observed
that the price of imported wheat was double that of Indian wheat. A
legal battle over it went to the Supreme Court.



The World Bank wants the withdrawal of each regulating law, including
the Essential Commodity Act (1965), Agricultural Produce Marketing Act
1972, Prevention of Black Marketing and Maintenance of Supplies of
Essential Commodities Act (1980) etc. it says these laws obstruct the
‘free’ flow of commodities.



The World Bank says its prescribed measure can lead to a pan-Indian
system in agriculture (i.e. flower farming). That means it wants to
destroy our locally organised market system and introduce an undivided
production and trade structure controlled by the MNCs. That is the
crux of the World Bank’s ‘not diversity, but unity’ slogan.



The World Bank is anxious that India is a backbencher in the world
market of exporters in spite of producing good quality commodities at
minimal prices. It is not bothered about food for 1.2 billion Indians.
Its only concern is our disability in export. But whose interest will
be served if Indian farmers produce exportable crops instead of the
conventional ones? For whom are the poor Indians to be deprived of
food? Why are the foreign monopolists so keen to control our
production, processing and supply systems? The only answer is: for
profits, even if Indian farmers go to hell!




__________________________________



Best

A. Mani



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