I say there is plenty of room to eliminate middle men and share the profits with both consumers and food producers/farmers. Organized Retail will crush the middlemen in the chain - and that’s business.

It’s one of the more accepted axioms in economics and strategy that whenver a few parties are buying from a large number of people, the power of pricing lies with the fewer parties. This phenomenon has played out in multiple ways in the past, the most recent being Wal Mart muscling up even large consumer product companies like P&G. Microsoft treating even Intel like cattle is a well reported story.
If organised retail is offering better prices to farmers now, it is purely an entry strategy and not a long term trend. The long term trend will be that they will reduce prices for the consumers by driving down the procurement price. They will be in a great position to do this if they can become the exclusive buyer from groups of clustered villages. A monopoly that will be as effective as Microsoft’s if you consider the costs the farmer will have to bear to find an alternative buyer.
Short term trend may be positive for farmers but the long term pressure is coming and will begin to appear in couple of years when organised retail gets it act sorted out.

Thus by stepping out of the way, letting the Farmers meet the demand populace or its best representative is the best gift the Govt can give the Farmers. And simplifying the supply chain and short circuiting demand and supply can only make it more efficient. Ideal state is better prices for farmers, lower prices for consumers (lower inflation too, as the basket usually has lots of edible stuff:)).

There was a news article a few years ago on how Pepsi with its Lays plant had done wonders for the Potato farmers in the North, increased their productivity, and thereby their profits too.

Ban by Bihar, UP or Kerala govt.s in the name of farmer protection is a facade for gratuity demanded by them. Reliance has taken over 2000 villages and can monopolize them anytime.

The debate now is who’s right? But both the options, Govt. or organized retail, are problems in India. There are very few businesses in India (TATA is the only one that comes to mind immediately) that follow the path. When the Govt. opens the sector, the bad businesses start operations first. So, it be better to keep organized retail out rather than make it worse.

Also, the appeal of organized retail is wholesale. Indian consumption needs are different. We buy 4 eggs and not 2 dozen, we need 500 ml of Milk, and not 4 liters. Our population does not have cars, our streets do not have parking lots. So, by not having organized retail, we do not loose anything.

Having said that, the Indian system of “mandi” should be improved. online mandi or making the process more transparent is a reasonable solution. e.g. e-chaupal by ITC.

In Summary, we should organize the purchase from the farmer, but leave alone the distribution to the end consumer. And dont mix the two.

So I guess, a little bit of discouragement of bombarding the market with organised retailers should be done. At least in the form of serious checks & balances .

My last point on the location and parking/other problems was more to stress on the fact that these people don’t have concerns about farmers and aam junta too much on thier heads as them seem to give the impression. Ahemm.. Sorry Basab, but by way of ‘Organised’ retailing , all I could see at the R fresh outlet was more of chaos & confusion ! (At least at the customer end)

We discussed pricing power in my earlier post on this subject right after Kerela banned organized retail. My stand was that pricing power would not shift further away from the farmer and it could actually move towards him. The news seems to indicate that it that is the case.

Quality of produce (picking the best, leaving the rest) are all forms of price negotiation. Why shouldn’t farmers and transporters be encouraged to produce and deliver higher quality produce? Only a price premium (or a penalty, depends upon your pov) will encourage that.

Lastly, city zoning laws should address the issue location of retailers. Again, that is not a reason to discourage or ban organized retail.

3 points about Reliance fresh (or any other such retail chains):

a.There has been protests in TN about reliance accepting only very high quality farm produce. What I heard is that they filter out vegetables or fruits they find unsuitable for their quality standards from the produce , leaving the farmer to sell the leftovers to someone else.

b.Give me one reason, why these biggie retailers won’t start squeezing the farmers as and when all other smaller players are eliminated from the market and all that the farmers would be left would be to sell to this biggie Retailers.

c.Lastly, personal experience at the Reliance fresh outlet at chennai. They have built their shops around residential areas.Otherwise quite neigbourhoods have suddenly become flooded with vehicles and people. No parking facilities, no space to handle the kind of crowd that pours in..clearly, Mr Ambani has more than just supply chain optimization in mind for counting profits.