Industry-sponsored study tours are a malpractice.

In the mid-1980s I was working with the Indian Express. As the Agriculture Correspondent for the newspaper I had followed keenly the claims Pepsico was making to re-enter India. In the garb of bringing a 2nd Horticultural Revolution in the trouble-torn Punjab, Pepsi had its eyes set on the vast Indian market for its beverages. The studies and reports Pepsico had presented were not so convincing. In my columns I had repeatedly questioned the claims.

Pepsico was certainly not happy with my reports. I was contacted by a senior Punjab bureaucrat who wanted me to sit across with the Country Director of Pepsico to know the other side. As a journalist this is what I am supposed to do. So I readily agreed. The three of us met for a cup of tea and after a lot of discussions, Pepsico invited me and my wife for a fortnight visit to the US to see for myself the remarkable research that was being conducted on agriculture. I was also told that Pepsico would be keen to take me to Venezuela to show me the success they have achieved in potato cultivation. When I just smiled and said "thank you" (and perhaps sensing that I may not take it as an unethical practice), I was told they were also taking a senior bureaucrat (who incidentally was responsible for the development sector, and was not very enthused with Pepsico's proposals) to the US.

Well, the bureaucrat did visit Pepsico's headquarters (he had sought permission from the Punjab Govt to attend a family marriage in the US) and once he returned he became a die hard champion for Pepsico.

Pepsico did subsequently make an entry into Punjab in the late 1980's. But all I know is that after some 30 years, in 2014, when I look back there is no trace of the 2nd Horticultural Revolution the soft drink giant had promised.

This incident came to my mind the moment I read the news report After GM trials ban, BJP, Sena MPs heading for Monsanto-funded study tour (Business Standard. Aug 22, 2014. http://bit.ly/1q095qc). The news report said: "A group of members of Parliament from BJP and Shiv Sena are heading to the US on a week long study tour sponsored by global seed giant, Monsanto. The group departs on Saturday."  It also quoted a Monsanto spokesperson who admitted that this is in line with industry practice. The visit would cost approximately $ 6,000 per head for food, accommodation and travel which would be entirely borne by Monsanto. Considering there are no free lunches, you can just imagine the kind of indirect return the company was expecting for this visit.

Within hours of the news report appearing the social media went berserk. The BJP responded by saying that none of its members would be part of the junket.

Nevertheless, the fact remains this is not the first time industry has sponsored such study junkets. And also Monsanto is not the only company to have done so. This is a usual lobbying practice adopted by Big Business and somehow the media is game with it. Monsanto itself has taken in the past scores of journalists, farmer leaders, scientists, and officials of the Department of Biotechnology on study tours. It will be interesting to know how many such junkets have been organised by Monsanto in the past, and to know who all went and what did they write when they came back. No wonder you see a very spirited defense of the controversial genetically modified (GM) crops that are under consideration for commercial approval.

This also reminds me of a news report that has appeared in the national daily The Hindu some years back. A group of visiting scientists (for an International Science Congress in New Delhi) had gone and met the then Chief Justice of India inviting him and some senor judges on an 'educational tour' of the US to understand the virtues of GM technology. I later found out that judges from some 20 countries including India, South Africa, Brazil, and Egypt had traveled to an institute named after Albert Einstein. The basic objective of such education trips for the judges was to expose them to 'the great potential of GM crops' so that they don't easily admit legal cases that would be filed in due course of time.

This malpractice must stop. Already enough damage has been done by manipulating the public discourse by such sponsored visits. Just like the Prime Minister Narendra Modi has put an end to the malpractice of carrying an entourage of journalists on his visits abroad, and has also directed ruling party MPs to take his permission before travelling abroad on sch junkets/study tours, it is high time the Indian media too on its own announced putting an end to this malpractice. Media can't be standing on the high moral ground without first setting up an example.

Why only MP's it is time the government also stops agricultural scientists, economists, sociologists, and also bar officials of the Department of Biotechnology, Ministry of Agriculture, Ministry of Science & Technology as well as the Ministry of Environment & Forests from such sponsored studies. This is a corrupt practice and it must be put to an end. #

FDI in retail: The myths around what it can achieve

There is a popular advertisement on TV. A child is running and falls down in the mud. His mother comes running, picks up the child, dusts his clothes and says: "Beta, get up. Don't worry, Surf Excel hai naa!"

In a country where nearly three lakh farmers have committed suicide, farm incomes are plummeting, where rural infrastructure is in shambles, middlemen rule the roost, and there is jobless growth, FDI in retail is being promoted as yet another Surf Excel. An impression is being created that once FDI in retail is in place, it will not only address all the ills plaguing the food and agriculture sector, but also take care of employment.

In the mid-1980s, when Pepsico came up with a proposal to bring in a second horticultural revolution in Punjab, it too was hailed as a path-breaking initiative that would put an end to the continuing distress on the farm. It was expected to usher in the latest technology, improve farm research and extension, create supply-chain infrastructure, and provide marketing linkages from farm to the fork. I remember the kind of excitement that prevailed all around. Politicians, bureaucrats, economists, agricultural scientists and even the Bhartiya Kisan Union (BKU) joined the chorus.

Some 15 years after the project was approved, Pepsico's horticultural revolution is all but forgotten today. Agriculture has gone from bad to worse. The food bowl of the country has also become a major hot spot for farmer suicides.

Arvind Kejriwal's scrapping of FDI in retail in Delhi has renewed the debate over one of the most contentious of policy issues. Commerce Minister Anand Sharma has expressed displeasure saying that the Delhi government's decision will send a wrong signal to foreign investors. On the other hand, FDI in retail will lay out back end infrastructure, bring in a chain of cold storages and improved transportation thereby reducing crop losses, remove middlemen who rob the farmers of profits, and thereby provide him higher prices and bring in improved technology to help in crop diversification. Of course, it will also create millions of jobs.

Let us now examine how true these claims are, or at least how likely. Wal-Mart, Tesco, Sainsbury, Carrefour and a host of other big retail players are expected to increase farm incomes. But in the US, where Wal-Mart has completed 50 years, if farmers had indeed been getting better income, what reason would there have been for the farming population to plummet to less than one per cent of the total population?

In the US too, 40 per cent of food is wasted and much of it after processing, where Wal-Marts should in fact have played a more important role. If big retail failed to reduce food wastage in the US, why do we expect them to do a miracle in India?  •  FDI: Just the facts, please  •  A stimulus package for farmers?

Farmers in US survive on the farm not because of Wal-Mart but the massive subsidy support they get, which includes direct farm income. Between 1997 and 2008, Rs 12.60 lakh crore was provided as income support to farmers. An UNCTAD-India study shows that if these subsidies, classified as Green Box in WTO parlance, are removed, American agriculture will collapse.

In Europe, despite the dominance of big retail, one farmer quits agriculture every minute. Europe provides the highest amount of subsidies, including direct income support. But because 74 per cent of these subsidies are cornered by Corporations and big farmers, small farmers are quitting the sector. In France, farm income has come down by 39 per cent in 2009. In OECD, the richest trading block comprising 30 countries, Rs 14 lakh crore was the farm subsidy support in 2009 alone. It is not big retail, but direct income support that keeps farmers in agriculture.

Studies show that in America, some 50 years back when farmers sold their produce for one dollar, their income was 70 cents. In 2005, this had fallen to 4 per cent. With middlemen wiped out, one would have expected the farmer's income to go up. But now it is a new battery of middlemen . quality controller, standardiser, certification agency, processor etc - who walk away with the farmer's profits. The number of middlemen, operating under the same hub, actually increases.

Take the example of an earlier Walmart-Bharti tie-up for wholesale marketing in Punjab. Baby corn is bought by Bharti-Walmart at Rs 8 per kg, sold at Rs 100/kg in wholesale by big retail, and ultimately the consumer price hovers around Rs 200/kg. It's a clear example of how the middlemen squeezes farm incomes and fleeces the consumers. This is not an isolated case. Much of the farm produce is bought at very low prices across the globe. Primarily for this reason, dairy farmers in UK are quitting on a large scale. They are urging the British government to set up a fair price mechanism that big retail should be directed to adopt.

There is no evidence that big retail creates back end infrastructure either. In US and Europe, rural infrastructure has been created through government support which came in the form of agricultural subsidies again. To say that 40 per cent of agricultural food that goes to waste in India will be drastically reduced by the influx of FDI in retail is also an illusion. In US too, 40 per cent of food is wasted and much of it after processing, where Wal-Marts should in fact have played a much more important role. More than 50 per cent of vegetables/fruits rot in supermarket stores. If big retail failed to reduce food wastage in the US, I wonder why do we expect them to do a miracle in India?

Regarding employment generation and poverty alleviation, lessons need to be drawn from a 2004 study by Stephen Goetz and Hema Swaminathan of Pennsylvania State University, which showed how higher poverty prevailed in areas where Wal-Mart stores had come up, compared to those states where big retail was absent. In any case, in a market with a turnover of $450 billion, Wal-Mart employs only 2.1 million people. In contrast, for an estimated $460-billion market, Indian retail employs 44 million people. If Wal-Mart is allowed to come in, what has to be understood is that for every job it creates, it is most likely to displace at least 20 workers.

Yes, there is a need to improve rural infrastructure, provide a sophisticated supply chain, and provide better income to farmers. The milkman of India, late Dr Verghese Kurien, had shown us the way. The cooperative dairy structure, which led to the evolution of the Amul brand, is the right approach. If he could do it for milk, which is a highly perishable commodity, there is no reason why it cannot be replicated for fruits, vegetables and other agricultural commodities. A solution to the plethora of problems on Indian farms does not lie in the west, but in our own backyard. There is no need to look for a Surf Excel. #

Source: FDI: Neither necessary, nor sufficient
India Together. http://www.indiatogether.org/2014/jan/dsh-fdiretail.htm

From Pepsico to Wal-mart: Selling a fake dream

In the mid-1980s, Pepsico came up with a proposal to bring in a 2^nd horticultural revolution in Punjab. It was hailed as a path-breaking initiative that would put an end to the continuing distress on the farm. It was expected to usher in the latest technology, improve farm research and extension, create supply-chain infrastructure, and provide marketing linkages from farm to the fork. I remember the kind of excitement that prevailed all around. Politicians, bureaucrats, economists, agricultural scientists and even the Bhartiya Kisan Union (BKU) joined the chorus. All my efforts to reason out the hollowness of the claims, based on Pepsico’s own studies, were simply lost in the din and noise created by the drum-beaters. 

Some 15 years after the project was approved, Pepsico’s horticultural revolution is all but forgotten. Agriculture has gone from bad to worse.  The food bowl of the country has also become a major hot spot for farmer suicides. While the soft drink giant remains busy marketing its colas, Pepsico has not been held accountable for its failed promises. It will never be punished for selling a fake dream to the beleaguered farming community. 

It is now the turn of Wal-Mart and other big retail giants. FDI in retail is once again being projected as a panacea for all the ills plaguing Indian agriculture. FDI in retail will lay out backend infrastructure, bring in a chain of cold storages and improved transportation thereby reducing crop losses; remove middlemen which rob the farmers of profits, and thereby provide him higher prices; bring in improved technology to help in crop diversification; and of course create millions of jobs. The cheerleaders are once again on the road. This time, it is the corporate controlled electronic media that is drumming up the hype.

Having spent Rs 52-crore in two years for lobbying alone, and after the recent New York Times exposure showing how Wal-Mart bribed its way to control 50 per cent of the retail market in Mexico, the Union Cabinet finally allowed big retail to set shop. If Wal-mart could bribe its way in Mexico, what makes us think they have not been able to do so in India?  

We are being told that Wal-Mart, Tesco, Sainsbury, Carrefour and a host of other big retail players are expected to increase farm income. In the US, where Wal-Mart has completed 50 years, if farmers were getting a better income, there was no reason why the farming population should plummet to less than one per cent of the population. Farmers in US survive on the farm not because of Wal-Mart but the massive subsidy support, which includes direct farm income. Between 1997 and 2008, Rs 12.60 lakh crore was provided as income support to farmers. A UNCTAD-India study shows that if these subsidies, classified as Green Box in WTO parlance, are removed, the American agriculture collapses.

In Europe, despite the dominance of big retail, every minute one farmer quits agriculture. Europe provides the highest amount of subsidies, including direct income support. But because 74 per cent of these subsidies are cornered by Corporations and big farmers, small farmers are quitting farming. In France, farm income has come down by 39 per cent in 2009, down from 22 per cent in 2008. In OECD, the richest trading block comprising 30 countries, Rs 14 lakh crore was the farm subsidy support in 2009 alone. It is not big retail, but direct income support that keeps farmers in agriculture.

These subsidies also bring down the domestic and international prices as a result of which big retail sells cheap. Empirical studies show big retail charging 20-30 per cent higher than open market in Latin America and Southeast Asia. In India, organised domestic retail has not been able to sell cheaper. A NABARD study for Hyderabad shows Reliance Fresh and other charging 15-20 per cent higher prices. Even at the peak of inflation in India, these domestic organised retailers did not reduce prices. So where is the advantage to consumers? 

Studies show in America, before 1950, when farmers would sell their produce for one dollar, 70 cents was his income. In 2005, it had fallen to 4 per cent. With the middlemen wiped out, I thought the farmer’s income should have gone up. No, it is the new battery of middlemen – quality controller, standardiser, certification agency, processor et c—who walk away with farmer’s profits. Number of middlemen, operating under the same hub, actually increases. Let us not forget, Wal-mart is a big middleman, it eats away the smaller middlemen.

There is no evidence that big retail creates backend infrastructure. In US and Europe, rural infrastructure has been created through government support which came in the form of agricultural subsidies. To say that 40 per cent agricultural food that goes waste in India will be drastically reduced is also an illusion. In US also, 40 per cent food is wasted and much of it is after processing where Wal-Mart’s should have played a much important role. 

Regarding employment generation and poverty alleviation, lessons need to be drawn from a 2004 study of Pennsylvania State University by Stephen  Goetz and Hema Swaminathan, which showed how higher poverty prevailed in areas where Wal-Mart stores had come up compared to those states where big retail was absent. In any case, for a $450 billion turnover, Wal-Mart employs only 2.1 million people. Whereas for an estimated $460 billion market, Indian retail employs 44 million people. Let us not forget, Pepsico had also promised to create 50,000 jobs. As per a question in Parliament, it became known that Pepsico had created less than 500 jobs, including 250 unskilled workers. Moreover, last month, massive demonstrations rocked US by Wal-Mart workers complaining of poor working conditions and exploitative salaries. Who creates employment, and also provides better working conditions, therefore is all evident.

Yes, there is a need to improve rural infrastructure, provide a sophisticated supply chain, and provide better income to farmers. The milkman of India, late Dr Verghese Kurien, had shown us the way. The cooperative dairy structure, which led to the evolution of the Amul brand, is the right approach. If he could do it for milk, which is a highly perishable commodity, there is no reason why it can’t be replicated in fruits, vegetables and other agricultural commodities. From a milk importer, India has now become world's biggest producer of milk. It is therefore obvious that solutions to the plethora of problems on Indian farms does not lie in the west, but in our own backyard. We need to look inwards. Otherwise we will go on committing the same mistakes, and in the process turn farms into killing fields.