PRESS RELEASE

Social, economic and environmental impact of corporate retail on India's food economy

Social, economic and environmental impact of corporate retail on India's food economy  

The huge hype of the entry of corporate retail into India is infact nothing but a hijack of our vibrant, well organized retail service economy. Corporate retail will not create two million jobs it will destroy 38 million livelihoods of people involved in running small shops, redis and street markets. The growth being projected as a new contribution  to the economy hides the destruction of the contribution of the 40 million people involved in small retail to the Indian economy.

Corporate retail is being described as organized retail. And small scale decentralized and highly networked indigenous retail is being falsely referred to as unorganized. However Indian trade is highly organized and has existed for centuries on the basis of low cost and high efficiency. India needs the self organized skills of our traders, shopkeeper, hawkers and vendors both to provide employment to millions and affordable friendly community service for basic needs to society.

Socio-economic impact of corporate retail  

India is a land of retail democracy- hundreds of thousands of weekly haats and bazaars are located across the length and breadth of our country by people's own self-organizational capacities. Our streets are bazaars – lively, vibrant, safe and the source of livelihood fro millions. India has the highest shop density in the world, with 11 outlets per 1000 people. This does not include the village haats.  

Our retail democracy is characterized by

1. High levels of livelihoods in retail with nearly 40 million employed which accounts for 8% of the employment and 4% of the entire population.
2. High levels of self organisation.
3. Low capital input
4. High levels of decentralization.

In a country with large numbers of people, and high levels of poverty, this model of retail democracy is the most appropriate in terms of ecological sustainability and economic viability.  

The entry of the giant corporate retail in India's food market will have direct impact on India's 650 million farmers and 40 million people employed in tiny retail.  

More than 6600 mega stores are planned with Rs. 40,000 crore (2.5 billion investment by 2011).  

Reliance plans to invest $5billion over next four years to open thousands of stores.  

Walmart' partner Bharti plans to invest up to $2.5 billion in new stores in the next eight years.  

RESEARCH  

To study the effect of corporate retail outlets on the existing shopkeepers and vendors, Research Foundation for Science Technology and Ecology/Navdanya carried out a research. In this research we interviewed the existing shopkeepers and vendors, whose shops were in within 1 km radius of a reliance store. Three areas were selected for this purpose and samples were collected randomly from these areas, first was Laxminagar, where reliance had opened store around 50 days ago and it sells majorly fruits and vegetables. Second was Bhim nagar mandi, where reliance sells all its vegetables and fruits that are rejected from the reliance fresh stores. Third was Paharganj, where a reliance store sells fruits, vegetables and grocery, this shop has opened around 40 days ago. In each of the three places we interviewed 25 retailers. In the case of Laxminagar and Nangloi, we interviewed only vegetable and fruit seller, while in Paharganj we interviewed both vegetable/fruits seller as well as grocery stores.

Key findings of the research on socio-economic impact on existing retailers  

Ø      88% of the existing retailers have experienced a decline in their sale, since reliance stores have come up in their area.

Ø      45% have seen a decline of more than 50% in their sale since the reliance shops have come up.

Ø      66% of the respondents have been doing this business for more than 10 years; some of them have been in the business for more than 30 years. It is very difficult for them to shift to some other business now and succeed there.

Ø      59% of the respondents have seen such decline in business that they think they will have to leave their business in near future. 27% have seen a major decline in future.

Ø      96% of the existing sellers get their supplies from the mandis, only 4% get it from reliance.

Ø      The impact of the reliance is so that nobody among the 75 respondents was unaware about reliance.

Ø      58.6% of the retailers keep their shops open for more than 12 hours. Some of them keep it open for more than 14 hours.

Ø      A major number of shopkeepers who have been in business for more than 10 years think that they will have to close their shops

Ø      Many of the small retailers of vegetable in Laxminagar and Paharganj have already left the business, as they could not compete with reliance even for a month

Ø      One of the big retailers of grocery in Paharganj has closed his shop within a month of reliance opening its shop it the nearby vicinity  

Livelihood of millions of small and big shopkeepers will be uprooted to set up the chain of corporation owned retail.  

After farming, retailing is India's major occupation. Census 2001 provides us the most authentic data on people involved in retail. According to it, there were 269 lakh `main' and 24 lakh marginal workers in wholesale and retail trade. That is, nearly three crore people depend on trade, 1.1 crore in the urban and 1.9 crore in the rural areas. Of the total, nearly 1.7 crore are not even matriculates. Thus, the livelihood of more than 30 million is involved and if we count the dependents, in the form of children and others, at least 120 million will be impacted by the retail revolution created by the large corporations. The growth of corporate retail will take place by destroying the self-organized small retail in India.  

IMPACT ON FARMERS  

Monopsony

Reliance and Walmart are presenting themselves as friends and liberators of farmers. They are referring to small traders as middleman, as if they are not giant middleman. Five small traders taking 2%commission each contribute to a 10% difference between the price the farmer gets and the consumer pays. On the other hand a single Walmart or reliance can slice of 90% profits above a farmer's price.  

In the case of small traders, farmers have a choice in terms of whom to sell. The APMC Acts also ensured that farmers would get a fair price and there would be no single buyer. In contrast, Reliance and Walmart are monoponistic buyers who in due course of time will drive down procurement prices of agricultural and manufactured products.  

We have seen the dismantling of mandis in last couple of years in various parts of the country. The primary force behind this was the corporate entry into the supply chain management of food. It is true that this year they have paid better prices to the farmers than the mandis, what is threatening is the reduction in the number of options the farmer is left with to sell his/her crop. Similarly for the manufactured goods, the prices paid by the retails giants might be more competitive than others,  but after other retails are wiped out, how many options will the producer have to sell his/her products. This has happened in the developed countries opting for corporate retail and there is no doubt that it would not happen here. Moreover another threat that we will be facing is the opening of a giant pipeline of cheaply sourced goods from China, Thailand, ASEAN, etc., leading to livelihood losses on a massive scale in India. So either sell at low cost or the food will be imported from other countries while our farmers will continue to commit suicides.  

ENVIRONMENTAL IMPACT  

Climate change

Climate change due to air pollution is already becoming a threat to human life. Temperatures are rising, sea level is rising and glaciers are melting. The imperative in the contaxt of climate change is to prevent increase of use of fossil fuel. Our hawker, redi wala and kirana store is the solution to climate change.

The Reliance , Bharti- Walmart model will increase fossil fuel use and carbon emissions. Further destabilizing the climate the super market lorries will  consume huge amount of fuel and lead to enormous pollution.  

Ø      Thus even if we go by conservative estimates the super market lorries in India will generate more than 7 million tonnes of carbon dioxide per year, adding more problem to the already fragile environment of the country.

Ø      When petroleum is becoming more and scarcer, the Lorries of these supermarkets will consume more than 1 billion litre of petroleum per year  

Traffic congestion and energy consumption.

Ø      When shopping gets so centralized, one might have to drive for every shopping, which will need more fuel and lead to more congestion on roads.

Ø      For refrigeration of the vegetables and fruits for the whole year atleast 6000 megawatt of electricity is needed.

Ø      For air-conditioning 4 million sq ft of built – up area one will need atleast150 megawatt of electricity. (only for Reliance stores)  

Excessive Pesticides and Preservative in our food:  The giant retail chains have their own standards of buying farm produce, without using excessive pesticides its very difficult for a farmer to produce fruits and vegetable which fits into the standards, so they are forced to use excessive insecticides and pesticides. Once these farm produce come to the retail giants, they sell it throughout the year, by preserving hem in cold storage, but in the process a lot of preservatives are also added to the food. So at the end when a consumer gets a “preserved” vegetable from these giant stores, it is full of toxic material harmful for consumption.  

Packaging of food creates a huge amount of waste in the already polluted cities. The land fills are getting filled and then more land of the poor farmers will be acquired to make landfills for reliance's  and Walmart's packaging waste.

For further information please contact :

Navdanya / Research Foundation for Science, Technology and Ecology
Phone : 26535422 / 26561868;
Email : vshiva@vsnl.com / rfste@vsnl.com