New alternative supply mechanisms versus ‘FDI’

By Dr Mohinder Kumar

Distribution of goods is as important as their production. It has always met with bottlenecks. During Bengal famine under the British feudalism, godowns were stocked with food grains but not reachable by the needy, starving poor as they had no ‘purchasing power’. Any system of storage and distribution goes hand-in-hand with specific kind of production system. Both should be compatible. For instance, small retail shop system suited small producer system as both enjoy independence.
In finance, modern large-scale centralized banking system is yet to strike compatibility with small producers for disbursement of institutional credit. As a result microfinance is making headways as it suits them just as village moneylenders suited small farmers during the British feudal era. It’s a different issue that both big microfinance institutions and moneylenders act as exploitative distribution systems despite being compatible with small producers. Commission Agents as dual point for interlocked credit and trading services in regulated markets are also becoming problematic system. It’s the same story everywhere for all distribution mechanisms.
In agriculture, there are constraints in awareness creation, technology up-gradation, extension networks, input delivery and distribution systems for farmers. Compare it with communist China. Whether our systems of dispensation of services are sustainable though they may be ‘suitable’?
In food, the public distribution system (PDS) centered on Food Corporation of India (FCI), Food & Civil Supplies Agencies, FCI godowns and a network of ration shops has so far suited our poverty stricken socio-economic structure well until recently as some problems propped up. But can it be sustained for the future?
We are at the cross roads, in need of new alternative distribution systems which are adequate and “sustainable”. In the age of globalization, development is defined in terms of sustainability, not subsistence. Whether or not a farmer’s family-subsistence/nutrition is ensured, he must supply maximum for global market! A bit of farce has been imported by history repeating itself, with the invitation of Foreign Direct Investment (FDI) in retail and other businesses. Farmer has to feed far distant foreign markets while food security act promises food for his family-subsistence! There is something amiss which defies logic. As far as practice is concerned it is market-driven, minus planning and human concern.
Producers and consumers lead compartmentalized existence. Our governments have had tough time in maintaining balance between the antithetical small farmers’ interests and consumers’ interests. The systems of minimum support price (MSP), administered price, harvest price, food subsidies have taken a heavy toll on governance. This is the state of affairs in each country, including India. FDI is coming in all businesses under these critical circumstances.
Boston Consulting Group (BCG)’s study findings influenced the expansion of FDI in our retail market. But there seems to have been no study on what alternative distribution mechanisms these developing countries should adopt against FDI. Anyway, the future distribution systems depend upon the outcome of historically continued struggle for existence between FDI and small producers. What should the small consumers do? They should join with small producers.
New social actors to take on the might of FDI and corporates should be the ‘citizens’. ‘Producers’ and ‘consumers’ should not have a separated, atomistic, compartmentalized existence. As small producers and farmers are getting organized in ‘Producers’ Companies (PC), small consumers too can form Consumers’ Cooperatives. Every small producer is a consumer and every consumer is likewise a producer also. This dichotomized existence of citizens is to be neutralized. This is possible through the cooperatives. Citizens, especially the marginalized and vulnerables need to come together, revitalize the local institutions and suffuse them with a renewed cooperative spirit. Upcoming PCs are producers’ cooperatives only. As there are producers’ and consumers’ cooperatives, they will have a level playing field for competition against corporate FDI and multi-national companies (MNC). Individualized farmers, artisans, handicraftsmen, producers and consumers cannot withstand the onslaught of colossal MNCs which are eying everything in the market to be brought under their control -technology, inputs, natural resources, human resources (labor), knowledge, extension, production, procurement, storage, processing, manufacturing, supply, retail, delivery and distribution. And finance too.
It is essential to see that PCs of farmers/producers should not fall under the control and management of big corporates, some of which are operating in collusion with ‘for-profit’ NGOs. Today, distinction between a Corporate and NGO is becoming obscure. To organize and exercise one’s legitimate right of survival is real politics. But we wonder why it is not so for the small scattered consumers and producers? Getting united merely for ‘higher price’ of produce is a small thing. Why they are reluctant in attaining political consciousness of cooperation and unity? Is this a design of the western neo-colonial forces represented by the capitalist corporates and MNCs? They do not want that small producers or consumers of the developing countries should get organized. In the USA, Canada and Europe, small producers are facing the same problem of existence as our producers and farmers. But there, governments keep them aloft by injecting huge amount of subsidy per producer as their numbers is negligible as compared to ours. So, our governments rightly expect our producers to get organized into PCs. Now the greed of FDI driven capitalist MNCs does not allow sparing the PCs from grip, as these are required to sell their produce to them at lucrative price. Initial higher price offered is a trap. When contract farming and forward market arrangement with ‘individual’ farmers for tomato in Punjab failed miserably after initial hype, they (MNCs and corporate agri-business firms) are now vying for sourcing agri-produce from ‘collectivized’ PCs! Now they chase PCs! Let us hope if history of FDI repeats itself ‘third’ time in our production and distribution system, it appears as joy, not tragedy or farce. Joy for each of us to celebrate. Is this possible? New, attractive, efficient, sustainable Consumers’ Cooperative Stores and local ‘bazaars’ is the immediate response. It’s our own, citizens’ social responsibility. Let us promote the idea of lavish consumers’ cooperative stores and producers’ cooperatives.
(The author is AGM (Economic Service) NABARD Regional office Jammu.