Will rotting foodgrain bring about a retail revolution?

August 4, 2010

Pictures of grain rotting in the rain in Punjab have shocked a country reeling under high food price inflation and where hundreds of thousands go to bed every night on an empty stomach.

A labourer carries a plastic sheet to cover wheat sacks at a wholesale grain market in Chandigarh May 18, 2010. REUTERS/Ajay Verma/FilesThe estimates vary from 1.2 million metric tonnes of rice and wheat wasting in Punjab alone, and as much as 18 million metric tonnes of food grain lying in the open across the country because of inadequate storage facilities, translating into losses of about 270 billion rupees ($6 billion).

But this is not a new problem. India has prided itself on increasing agricultural productivity, but it has not invested adequately in storage and warehousing facilities, condemning some 40 percent of produce that the country can ill-afford to waste to the trash can.

A CRISIL Research study estimates allowing foreign direct investment in multi-brand retail could cut wastage of about 630 billion rupees in fruit and vegetable wastage alone every year, or about 30 percent of total output.

Foreign retailers including Wal-Mart, who have campaigned for opening up the tightly controlled sector, say foreign investment is key to minimising wastage and lowering prices to consumers.

But private investment in building and modernising the supply and logistics chain has been slow to come.

While the government permits foreign investment in the supply chain, foreign retailers have been unwilling to commit large sums of money as there are still restrictions in multi-brand retail.

Last month, the government issued a discussion paper on opening up retail, a politically fraught issue.

But the urgent need to check food price inflation and the pictures of rotting grain are adding fuel to the fire and may be just the ammunition the government needs to push for easing restrictions in the $450-billion retail industry.

Raj Jain, chief executive of Bharti-Wal Mart, estimates it could take at least a decade to build a supply chain of international quality and standard in India.

We really cannot afford to wait that long to stem the waste and feed our people.


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It really is pathetic how a few politicians can hold the entire country hostage. To talk about ideology when stomachs are without food, a population worse off than the sub-saharan African continent… this be comparable to genocide. Was Pol Pot worse than the leaders at the helm of this country? Look at the figures. Less than 60% of the agricultural produce making its way to feed the nation while politicians, administration and middle-men make money.

Since India’s allergy to infrastructure is a known disease, I am sure if we allow 100% FDI in retail, we will be somehow in a position to accomodate kickbacks to the vested interests. At least this way, the poor don’t get to die of hunger.

Posted by Kartikeya | Report as abusive

Somebody is losing money because his possesions perish. I would consider him the natural candidate for investing this money. I can’t see why you would need foreign investment, let alone a Western supermarket for that.

Posted by musicmaster2 | Report as abusive

India, despite its development in the area of information technology, suffers a lot in other areas. I am very sad to see this news, knowing that so many people have this food, which give impression that some do not want to change this picture

Posted by Arih | Report as abusive

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[…] Originally Posted by vipin11 Well i don't like to be redundant but since you missed my earlier point To meet the requirements of the Food Security Bill, India will annually need 60 million to 61 million tons of grains to feed people who will be eligible for assistance under the program, up from around 55 million tons it needs now for state-run welfare programs. The government will also need an investment of 1.1 trillion rupees to boost farm output over next few years.(Courtesy: The Hindu) I agree with you that the impact wouldn't be that much at present but few year down the line….it is a huge investment.!!! and yes the point which talked about 0.2% decrease in GDP, even this figure doesn't look like a big figure but when we consider the the figure of our actual Gross domestic product it will be quite significant(1% of 1000 crore is quite significant)….when each country is talking about how to raise their GDP and how to go forward why our government steering us backwards…!!! As I have stated in my post previously ,the loss involved in the rotting food grains is about 270 billions !! This can't continue as this would contribute to a significant drop in the GDP .The NFSB's investment will have to address this (since it is expected to provide better infras for storage and distribution)!! If not in the way of NFSB,the government will have to address the issue of providing better infras with the FDI in retail pushed to the back.Hence,this investment is the need of the hour and cannot be avoided even if it seems to bite a % of GDP,it is stabilising it in the longer run !! Source:Will rotting foodgrain bring about a retail revolution? | India Insight […]

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