India Insight

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.

Comments
3 comments so far | RSS Comments RSS

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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