Read the passage given below and solve the questions based on it.
It is being projected a boon for the agricultural sector. In reality, it will be the beginning of the end for Indian farmers. It has happened in the west. Ever since big retail – dominated by multi-brand retailers has entered the market, farmers have disappeared and poverty has increased. Today, not more than seven lakh farmers remain on the farms in the west. According to a report, ever minute one farmer quits agriculture. Farmers’ incomes have come down by more than forty per cent. These days low supermarket prices are being cited as the reason for the exodus of dairy farmers too. It is therefore futile to expect the supermarkets rescuing farmers in India.
Despite the destruction of farming globally, administrators in India are gung-ho about allowing foreign direct investment in multi-brand retailing. “The agriculture sector needs well functioning markets to drive growth, employment and economic prosperity in rural areas,” says a discussion paper.
Since 2006, India has allowed a partial opening up of the retail sector. Have these retail units benefited Indian farmers and the consumers? The answer is number the argument for setting up of big retail chains is that the supermarket chains will squeeze out the middlemen thereby providing higher prices to farmers and at the same time provide large investments for the development of post-harvest infrastructure. All these claims are untrue, and big retail has not helped farmers anywhere in the world.
If the supermarkets were so efficient, why is the west providing a massive subsidy for agriculture? After all, the world’s biggest retail giants are based in the west and it should have helped their farmers become economically viable. But it did not happen. Till 1950, a farmer who would receive about seventy per cent of what was spent on food receives no more than, 3 to 4 per cent today. And that is why the farmers there are being supported in the form of direct income support by the government.
A report by the Organization for Economic Cooperation and Development (OECD), a group comprising the richest 30 countries in the world, states explicitly that arm subsidies rose by 22 per cent in 2008. In just 2009, industrialized countries provided a subsidy of Rs 1,260 billion. And it is primarily for this reason that farm incomes are lucrative. Take the Netherlands: the average farm family income in 275 per cent of the average household income. This is because of farm subsidies, not supermarkets India is therefore importing a failed model from the west especially when India is incapable of providing such heavy subsidies to its farmers.
Regarding employment, big tail does not squeeze out middlemen from the food chain. Supermarkets claim that they remove middlemen and therefore are able to provide a higher price to farmers. In reality what happens is the opposite. Supermarkets are themselves the big middlemen. They replace the small fish supermarkets replace the plethora of small middlemen. The muneem clad in a dhoti-kurta is replaced by a smartly dressed up middlemen. So while the farmer pauperizes the profit of supermarkets multiple.
Based on biased studies by consultancy firms and some institutes, it is believed that supermarkets will create employment and therefore help in ameliorating poverty. This is a flawed assumption. Lessons need to be drawn from a 2004 study done at Pennsylvanian State University. The authors measured the impact of a retail boom on poverty in various adjoining states. The comprehensive study clearly brings out that those American states that had more retail stores in 1987, had higher poverty rates by 1999 than the states where fewer stores were set up.
At stake is the livelihood security of 120 lakh small shopkeepers, 4 crores hawkers and at least 20 crores (of the 60 crores) small farmers. What is needed is more public sector investment in setting up a chain of mandis across the country. Providing an assured market and reasonable procurement price is what Indian farmers need. This has to be supplemented by a network of food grain banks at panchayat level that assure local production and distribution.
Which of the following is true in context of the passage?