Govt to help big-ticket retailers

NEW DELHI: Retail majors would get government assistance to benefit from contract farming if they provide employment to agents who buy produce from the farmers and supply it to wholesalers.

While contract farming would enable retailers to strengthen their sourcing, providing jobs to agents would insulate the Centre and the state governments from criticism over loss of jobs. Agents are considered politically influential and protecting their livelihood is seen as a sensitive issue for the government.

It is felt the proposed formula would provide a win-win situation for all sections concerned. Farmers would benefit as companies would pay them a better price and still source farm products cheaper. Even after factoring in the cost of providing employment to middlemen, retail majors may save significantly in terms of sourcing cost.

“For managing contract farming, companies will anyway need trained manpower, and agents understand the nitty-gritty of agriculture,” a senior government official told ET.

It is expected the Centre would take the initiative and the states would find the solution acceptable since agents would not lose their livelihood. The intermediaries command a significant political influence in Punjab, Uttar Pradesh and Bihar.

Lobbying by the pressure group is considered a prime reason for the Uttar Pradesh government going slow on contract farming even though most farmers are in favour of companies buying directly from them.

Proposals to create alternative employment for agents were initially mooted by the ministry of food processing. Food processing minister Subodh Kant Sahay told ET that his ministry was concerned about the agents.

“They should not lose out in the retail revolution. Big-ticket retailers should involve their services to the best possible extent. If the formula works, it will be a win-win situation for all involved parties. Despite creation of additional jobs, the companies will be able to save a significant amount of money,” he explained.

A senior government official told ET that agents can be of greater use if they are involved in procuring products from the farmers, he said.

Mr Sahay recently met Kishore Biyani of the Future group to discuss inclusive growth in the retail sector. The Future group, Reliance Retail and the recently-formed alliance between Bharti and Wal-Mart have huge plans for setting up supply chain networks across the country.