Small farmers benefit less by selling their produce to supermarkets
Though selling to supermarkets increases the income of small farmers, not all are equipped to take advantage of the opportunity, according to a research report by the Tata-Cornell Institute for Agriculture and Nutrition (TCI) at Cornell University.
It also found that there was a 14 per cent increase in the incomes of farmers who sell to supermarkets, but small, asset-poor farms are less likely to get that benefit. “As India continues to develop and urbanise, the role of supermarkets in the country’s food system will only grow,” said TCI Director Prabhu Pingali., also a professor in Cornell’s Charles H. Dyson School of Applied Economics and Management, with an appointment in the Department of Global Development in the College of Agriculture and Life Sciences (CALS). “Understanding how this affects smallholder farmers and why is imperative to ensuring that they benefit from this growth,” he said.
Impact of selling to supermarkets
Researchers analysed field surveys of farm households in four States to determine the impact of supermarkets and under what circumstances farmers could benefit from selling to them.
About half of the respondents in the survey said they sold crops to supermarket procurement centres in their villages, while the remaining farmers preferred to sell through traditional markets.
The study found that the net income of a farmer selling to supermarkets was ₹83,461 compared with ₹71,169 for a farmer selling in traditional markets.
It also said that farm size was generally not a predictor of whether a farmer sold to supermarkets, still it was found that smaller farms were less likely to do so, possibly because of a lack of resources. “Specialised vegetable farms and those equipped with irrigation were more likely to sell to supermarkets,” the report said.
Providing option
Lead author of the study, Chandra Nuthalapati, said the study provides policymakers with a number of options to help small farmers take advantage of modern retail markets, including incentivising the expansion of procurement centres in rural areas and investing in irrigation and vegetable-production extension services.
“Policymakers ought to encourage the continued growth of supermarkets while simultaneously investing in services and infrastructure that may empower more farmers to sell to them,” Nuthalapati said.
Supermarkets have spread rapidly in India over the past 20 years, although presently food retail tends to be small-scale and fragmented.
Some experts predicted that the rise of supermarkets and their procurement centres in rural areas would reduce farmers’ transaction costs and improve their access to markets. Others, however, feared that smallholders would be squeezed out by supermarkets’ high standards for quality, consistency and volume.