Why I love supermarkets
If I ask people whether they prefer to shop in supermarkets or at their local kirana (grocery shop) I get mixed responses. Supermarkets after all have started to proliferate only in the last 5 years or so and some people are still not comfortable shopping here, except occasionally. They prefer the local grocer as they have a personal relationship with the fellow and perhaps feel some amount of loyalty towards him. Home delivery and credit which the local grocer provides is also a big plus and well, so is distance. Not many people are lucky enough to live within walking distance of a supermarket. And that is what we Indians are used to…walking to the corner store.
Supermarkets are a boon
Having moved cities every couple of years, finding a good kirana shop was never an easy job for me. Local retailers give you the best service if they know you, and you speak to them in their own language, which is usually the language of the region. And there is also no way you can know which retailer is honest and which one suits you best if you are new in the neighborhood. One is forced to learn by trial and error. And having juggled work and home for many years, for me shopping at these small shops had become far too time-consuming. One had to wait patiently for the retailer to measure out each item one by one. If there was a crowd of people at the shop, it meant a longer wait. Somehow I am the kind of person who doesn’t like stuff home delivered. I like to pick my own grains from a myriad of different qualities available and I like to feel the vegetable and fruits with my fingers before I buy them. Totally impractical, but then supermarkets allow me to do this without anyone breathing down my neck.
Besides, with vegetable and fruit sellers it was always this endless bargaining process which one had to go through and I had tired of it.
At supermarkets, I worry less about being cheated. Or rather if there is cheating, I know it applies equally to all customers. Somehow it really upsets me if I am charged a different price from a customer whom the retailer likes more. Therefore for me supermarkets have been a manna from heaven.
Supermarkets are good for the country too…they help curb inflation
A recent study by Assocham tells us how middlemen are contributing to the present inflation in India and what the country needs is more supermarkets which will give the farmer direct access to the final seller. Instead we have the wholesaler buying from the farmer and selling to a semi-wholesaler who sells to the retailer and as a result prices get inflated. And these middlemen take far more than they should.
Inflation is at 7.41 percent (March 2008), at its highest since November 2004 and this is being caused by increase in prices of metals, food and fuel. Middlemen have helped raise prices.
The price paid to the farmer for his produce has gone up by only 33 percent in the last 5 years, but the price that the wholesaler (who buys from the farmer and sells to the retailer) has gone up by 60 percent. And the retailer too is taking a higher profit than he did before.
The President of ASSOCHAM says:
The Wholesale Price has benefited multiple times middlemen and traders, particularly for sale of essential commodities and worst hit in the process remained farmer and consumer as farmers margins squeezed badly with consumers paying unreasonably higher prices…The ASSOCHAM Chief, however, hoped that with the big retail players (supermarkets) like Reliance, Subhiksha etc. opening up their chains of retail outlets, consumers would benefit and farmers get reasonable price for their produce as organised retailers source their supplies directly from farm land for end users without involving middle men in the process.
Two examples that are eye-openers:
- In 2007-08 the farmer got just 0.70 percent more (over the previous year) for the price of Arhar dal, but the wholesale price jumped up by 32 percent!
- For gram dal, the farmer got an increase of just 0.70% in 2007-08 over the previous year, but wholesalers sold the dal after jacking up the price by 42 percent! And then retailer take a further margin of 20 t0 35 percent.
Farmers suffer alongwith consumers
A quote from the Commodity Markets Regulator, Forward Markets Commission (FMC):
The study is an eye opener and confirms what farmers and consumers have experienced all along. It is the traders who corner stocks buying at lower prices at harvest time and selling at higher prices later. The profit they get is disproportionately higher than the value addition. risks taken vis-à-vis the value addition and risks taken by the farmers.
The FMC suggests the following measures:
- Primary suppliers and corporate retailers need to buy directly from farmers
- Another way is to encourage farmers to store their own stocks in godowns and banks should allow loans for this purpose
- The government should be extremely strict with unscrupulous traders and book them under essential commodities act
- Public also to be vigilant and bring to notice of the authorities of any untowardly high prices.
While Inflation is a world wide phenomena today and so is food shortage, some of our peculiar problems are helping Inflation along. Large scale hoarding by middlemen is one of them.
- Import duty on all crude edible oils, including palm and soya, to be abolished
- Export of non-basmati rice and pulses is banned
- Import duty on butter and clarified butter (ghee) has been cut from 40 per cent to 30 per cent
- The 15 per cent import duty on maize (for imports up to five lakh tons) has been abolished
- States have been asked to impose limits on commodity stocks with middlemen and take stringent measures under the Essential Commodities Act to prevent hoarding
- Steel producers have been asked not to raise prices
- Cement export has been banned
- Warehouses of traders in Maharashtra and Delhi raided last weekend while Andhra Pradesh and Gujarat have imposed stock limits to prevent hoarding
More measures are to be taken by the RBI about which we will know by the end of the month. There is an indication that the RBI is thinking of increasing interest rates to reduce liquidity.
(Photos are by me)