@ Amit ji, a lot of what I write is to enable me to collect my thoughts for my benefit and for the benefit of those who share the wavelength with me. So no need to reply if you do not feel like. You are like a Bhagwaan ki murti in my write ups. Symbolic that is.
Re.
we've had home grown organised retail chains for about 10 or more yet why is there's still 30 per cent/$12 billion wastage of farm produce every year?
Amit ji I have already asked you to rethink your 30% wastage figure. Avoiding wastage of 30% = = 30% profits on sales = = 360% profit on capital employed assuming 12 inventory turnovers. Would you be willing to sell off your home and hearth to get into supply chain. Since lack of supply chain is what you say is causing this wastage. Also you must show the 1/3rd of trucking capacity that is needed to move this waste out of situ. Which you are yet to do after my last post addressed to you.
Amit ji the link you provided itself says that Supply chain is open to international players since long and yet they are not coming in. Instead they are asking for entry into Multi brand retail. And if think they are not going to come into supply chain till you hand over retail to them as well, well you just wait. You really believe somebody would want to invest in storage and trucking when he can get into real estate and retail and get a large bunch of rent seekers to invest in stocking and trucking. Again your link also says : “Foreign retailers who want entry into India, such as Wal-Mart, say foreign investment is key to minimising waste and lowering prices to consumers.” IOW they themselves are claiming that supply chain is directly linked with savings in farm produce. So why hanker for retail at all. Why don’t they just take up that end of supply chain which they claim will result in this saving. Besides what do think will happen to all this farm produce saved in years of normal monsoon.
Naah not so fast. You cannot take the excuse of ‘exports’ for the simple reason that ‘exports’ can be resorted to even now without any change in situation. Differential costs/benefits are the only relevant consideration. Export option does not constitute a differential cost/benefit.
Will these FDI driven companies stock more of the food grains for the benefit of poor Indians in years of poor monsoon?
And how much can be consumed by people at places where these FDI Retailers are going to establish shops? Accha let me catch the ear from the other side. The prices in Big Bazar and Sunday market are pretty much the same for Bhaji-Tarkari. How many rickshaw pullers do you see in Big Bazar? And you are advocating Walmart which is not as Indianised as Big Bazar is and is never going to get so.
Amit ji I can keep going on and on. Your case is so very weak on every count you have raised that it is almost a boring exercise demolishing it. This 30% figure is the only one I attacked because you are a fellow countrymen and an educated one at that. I would like to stand beside you as you demolish stupidity. I just could not bear to see you suspend your Vivek and instead peddle in utter bull.
BTW the link you post clearly links this 30% figure with not just CRISIL but also Walmart. Do you really think this figure is believable? And when was the last time you invested based on CRISIL ratings which is supposed to be their main business.
ADDED AFTER A RE-READ OF YOUR POST:
The present Mandi system is no doubt in need of some deep changes quite a lot of which require political will. But it is not defunct. I fail to understand how anyone can advocate a wager which is what FDI in retail helping out in management of rotting grains at FCI amounts to. That to, while swearing and cussing the system that has already served for so long. In fact the link you provide gives the exact same conclusions and makes no recommendation for FDI in retail and instead cautions us from following the western example. The FDI in Retail is a sleight for avoiding the right steps and creating fiefdoms.
The soft skills aspect you allude to is again entirely besides the point. How can FDI driven companies help a country gain soft skills when the country in question is a customer care executive to the whole world?
The China factor in the AC context was to establish the existence of level playing field in terms of procurement of inputs. I fail to understand the relevance of your follow on comment on it even after re-reading it 3 times.
Re. Amit ji -
There is a link posted on this page which says that farmers who take all the risk and cost in sowing and farming typically get 20 per cent of what you and I pay at the shops while the middleman who takes no risks or makes any investment gets around 45 per cent.
Amit ji I could not find the link where you say it is. So I am going to take your statement on face value.
Firstly if we take your statement at face value then I fail to understand why indeed the middleman is paid at all if as you say he “takes no risk and makes no investments”.
. Either the farmer is an idiot or the consumer is an idiot if they pay to finance this middleman. At least this middleman is some kind of Djinn who can cast a spell on millions of farmers and consumers. Or (I cannot resist it) why not you and I get into a partnership to exploit this opportunity acting as a middleman. Abhijit ji can also join us. Since I being a middleman will not have to make any investments and take no risks, we can put in a Board/General meeting resolution putting you and Abhijit ji incharge of collections and you can payout my share of the profits as soon as you can collect these.
Ok on a more serious note, and with a few additional inputs, what it implies is if we spend INR 100 then Middleman gets INR 45 but what you fail to tell us is that the middleman pays the price to the farmer at spot rates while the Government MSPs were historically never paid on time. This in a country where I think about 70% of the farmers are classified as Small and marginal and cannot realistically be expected to provide credit to the State. Also you do not tell us that the rate of interest to be paid by the middleman is 30% - 36% on that INR 20 that he pays to the farmers but since there are many farmers and less middlemen so this INR 20 is to be multiplied by the number of farmers that he services. And then he also has to manage the market-making of the whole stock that he actually takes delivery of from the farmer for the simple reason that he has paid spot prices. Amit ji, if you take any route out of Delhi. At various places you will actually see huge open space storages of grains etc covered with Tirpaal/Plastic. That’s your middleman. So this middleman has to manage stockage of this grain. All the while providing employment to village bums who would otherwise take to crime. Amit ji middleman is there for a reason. Had he been actually as useless as he is made out to be, then he would surely have been lynched by now.
Re. Amit ji -
As regards your point that Walmart types "outsource" supply chains to third parties, I can only say "Wow, kya baat, kya baat!"
Strange thing is Amit ji, you actually quoted me say “Well I will go out and say that it make imminent business sense to get somebody else to invest in storages and trucking facilities if one is serious about ones business” and then you went on to twist it the way you did. And I mentioned that much because you have since beginning tied up rotting food grains which to my mind needs trucking and storage with FDI Retailers.
But I am willing to be educated, you see I have not worked for any of the Retailers. I only worked on Balance Sheets, MIS, Commercial laws, Direct and Indirect Tax laws, Financing, Franchisee agreement negotiations, Pricing, Budgeting and now Corporate laws for Services, Trade, Construction, ITES, EoUs, MLMs with a sprinkling of fraud detection in Transaction Banking. Oh also some Manufacturing Balance Sheets. Unfortunately nothing above a 1000 Crores. So what reading material do you suggest when you ask me to “read up some materials about supply chain management in the retail sector”.
