Oppose the monopolization of retail food trade by private corporations

Recent moves of India’s biggest business houses to gain control of retail food trade pose a grave threat to the livelihood of crores of peasants and small shopkeepers. It also poses a grave threat to the health and wellbeing of the working class and people, who constitute the consumers of food and food products in the country.

Retail trade in India is characterized by the wide prevalence of family-run shops. An estimated 1.2 crore (12 million) small and medium sized shops have 96% share of the market, compared to 80% in China, 60% in Thailand and less than 1% in the United States. The Indian market is attracting the attention of global giants including WalMart, as well as the Indian giants including Reliance Industries, as it is the most attractive market for the trading monopolies to conquer.

It is illustrative to examine the case of Reliance Industries, which is now India's largest privately owned company, with gross revenue of Rs. 90,000 crore ($20 billion) in 2005 and profit of 9,000 crore ($2 billion), which is about 3.5% of the ‘national income’ or GDP of India. In the past two years, Reliance has built 1,250 modern service stations, and already has 15 percent of the retail gas market, with plans to double the number of Reliance stations by December 2006.

Among the most ambitious of Mukesh Ambani's new schemes are the plans to gain control of retail food trade. He has revealed plans to invest over Rs. 22,000 crore ($5 billion) over the next five years to connect farms with markets and ports through a distribution system guided by the latest logistics technology, and enabling $20 billion in agricultural exports annually.

Reliance has already started moving to incorporate small stores into its chain, starting with a trial partnership with the Sahakari Bhandar chain of 19 supermarkets in Mumbai. In just two months, Reliance has renovated, computerized and stocked these stores, with highly profitable results: average store revenue and customer traffic are reported to have tripled. It plans to build a chain of both medium-sized and super-sized stores across India, replacing the lakhs of small grocery shops and street vendors.

Mukesh Ambani claims that if his plans succeed, “consumers will get fresher food at lower prices, rural incomes will soar, farmers will become active consumers, and Reliance will become a WalMart in India.” He is turning the truth on its head.

The truth is that when monopoly capitalists gain control of retail trade, food prices tend to go up and not down. This is mainly because the capitalist monopolies, once they have established dominant market share, engage in monopolistic pricing in their pursuit of maximum profits. This factor more than cancels out the positive economies of scale. Monopoly rents for shop space also feeds into higher consumer prices. In the United States, for instance, where a handful of corporate giants headed by WalMart control retail trade, food is not cheaper than it is in India. Nor is it healthier, as the private trading corporations add all kinds of harmful and untested chemicals to prolong the ‘shelf life’ of packaged food items.

The UPA Government and other state governments are paving the way for the monopolization of retail trade by private giant corporations, thereby threatening the interests of crores of peasants, small shopkeepers and the masses of people who consume the food. Workers, peasants, women and youth must oppose this economic policy orientation dictated by the greed of private capitalist corporations, Indian and foreign. We must demand that the State fulfill its responsibility of ensuring, on the one hand, secure livelihood for the tillers, and on the other hand, adequate supply of essential foods of acceptable quality at affordable prices for all.

In this context, it is necessary for the working class movement to critically examine the stance of only opposing Foreign Direct Investment (FDI) in retail trade. Such a stance is being taken by several parties in the name of defending the toiling masses. However, the slogan of opposing only FDI in retail trade is actually serving the interests of the Indian capitalist giants such as Reliance Industries, who would like to establish their own controlling positions before letting in foreign companies.