Chain reaction

Published : Jul 13, 2007 00:00 IST

Direct procurement and sale of vegetables by big players has hit business badly in the Koyambedu market in Chennai.


Shortly after midnight, when Chennai sleeps, the wholesale market in Koyambedu comes alive. Not even the rain or the smell of cabbage leaves rotting in the slush can halt the milling crowd. Selvaraj, a trader in tomatoes for over 30 years, too, does not fret about the filth. With his business in jeopardy, he has little time for the finer aspects of life. He has been observing changes in the market for about four months. "Earlier, trade would be hectic till noon, but now business turns dull by 7 a.m.," he says.

Selvaraj knows that it is not just the bad weather. There is consensus among traders in Koyambedu that the entry of Reliance Fresh in the city is to blame for their plight. They estimate that the turnover has declined by 20 per cent to 50 per cent in the past few months. Nearly every segment along the supply chain is feeling the pinch. Small shop owners and street vendors are the worst hit.

Duraisamy supplies fruits to 300 shops, Rs.50,000 worth of them on credit, almost every day. He says many vendors from across the city "are complaining about falling sales" as a result of Reliance's expanding presence. He points out that the presence of smaller chain stores, which sold imported fruits, did not hurt them this badly.

About a lakh men and women depend on Koyambedu for their livelihood. There are 2,646 wholesale and retail shops selling fruits and vegetables. More than 5,000 people seek daily wage labour here. Among them are migrants from Dindigul, Tindivanam, Villupuram in Tamil Nadu, and from Andhra Pradesh. There is little work for them these days.

Wholesalers and commission agents are now pitted against Reliance, which buys directly from farmers. S. Chandran, a vegetable merchant and commission agent, says the company "has identified areas where the yield of specific items is good and has approached farmers there to sell exclusively to them". As a result, "only second-grade vegetables arrive here," he says.

Madivaanan, a trader, has recorded a 40 per cent drop in the arrival of gourd, brinjal and lady's finger from Tindivanam and Villupuram because of direct purchases by Reliance. He would invest about Rs.10,000 an acre for the crop, but now the farmers are changing loyalty. "They fall for the money offered to them," he says.

Traders also accuse Reliance of selling "rejected stock" at throwaway prices. K. Ezhumalai, who supplies vegetables from Koyambedu to hotels in the city, is unable to compete with the discount the company offers on unsold vegetables. He was earlier supplying vegetables to 10 hotels, but in the past three months three hotels have cut down orders.

The viability of the Koyambedu market was ensured by legislation enacted in 1996, which conferred monopoly status on it by prohibiting wholesale trading in perishables anywhere else in the city. The complex was built here to decongest the Kothaval Chavadi marketplace. The State government invested close to Rs.50 crore in the market. The infrastructure, built at considerable cost, is now in jeopardy because big business has other plans.

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