ONE of the most sensitive initiatives by Reliance Retail since its foray into the farm sector in Kerala in June 2007 was its attempt to procure rice from Kuttanad in Alappuzha district, where farmers have been in distress for long because of falling prices, labour shortage, high cost of inputs, shrinking area under cultivation, opposition to mechanisation, and high wages.
Kerala, a chronically food deficit State, faces a serious shortage of rice this year following a steep drop in the quantity of rice available in neighbouring States for procurement for the public distribution system and by traders in the open market.
In March-April, as prices in the open market shot up and before a calamitous spell of rain wiped out the summer rice harvest in many parts of Kuttanad, Reliance nearly clinched a deal with farmers of some self-help groups under the Kuttanad Development Society to buy two varieties of rice. Fr. Thomas Peelanikkal, KDS chairman, said one of these was a type of value-added rice produced using an indigenous process typical of Kuttanad and the other was an ordinary mill variety. Both were marketed by the KDS under the brand name Karshakan directly to consumers through convents, hostels and a farmers market at Pala in Kottayam district as a measure to help the farmers and not as a business venture, he added.
Though the negotiations were kept confidential until the very end, the deal fell through at the last minute, just before torrential rain caused extensive damage to the summer harvest. A company official told Frontline that the farmers backed out at the last minute because of political compulsions.
Fr. Peelanikkal said Reliances representatives had offered to buy rice from the KDS, especially the traditional variety, at around Rs.16 when the governments procurement price (for paddy) was Rs.8.50 a kg. But before the deal was struck, the government revised the procurement price to Rs.9 a kg and again, after the rain havoc, to Rs.10.50 a kg. Yet the company wanted us to stick to the price agreed upon earlier and that was not acceptable to the farmers, said Fr. Peelanikkal.
He added that the company wanted to sell the Karshakan brand at its outlets at a higher price than what we were offering in the local markets. Moreover, we also disagreed on the transportation charges we had to meet to deliver the rice to the companys godown in Thrissur, he said.
Fr. Peelanikkal said that farmers, even when they refused the deal, were aware of the benefits of selling to Reliance Retail: an assured market and the price, in cash, immediately. That would any day be considered a godsend in Kuttanad, where farmers wait months on end for the money the government owed to them for paddy sold to the State Civil Supplies Department, he said.
However, he said, the farmers were also well aware of the dangers of entering into an agreement with a big retail chain. We knew that they were merely seeking an entry into the market and that, in the long run, they would ease us out, buy directly from farmers or even start contract cultivation on their own. But the attraction of an assured market and the immediate payment it offered was something that most farmers in Kuttanad would find hard to refuse, he said.
R. Krishnakumar
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