Understanding the role and implications of FDI in agri-food markets from a value chain perspective: case of multi-brand retail trade (MBRT) FDI in India

Abstract

An efficient agricultural marketing system plays vital role in stabilising consumer prices, reducing post harvest losses and improving farmer’s income. It also optimises resource use, and facilitates growth of agro-based industry and enhancing value addition. The essential component of improving marketing efficiency is linking the farm gate with retail outlets. In India the marketing system is also changing from traditional retail to modern organised retail. The essential difference between traditional retail and modern organised retail is that in traditional retail, marketing passes through a number of intermediaries, whereas direct procurement or procurement through big procurement agencies is the practice followed by modern organised retail. The success of modern organised retail in agricultural sector depends on strong forward and backward linkages. The high food inflation during the recent year has both supply and demand side explanations and it calls for increased production and also investments in post-harvest marketing, and management of food commodities to reduce losses and improve efficiency of supply chains through favorable policies. Supply chain management is more important in the sector of agribusiness because most of the agricultural products are perishable and have a very short shelf life.