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Entry of retailers in agriculture in UP on hold

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(Following is the first in series on state government’s views on retail)

Not to anger farmers, Uttar Pradesh government has decided to keep on hold the decision to allow big retailers from selling agricultural products in the country’s biggest market.

“The government cannot risk going against the wishes of the farmers and there is need for consensus among them since farmers are divided on this issue,” a top official told Indiaretailing.

With a population of 16 crore, organized retail has been eyeing the state and Reliance Retail within days of launching its outlets was forced to close them and retrench about 1000 employees as it faced violent protests.

Reliance Fresh had plans of investing Rs 9,000 crore in the state over the next three years and opening about 200 outlets.

Asked about government’s stand on the matter, the official said it was “as good as buried” since outlets remaining open could cause law and order problem.

“We are in no hurry….let there be a consensus on the issue of allowing the big companies in retail trade…only then could they be given permission,” the official said.

“Although there is a section of the farmers which is in favour of retail trade but unless there is unanimity on this issue it cannot be allowed,” he said.

Local traders, the opposition parties and farmers are against entry of the big companies in retail trade though a section of the farmers body, Bhartiya Kisan Union (BKU), and some farmers’ organisations have protested the government decision.

The non-serious attitude of the state government to retail is evident from the fact that the committee, which was formed to consider the feasibility of allowing big players in the retail business had held only one meeting since its formation over a month back.

“The committee headed by the cabinet secretary had met once but nothing concrete could come out of the meeting,” said the official.

“The problem in allowing the big companies in the retail trade of agricultural products is that they buy the products directly from the farmers and not from the wholesale `mandis’ set-up for the purpose of their marketing”, he said.

“Once you allow these companies to procure products directly from the farmers you literally do away with the chain of middlemen. The products will not then come to the mandis and the big players can sell them at a relatively cheaper price rendering lakhs of small vendors unemployed”, the official said.

However, the U.P. government made an attempt to appease organized retail by allowing voluntary contract farming but had to withdraw the decision as it came under attack from farmers and opposition Samajwadi Party.

But, the state government has no objection to the sale of non-agricultural products by retailers and this was why Spencer faced no opposition.

Lucknow Bureau

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