Most farmers, however, want the government to go a step further and make it mandatory for retailers to buy 75% of their produce directly from farmers, bypassing the restrictive 'mandi' auction system.
"Traders and middlemen are sucking our blood. But no political party is talking about our interest because we are not organised like labour unions, nor have deep pockets like traders," said P Chengal Reddy, secretary-general of Consortium of Indian Farmers Associations ( CIFA).
"India has 600 million farmers, 1,200 million consumers and 5 million traders. Both farmers and consumers are benefited by FDI in retail," Reddy added.
Last week, the government allowed 51% foreign direct investment (FDI) in multi-brand retail and also raised FDI limit in single-brand retail to 100%. The move, however, stirred up political dissent with parties such as the BJP, CPI(M) and TMC demanding the government drop its plan as it would cost millions of jobs.
But big farmers are all for retail reforms. Bharat Krishak Samaj, a farm lobby with more than 75,000 members, said it supports FDI in retail on the condition that direct procurement from farmers is made mandatory. "Till it is a law, nobody is going to follow it. Everyone is bothered about shopkeepers," chairman Ajay Jakhar said.
Farmer leaders say the stranglehold of middlemen and traders is at the root of rural poverty and India's food inflation.
CIFA's Reddy said farmers' biggest problem is marketing. "Farmers declared a crop holiday in Andhra Pradesh because they couldn't sell. Cotton farmers in Maharashtra committed suicide because they couldn't sell," he said.
"FDI in retail will open alternative avenues of sale for us," Reddy added.
He said the mandi system does not favour farmers because they lose 5% of the value in transportation, 10% in broker commission and 10% in quality parameters. "Direct purchase by large retailers will solve this problem."
The thumb rule of price rise from a farmer to a consumer in perishables such as fruits and vegetables is 1:2:3:4, said S Baskar Reddy, joint director (agriculture & rural development) at Ficci, an industry body. What a farmer sells for 1 is sold at the mandi at 2, which becomes 3 at the mandi at the consumption centre and 4 when it reaches the consumer through a retailer.
Farmers near urban areas are already finding ways to circumvent the mandi system and reach the consumer directly. For instance, 23-year-old farmer S Chandrasekhar drives 10 km every Sunday to sell fresh vegetables to joggers and walkers on Chennai's Besant Nagar beach. Some 1,160 km away, Shriram Gadhave, president of All India Vegetable Growers Association, organises buyer-seller meets at Thane and surrounding areas to facilitate better price recovery. "FDI in retail will give us an instrument to get better prices and help consumers as well," Chandrasekhar said.
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