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Myth no. 4: Value Chain Short-Cut

The popular belief is that FDI will help remove the layers of "Traders", those anathema of free-markets and social revolution (/sarc) from the food value chain.

Unfortunately, the value of Traders is very different from the popular perception. Yes, there are numerous incidents of high handedness and arrogance which almost always seem to converge in farmer suicides and hence it is bad. However, the truth is, in the country where farmers are under-banked and the scheduled bans balk at giving farm loans, traders perform an important financial function.

Most of the problems that we frequently come across are mainly in the rain-fed irrigation where the possibility of crop failures are very high (and seasonal). You will not find much crop failures in irrigated lands and as such the role of the "traders" in these parts of the countries is very beneficial.

The present status quo relying on Traders to provide financing to the farm activity is not sustainable and feasible, however until such time as universal financial inclusion and generous farm credit is available, these particular brand of traders will be indispensable to the economic activity. And all bets in, that the most beneficiaries of new regulations will be Traders, all you have to now do is to calculate who the penultimate losers would be. Time and again it will be in two phases, first will be the local manufacturers and second, the customers.



Value chain in Agriculture and Food retail

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