Small Farmers Gain Less by Selling to Supermarkets: Study Reveals

A study by the Tata-Cornell Institute for Agriculture and Nutrition (TCI) at Cornell University indicates that while selling products to supermarkets might increase small farmers' income, not all are suited to take advantage of this possibility.

The analysis states that small, asset-poor farms are less likely to profit from this arrangement even when farmers who sell to supermarkets have a 14% rise in revenue. "Supermarkets will become more important in India's food system as the nation keeps urbanizing," said Prabhu Pingali, Director of TCI and Professor at Cornell's Charles H. Dyson School of Applied Economics and Management. Ensuring smallholder farmers gain from this development depends on knowing how it affects them and addressing why some are left out.

Influence of Sales on Supermarkets

Based on field studies conducted on farm families spread across four states, the research looked at how supermarkets affected small farmers and found the circumstances in which selling to them may help them.

While around half of the farmers questioned chose traditional marketplaces, almost half sold their produce to supermarket procurement centers in their communities.

Farmers selling to supermarkets had a net income average of ₹83,461, while those selling in conventional marketplaces had ₹ 71,169. Fascinatingly, it seems that a farmer's selling to supermarkets had less effect on their farm size. Smaller farms, perhaps with less finances, were less likely to participate in grocery sales. The survey also revealed that individuals with irrigation and specialist vegetable farms were more likely to supply stores.

Offering Small Farmers Help

The lead author of the research, Chandra Nuthalapati, underlined that the results provide legislators with many approaches to letting small farmers enter contemporary retail marketplaces. These include funding irrigation and vegetable-producing services and motivating the spread of procurement facilities in rural regions.

"Policymakers should encourage the expansion of supermarkets and invest in the infrastructure and services that can enable more farmers to profit from this retail change," Nuthalapati added.

Over the last two decades, supermarkets have spread quickly across India; the food retail business is still small-scale and fragmented. While some analysts contend that smallholders may be excluded owing to the high requirements for quality, consistency, and volume demanded by supermarkets, others are concerned that supermarket procurement centres in rural regions would cut transaction costs and enhance market access.