Amid rising unrest, supporters of the Farm Bill inside and outside the government describe it as ushering in a 1991 moment for Indian farming, suggesting that this will liberate farmers from the clutches of state-run mandi's and middlemen-commission agents, paving the entry for corporate players who will offer farmers a better deal.
Critics of the Bill fear this means an 'Adani-Ambani' takeover of Indian farming.
The excitement (and concern) is particularly over what the Bill could mean for India's booming market for fruits and vegetables, valued at an estimated over Rs 5 lakh crore, but which unlike essential foodgrains is free of government support pricing.
For traders, corporate or otherwise, fruits and vegetables offer amongst the highest margins for any food product. A kilo of brinjal, for instance, that the farmer sells for Rs 10 per kg could retail for Rs 18, a markup of about 80%.
In the eyes of the Bill's cheerleaders, the so-called Adani-Ambani entry could transform the purchase and sale of fresh produce to the advantage of farmers and consumers; skeptics fear that horticultural farmers, who tend to fall in the small/marginal category, could face even more price exploitation.
The Farm Bills triggered widespread protests by farmers across the country. (File Photo)
What the cheerleaders (and some critics) omit to mention is this: big corporates have already been buying directly from farmers for a decade, but have not been able to grow beyond 10% of India's lucrative grocery market.
Since the mid-2000's, some of those who have tried their hand, and faltered, at food retail include Reliance (Fresh), Godrej (Natures Basket), Aditya Birla (MORE), Bharti - Wal Mart and Future Group (Big Bazaar).
More recently, online retailers like Grofers and Big Basket have entered the food space.
But despite so much corporate heft, close to 90% of India's fruits vegetables and other grocery produce continue to be sold informally, through the vast , fragmented network of street vendors, thelewallah's and kirana stores, an estimated 12.9 million of them.
Will the new farm bill change that?
It will certainly make it easier, and cheaper for corporates to buy from farmers. Until now, all transactions taking place inside or outside mandi's had to take clearances from - and to pay taxes and cesses to - state governments and the mandi's. In states like Punjab, these taxes could go up to 8%.
Now all non-mandi sales will neither need permissions, nor invoke costly taxes.
But even if corporates are able to buy produce more easily, at cheaper rates, who will they sell to?
To take on India's ruthlessly competitive unorganised market, corporate entrants needed economies of scale, what in industry parlance is called Big Box retail - hangar-sized supermarkets of the sort that dominate food retail in developed economies by offering customers bargain prices. (Think Wal Mart, Tesco, ASDA, Carrefour and so on.)
Indian Big Box retail, however, has remained in an infancy, despite more than a decade of struggle.
Talk to those in the business, and they will tell you that one of the biggest constraints to scaling up has not been mandi / state taxes, but the high price of urban real estate.
Simply put, the cost of renting or buying large spaces in urban India is too high to make corporate grocery retail competitive. Additional overheads like electricity and manpower only push up costs further.
Add to this the other big hurdle -- the shopping habits of Indians. For the organised retail model to work, it requires a sizeable chunk of Indian consumers to switch to the Western-style shopping model of making a weekly or monthly grocery run to the supermarket.
But despite growing affluence and changing lifestyles, only a tiny fraction of elite Indians shop in this manner.
Most Indians prefer to buy their fresh produce every day, (or every 2-3 days); our huge informal network caters to this need superbly, with a thela, redawallah, pavement vendor or kirana store within striking distance, more than willing to make home deliveries, no matter how small the order. (The entry of online food retailers has not altered this significantly.)
Corporate retailers have tried to find a way around this by renting mom-and-pop size grocery stores, turning them into fancier versions of the kirana. This has allowed them a limited foothold in urban high streets, but without the advantages of the economies of scale, this model too has not been able to scale up.
(Moreover, even this trend has seen a push back from some kirana's who have upped their game, reorganizing their stores to look more like fancy supermarkets.)
As K Radhakrishnan, a veteran food retailer, now helming the Tata's entry into food retail told me, 6000 tonnes of fruit and vegetables moves daily through Vashi, Mumbai's biggest mandi.
Organised retailers (Reliance, Godrej et al) servicing India's financial capital only lift and sell 100 tonnes daily.
The bottom line appears to be this: unless urban real estate prices collapse, and Indian shopping habits dramatically shift, the chances that most Indians will have little choice but to buy an Ambani-branded baingan remains slim.
(Sreenivasan Jain and Mariyam Alavi are reporters with NDTV 24x7)
Disclaimer: The opinions expressed within this article are the personal opinions of the authors. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.