Problems and Prospects of Food-Retailing in the State of Uttar Pradesh (India)

By Singh, Rakesh; Badal, P. S. et al. | Journal of Services Research, October 1, 2008 | Go to article overview

Problems and Prospects of Food-Retailing in the State of Uttar Pradesh (India)


Singh, Rakesh, Badal, P. S., Kushwaha, S., Singh, H. P., Singh, O. P., Sen, C., Journal of Services Research


INTRODUCTION

After independence, India's food policies were formulated under extreme food shortage, chronic poverty, acute scarcity of foreign exchange and greater demand for subsistence crops. But over a period the scenario has changed from a condition of scarcity to a condition of food surplus (Table 1), increase in purchasing power, huge reserves of foreign exchange and rising demand for processed and high value food products. Improving farm productivity, competitiveness and diversification towards high value farm products have become important. As per the population census 2001, about 228 million people in rural India, equivalent to 56 percent of total labor force, are farmers and agricultural labourers. In 2005 National Sample Survey Organization (NSSO) estimated that farming households account for 60 percent of households in rural areas and direct income from farming activities account for over 50 percent of farm households. Agriculture will continue to play the role of the biggest employer in future as well.

In the history of agricultural development of India, we find that the first phase (1950-1966) of agricultural development was possible through Institutional Reform i.e. land reform measures and mega irrigation project. The credit for second phase of development goes to Green Revolution in Agriculture which was possible through technological changes i.e. in the form of high yielding varieties (HYVs), use of chemicals, irrigation etc. However, in present scenario stagnation in agricultural production has taken place. Monthly income of farmer's household is very low and it is expected that next phase of development is possible through marketing reforms and promotion of food processing sector. Food retailing comprises a large segment of retail sector, accounting for about 63 percent of total retail sales. With an estimated 15 million retail outlets in the country, the retail sector contributes about 10 percent of GDP and employs 6-7 percent of the labour force in India second only to agriculture (Bajpai and Dasgupta, 2004). At an estimated Rs12.8 trillion in 2006, India's retailing sector makes up close to 40 per cent of the country's GDP. Of this, food and grocery (F&G) items account for a significant 74 per cent of total retail sales across both, the organised and unorganised sectors. Only one per cent of the food items retailed in India flow through the organised retail channel. There exists ample scope in organised retailing in agri-food sector. Therefore, it becomes necessary for all the state governments to exploit the opportunities of changing scenario in agri-retail sector in order to increase prosperity and standard of living of rural people.

Uttar Pradesh is the largest producers of various agricultural products (Table 1). The state with annual production of 41.8 million tons of food grains (22 percent of the Country's total production) from 17.48 million hectares of cultivated land, contributes significantly to the national food supply.

PROBLEMS/ CONSTRAINTS OF AGRICULTURE SECTOR IN U.P.

With 166 million people, it is home to one-sixth of the nation's population and almost one-fifth of the country's poor, and ranks below the national average in a wide range of economic and social indicators. The state's prosperity gap is also widening, per capita income was 3 percent lower than national average in the early 1950s, but it had slipped to 38 percent lower by 2000. Almost 80 percent people of UP lives in rural areas, and out of these, 21.5 percent or more than 28 million, live below poverty line. Agriculture is the dominant economic sector of the state, employing 67 percent of the labour force and contributing 36 percent of state's GDP. But this sector exhibits weak and uneven growth in production, averaging only 2.2 percent annually over the last decade, and just 1.2 percent annually over the last five years. In the present era of globalization, agriculture is facing some new challenges which relates to linking farmers to modern supply chains, lack of technical knowledge to meet stringent quality and food safety standards along with export competitiveness due to sanitary and phytosanitary measures. …

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