Supermarkets and Rural Inequality in India: A Case Study of Reliance Fresh

Abstract

Drawing upon insights from growing strand of value chain literature, this article examines primary data collected from farmers supplying cauliflower and spinach to Reliance Fresh in the outskirts of Jaipur to understand the implication for farmer households of emergence of supermarket in a smallholder-dominated setting. The article finds that as a lead firm, Reliance Fresh is adopting flexible models of sourcing, devoid of any resource provision, to procure fresh produce of required quality and standards. In such a context, the barrier to participation of smallholders in supermarket-driven agri-food system varies across crops, depending on resource intensity of crops. Participation of smallholders, poorly endowed with human and physical capital, is limited in resource-intensive crop, such as cauliflower, because of high entry barrier in terms of requirement of assets. In contrast, entry barrier is low for smallholders in labour-intensive crop such as spinach, but competition among them, endowed with family labour, bid the rent down to the minimum. Gini decomposition exercise indicates that the emergence of supermarket-driven agri-food system has adverse distributional consequence in rural agrarian setting. Promotion of wholesale market with better infrastructure and encouragement of farmer federation as institutional innovations are suggested for inclusive agri-food marketing system.