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FEELING THE HEAT

Why Reliance is announcing that farming isn’t part of its gigantic ambitions

REUTERS/Shailesh Andrade
Never say never.
  • Niharika Sharma
By Niharika Sharma

Reporter based in New Delhi.

Published Last updated

India’s thousands of protesting farmers have finally grabbed the attention of the country’s richest billionaire. On Monday (Jan. 4), Mukesh Ambani’s Reliance Industries issued a statement speaking to those farmers—describing itself as their friend and not a rival.

Many of the farmers who have flocked to India’s capital since November to voice opposition to farm laws introduced by the Narendra Modi government this year believe that these “reforms” will benefit Reliance and other large corporations whose grocery and delivery businesses aim to reshape how Indians buy food. The firm said their fears are unfounded.

“Reliance has nothing whatsoever to do with the three farm laws currently debated in the country, and in no way benefits from them,” said the firm. “As customers of their services, we believe in building a strong and equal partnership with Indian farmers on the basis of shared prosperity, inclusive development and an equitable New India.”

The new laws, which allow the market to have greater say in the pricing and sale of farm products, could shake up a decades-old system which though unwieldy, offers some pricing protections to farmers. Farmers worry that this could mean they are roped into contract farming arrangements where corporations operating large-scale grocery businesses set the prices for their produce—or that corporate farms could supplant them.

Reliance, for example, operates the Reliance Fresh chain of grocery stores through its subsidiary Reliance Retail. The retail arm, together with telecom subsidiary Jio Platforms, has also launched JioMart, an online grocery service in partnership with Facebook’s WhatsApp messaging platform. Its JioKrishi app, meanwhile, is setting up a farm-to-fork supply chain.

But the company said today that neither it nor any of its affiliates have engaged in “‘corporate’ or ‘contract’ farming in the past, and have absolutely no plans to enter this business.”

“Reliance has never entered into long-term procurement contracts to gain an unfair advantage over farmers or sought that its suppliers buy from farmers at less than remunerative prices, nor will it ever do so,” RIL’s statement read.

Why is Reliance speaking up now?

Reliance’s explanation is clearly aimed at cooling down farmers who have been protesting from more than a month—and whose protests appear to have turned to telecom arm Reliance Jio as talks with the government drag on.

Reports have emerged in recent days of Jio telecom towers being damaged in the farming states of Punjab and Haryana. In December alone, more than 1,000 of Jio’s 9,000 telecom towers in Punjab were vandalised. Jio, a unit of Jio Platforms, is the gleaming new crown jewel of the conglomerate’s expanding tech business.

The farmers have argued that the new laws have been drafted under the influence of business tycoons, and will allow private market forces in a sector that has been largely regulated by the government. At present, farmers take their produce to wholesale markets or mandis governed by the Agricultural Produce Market Committee (APMC). The APMC in every state decides the prices it will pay the producers, and then sells them further up the chain. But the new reforms will allow the creation of private wholesale markets, which farmers think will lessen the protections they currently get.

Along with its assurances to farmers, Reliance said in its statement today that it has approached the Punjab and Haryana High Court pleading that the government safeguard its assets and services in the two states against “miscreants.” It was careful not to allege that farmers were behind the vandalism, but instead blamed business rivals.

Reiterating that Reliance isn’t hurting farmers, Ambani’s firm said that in fact it is playing a significant role in benefitting them.

“Reliance Retail has built India’s largest organised retail business by investing in economies of scale and creating world-class technology-enabled supply chains, which has brought significant gains to both Indian farmers and consumers,” it said.

It also said that Jio’s cheap 4G data is “bringing the benefits of the digital revolution to crores of Indian farmers.”

Reliance’s supply chain promise

Reliance is banking on its recent partnership with Facebook to strengthen the expansion of JioMart, an online grocery channel that won’t make or store its own products. Instead, it will procure from around 30 million small and medium-sized mom-and-pop shops, not from farmers.

As for its offline venture Reliance Fresh, which sells food grains and staples, fruits and vegetables and is a part of Reliance Retail, a wholly-owned subsidiary of RIL, it deals directly with various independent suppliers, who are mostly middlemen in the supply chain.

Reliance in its statement today said it will insist that its suppliers pay fair prices to farmers and adhere to the Minimum Support Price (MSP) mechanism, which the government offers as a safe haven to farmers if there’s a sharp price fall during a particular growing season. The farmers believe that with a shift to a more market-based system, the MSP will lose its teeth.

“We shall insist on our suppliers to strictly abide by MSP mechanism, and/or any other mechanism for a remunerative price for farm produce, as may be determined and implemented by the government,” Reliance said.

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