Great analysis in today’s paper on how the Indian government is establishing commodity exchanges in rural towns to enable farmers to bypass the middlemen who have traditionally controlled the route from farm to market.
In August, we looked specifically at the role of middlemen in the mango market, with an article and a slideshow. In that case, big retailers, including Walmart, were trying to deal directly with farmers both to cut their own costs and, they say, to help farmers become more efficient with advice from agricultural experts (and, of course, to increase their profits).
Traditional forms of business are a real burden on economic development in India and are also complicated to dismantle. These functions have existed for centuries and the deeply embedded role of caste – middlemen often pressure farmers to sell to them on the basis of shared caste – make it hard to break out of this cycle, particularly in less well-educated rural areas.
An Indian sociologist who has studied and written extensively about caste – and also had a role advising a professional services firm in India – once told me that the best hope for breaking down the caste system and, thereby encouraging social and economic development, was urbanisation. The rural and agricultural economy is hugely influenced by caste because profession and social class are inextricably linked. In cities, the professor said, these ties are broken.
Business and social change can sometimes be a good thing.