Briefing Room


Amy Cohen dishes about the ‘supermarket revolution’ and its effects on developing countries

August 13, 2013 | Faculty

What are you researching currently?

I am working on a project that examines what is at stake when developing countries regulate their food markets around the imperatives of large, corporate supermarket chains. Supermarkets, so common in the West are now dramatically altering the economic, social, and political landscape for farmers, traders, small retailers, and consumers throughout the developing world. We typically think of supermarkets as changing the retail experience for consumers, but the rise of supermarkets also transforms supply chains in fundamental ways. Farmers, brokers, agents, wholesalers, and traders are all affected. As a legal scholar, I am especially interested in studying how particular legal rules — rules governing, for example, land use, contracts, and competition — have enabled India’s current configuration of agricultural markets, and how supermarkets desire a different set of legal rules that better serve their interests.

What makes India a particularly important or interesting place to study the development of supermarkets?

Well, let me begin by saying a bit about supermarkets more generally. Supermarkets wield tremendous control over the organization of food distribution systems throughout much of the world. Largely an early-20th century, U.S. invention, supermarkets initially sold to consumers what was available from producers, processors, and manufactures who had been the dominant actors in food systems. Over the last few decades, supermarkets have reversed the way power flows in food supply chains. They now dictate what kinds of goods get produced, processed, manufactured, and sold. Moreover, in many Western countries, just a handful of supermarket chains control the vast majority of food retail sales. Over the past two decades, supermarket chains expanded their global reach enormously in the developing world.

India, however, is a latecomer to what scholars have called the “supermarket revolution.” This is in part because when India began on a path of economic liberalization in the 1990s, it deemed the retail market too sensitive to allow foreign direct investment. Citing concerns with economic growth, however, in September 2012, the Indian Cabinet reversed its longstanding exclusion of foreign direct investment (think, for example, Wal-Mart) in food retail. At the same time, Indian business conglomerates are now devoting billions to developing their own domestic retail outlets often with global chains as consultants. So among the many other factors that make India so interesting to study, corporate retail there is very new, very contentious, and still just a tiny fraction of the retail market.

Did you see a lot resistance to supermarket chains when you were on the ground in India?

I spent five months in the east Indian state of West Bengal, where supermarkets have met with especially intense political resistance, including organized protests by small retailers and traders. To that end, the state government has adopted a number of protectionist legal measures designed to discourage corporate investment in food retail. And it is not difficult to understand why: In a country where retail (and mostly small-scale retail) is the second-largest employer after agriculture (and mostly small-scale agriculture), supermarkets stand to have significant effects on future opportunities for capital accumulation and, with it, the social well-being for millions of Indians.

Where do you think the future of food retail in India is headed?

It’s hard to say. I think any policymaker should ask how different kinds of markets for food stand to advance or harm the interests of the majority of India’s citizens who are poor. From this perspective, there is a good deal of value in the status quo. Existing markets are spaces where numerous economic actors can sustain themselves and their dependents through longstanding market relations while circulating food throughout the country via methods, I should add, that depend far less on fossil fuels than the highly capitalized supply chains of the West. Small farmers and traders also often survive on very thin profit margins, keeping prices low for consumers. But at the same time, in the traditional supply chain, small farmers and small traders are often beholden to more powerful wholesalers, brokers, and moneylenders, who govern via extralegal rules and the opaque patronage of the state. The existing system would therefore surely benefit from legal and economic reform.

Yet, at the same time, I agree with Indian activists that the answer to India’s food markets cannot be corporate domination. Most basically, supermarket-led development means that large retail chains will restructure food markets in their own interests. There is plenty of evidence to suggest how this will unfold. Throughout the world, the unprecedented economic concentration in food retail has coincided with growing economic inequality in food distribution and consumption. As food scholars Philip McMichael and Harriet Friedmann have persuasively argued, our current food system explicitly “differentiates by creating distinctly different types of food for rich and poor consumers, including distinction by price (Whole Foods versus Wal-Mart), and nothing for those without money.” This growing divide between the classes of the rich and poor suggests deep inequalities and failures in global food markets.

What gives me hope is that in India, ideas of social welfare remain closely tied to populist political strategies, activist demands for democratic self-governance, and the economic self-interest of the hundreds of millions of entrepreneurial Indians whose livelihoods depend on servicing the country’s existing food supply chains. Taken together, these forces may be able to mount a sustained ideological and economic challenge to the market dominance of just a handful of domestic or multinational supermarket chains, and perhaps also generate some practicable suggestions for market reform.