Surging vegetable prices brings major retail players under scanner in Kerala

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Retail giants are likely to face the LDF government’s glare in Kerala, this time at their vegetable sourcing end. With the State’s stocks of vegetables and provisions falling to their lowpoints, the Kerala government has vowed a crackdown on the sourcing plans of many retail sector operators in the State.

“Local procurement by big retail players are behind the sudden soaring of vegetable prices in Kerala,” food minister C Divakaran said. According to him, stringent measures will be taken “withing two days” to control the sourcing moves of big retail. Chief Minister VS Achuthanandan has directly initiated the move, Divakaran said.

The State government’s own vegetable sourcing arm - Horticorp or its grocery division Supplyco - are yet to have a direct sourcing tie up with farmers in Idukky while many retail majors have. It is understood that the State government would stipulate that the State-run chains should have the purchase preference in the farm belt.

One may recall that the Tamil Nadu Agricultural University had predicted higher vegetable prices in Kerala during summer.

A market study by a team led by N Raveendran had forcast 60-70% fall in tomato, cabbage and cauliflower yield in summer, translating to huge price rises. Kerala Government proposes to compete with retail majors in sourcing from Tamil Nadu too.

So far, there are about 70-75 retail stores in Kerala, set up by Reliance Retail of Reliance Industries Ltd, Fab Mall of Trinethra Super Retail Ltd and Big Bazaar of Pantaloon Retail (India) Ltd.

Though its four collection points Reliance Retail procures yam, colacasia, bitterguard and snakeguard from over 2000 farmers in State. Plans were also afoot to undertake sourcing of commodities like pepper, turmeric and ginger from Kerala, considering the superior quality of these spices.

Officials of retail firms refrained from commenting on the sourcing curbs since the State Government was keeping its cards too close to chest. “Much would depend on what the Kerala government does rather than what it says,” a senior official of a retail firm told FE.

Meanwhile, the next session of the State Assembly, beginning soon is likely to drop the 10% surcharge on retail players with over Rs 5 crore turnover, proposed in the State Budget.

This is following confusion whether its would affect small traders more than the ‘monopoly players’.