Archive for May, 2007

Indians and drugs

May 25, 2007 Leave a comment

It’s not especially surprising to see a BBC article that looks at the start of a potential major positive in a country’s economic position, and then gets the consequences utterly wrong (this isn’t particularly having a go at the BBC for being leftie – the Times, Telegraph and Daily Wail are equally economically illiterate at times). This particular piece is on the introduction of supermarkets into India, and especially the associated Risks and Catastrophes.

Now, while gibbering loons and farmers everywhere bemoan and bewail the presence of supermarkets in the west, it’s clear that they’ve massively improved the quality and availability of food. Even if you’re very poor indeed in the UK, you can afford to eat well as long as you live within reach of a supermarket, even quite a crap one.

In the UK prior to supermarkets, people paid a great deal to buy food from local grocers, a few of whom are nostalgically remembered as good, while most were somewhere between mediocre and downright crooked. The supermarkets were a boon primarily to the poor, and shopping at farmers’ markets today is a badge of upper-middle-class pretension. The local shops have either turned into bastions of poshness or closed down, and good riddance.

I think this is the kind of narrative that charity worker Indu Singh is thinking of in India: “We have already seen that in places where these supermarkets are coming up, local vendors are losing 40% of their business. What we are seeing is a big divide being created, between the super elite and the poor.

But the Indian supermarkets are the opposite of UK supermarkets: they are more expensive than the street markets for basic produce. So the only people who go there are people who are rich enough for the price differential not to matter. And India is still a very poor country, so there aren’t very many people rich enough for the price differential not to matter – even people who are solidly in the middle and upper-middle ends of India’s income distribution are still poor by global standards

Overall, supermarkets in India serve the top 5% income bracket – certainly not the top 40%. So if a street vendor is genuinely losing 40% of his custom to the supermarkets, either that’s because he’s selling the local equivalent of porcini mushrooms and truffle oil, or because his patch is right outside the poshest part of the community. But there is absolutely no way this is being replicated across the community – the impact on regular vendors, especially the poorest ones who sell the cheapest products, will be negligible in the medium term.

The longer term consequences are harder to predict. To roll out its supermarket chain, Reliance has also had to build its own food supply and logistics network, since India doesn’t have one of these to start with. In other words, it collects produce from rural farmers, sorts, grades and packs it, and trucks it via distribution centres to its urban stores.

This is a long way from complete (the plan is to roll out over 1,000 stores, and it currently has 40), but could entirely transform the way India’s agriculture sector works – or, more accurately, the way in which it fails to transport produce to market in a timely fashion, leading to massive wasteage and ultimately driving poverty and starvation. At this point, undercutting the market stalls might be possible, which would be massively beneficial to India’s urban poor. Alternatively, the whole system could fail, and one of India’s richest families would become slightly less so. Either way, it’s very exciting and could do with some better reporting…

In other bloggish news, I’ve got a new article up at the Sharpener on why, even though homeopathy is nonsense, the reason for this is not because we have no idea how it could possibly work – indeed, we have no idea how a huge number of demonstrably effective drugs could possibly work.

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