“Neither of the business groups procure foodgrain from farmers” – Mukesh Ambani on Reliance Jio clarification; yet In one of the first deals between a corporate and farmers – Reliance Retail buys paddy from Karnataka farmers collective?

In one of the first example after Agri – marketing laws were introduced, a significant deal has been struck between Reliance Retail and Swastya Farmer Producer Company Ltd based in Sindhanur in Karnataka’s Raichur district.

The deal wherein 1100 farmers in Karnataka signed an agreement with Reliance Retail under which they would sell their paddy, about 1000 tonne ( Sona Masoori rice variety) at Rs 1950 per quintal (100 kg).
The deal has the farmers being paid Rs 100 above the MSP of Rs 1850 per quintal, according to the Managing Director V. Mallikarjun of Swasthya Farmers Producing Company (SEPC).
Reliance Retail has for the purpose taken on lease a warehouse of the state-run Food Corporation of India (FCI).

However, even though the farmers are getting Rs 100 more per quintal than the MSP, they are required to bear other related expenses such as transport costs, loading/unloading, costs of gunny bags, etc., on their own.
The deal between Reliance Retail and the farmers leads us to a statement made by Reliance Industries very recently, according to which Reliance has assured that the company had no plans to enter contract farming and has nothing to do with the three agricultural laws, against which there have been extensive ongoing protests being carried out by the farmers’ community.

Instead, Reliance also accused its rivals and others of spreading “malicious and motivated campaigns” against Reliance Industries.
However, the recent deal struck with the farmers in Karnataka, wherein the Swastya FPC, which is promoted by NABARD and has roughly 1100 registered farmers, the agreement has the association enrolled as a vendor with Reliance Retail.

The centre has no MSP for the fine paddy variety and has an MSP for common paddy at Rs 1868 per quintal and Rs 1888 for the Grade A paddy.

Beginning of a trend?
According to the President of Karnataka Rajya Raitha Sanga and Hasiru Sene, this is just the beginning of the trend wherein large corporates would enter the Agri market and strike deals to farmers, as the government has given this opportunity.

Moreover, he also expressed his views that small and local millers and traders will get affected by large corporates’ entry as they would be unable to compete with them.

It also highlights the possibility of these large corporates to dictate terms and prices to farmers, and that this trend would emerge in 3 – 4 years as the newness and the current circumstance – the ongoing farmers’ protests – which has the above as the main point of friction between the government and the farmers – the same could be highlighted and proved correct.
Karnataka has about 160 APMCs across the state; about 60,000 traders and middlemen’s livelihood depends on this.

Reliance Statement

Reliance has reiterated that it is not in the business to buy food grains directly from farmers, nor has it entered into a long term procurement contract.

The above clarification came in when Reliance Jio Infocomm suffered losses when their telecom towers and infrastructure were damaged and destroyed. The company had moved to Punjab and Haryana High Court.

In fact, Reliance Jio went further to accuse its business rivals, competitors, and other vested interests of spreading rumors and tainting the company’s image with wrong facts.
The company stated that those parties with malicious intent had launched an incessant and motivated vilification campaign with no credibility and truth against Reliance.

RIL had presented to the courts that RIL nor its group companies were engaged or party to “corporate” or “contract” farming; this is where the contradiction and the white lies emerge – it had, as recently as on January 5, 2021, issued a clarification on the above and as of January 10, 2021 – the news of Reliance Retail purchasing paddy came to be reported.

The attacks on Reliance infrastructure and towers were mostly in the state of Punjab and Haryana; the protesting farmers also called out for the boycott of products and services of RIL and the Adani Group.
In the process, the protestors had cut down and disconnected power supplies to the towers, disrupting phone services.
Reliance Jio, on its part, had sought compensation for the damages and destruction caused to its infrastructure.

Reliance entry into the food business

As early as January 2020, they were media reports that Reliance has plans to enter the restaurant business with a Michelin – star Armani eatery. It planned to launch its food business with a tie-up with Milan-based luxury company Emporio Armani and scheduled to open its first eatery in an upcoming luxury mall in Bandra Kurla Complex, Mumbai.

Mukesh Ambani – the perfect businessman

Reliance industries under the leadership of Mukesh Ambani have been clearing one hurdle after another and, in the process, also setting major business goals.
Through his shrewdness and business acumen, he has made the biggest deals in the year 2020, even as businesses were struggling to survive, and many went kaput in the outbreak of the coronavirus, which bled the economy dry.

However, the story that played out for Reliance and affiliated groups made top headlines and led people to envy the “good streak” that the company found for itself; in the process, it catapulted Mukesh Ambani to the list of top 10 most influential and richest businessman in the year 2020.
While the “good luck” can be attributed to Mukesh Ambani’s grit of producing successes out of nowhere, it has also led him to a place where his friends are few.

The reasons for the same are debatable, but herein lies the fact – as one of the most influential business tycoon of the country and the most successful corporate, Mukesh Ambani led Reliance enjoys a certain closeness with the BJP government.
We know that he shares an excellent relationship with the Prime Minister of the country, Narendra Modi, and many a time, he has been accused of being played a “favorite” and of enjoying “favoritism” from the government.

This has been observed and been pointed out by many, including corporate’s at multiple times. Yet, it has not impacted Mukesh Ambani or his businesses as he continues to do what he does best.

But his shrewdness may have been caught in this instances – where he has very clearly issued a statement and to the court as well that Reliance was not in the business of procuring food grains from the farmers – yet it has entered into a contract and agreement with the farmers in the state of Karnataka to procure paddy albeit at a higher rate than offered by the MSP which anyway does not apply to the paddy bought since the MSP offered by the government does not cover it.

Mukesh Ambani and Reliance need to relook at the statement issued to the public at large and the courts – and clarify the stand and the statement they had made earlier, which, as it turns out, is entirely false.