Is being poor an opportunity for the industry to make more money? Seems so in some countries

"Though every one knows that the quality of health is intricately linked to the nutritive value of food one eats, continuous attempts by the food corporates, especially in a country like the US, to feed the population with patently unhealthy high fat and high calorie products with practically zero nutrition are not being resisted by the policy makers. In stead, with their tremendous financial clout and lobbying muscle the fast food industry is trying to kill every challenge thrown at them by a series of small restaurants who offer better products. The latest attempt being tried in this direction involves a war of attrition through steep reduction in prices for many products offered by them, naturally tempting the most resolute consumer with honest intentions to eat only healthy foods! Here is a take on this alarming trend which must be nipped in the bud by whatever policy orchestrations the government can do so that small restaurants are not driven to extinction, snuffing out a healthy alternative to millions of low income consumers.

"THE NATION'S FAST-FOOD giants certainly weren't going to allow a new breed of smaller "fast-casual" chains to eat their lunch without taking action. The industry's fast-casual segment has steadily been winning over customers with products that typically are made with less fat and fewer processed ingredients than the legacy restaurants use. Over the next five years, most of the fast-food market's revenue growth is expected to come from these kinds of outlets — companies such as Panera Bread, Shake Shack, Cosi, and, yes, Chipotle. Instead of taking a cue from the modestly encouraging nutritional trend, fast-food's founding fathers have decided to counter the upstart competitors' higher quality by pitching quantity. They're doubling down on the same high-calorie strategies that for decades have, at least in part, helped make Americans overweight and unhealthy. McDonald's, Burger King, and others are running advertising campaigns that promote fat-rich meals at newly discounted prices. Wendy's started the feeding frenzy in October with a "4 for $4" deal that packages chicken nuggets, a bacon cheeseburger, a drink, and fries. McDonald's earlier this month introduced its "McPick 2," Burger King followed by hyping a $4 promotion that features five items, and Pizza Hut's $5 "Flavor Menu,"includes four 20-oz. sodas, and a Hershey's Triple Chocolate Brownie — "9 squares of warm, oven-fresh goodness." Faced with this kind of marketing onslaught, do fresh fruits and vegetables stand a chance? Many time-stressed Americans can't resist the temptation of relatively inexpensive prepared food they can grab at a drive-through window. And given the choice between spending $5 on food that fills the kids up, or buying a single organic tomato, it's understandable why a budget-conscious consumer might opt for the former. That behavior won't easily be changed. Making wholesome food more affordable and available has long posed a major challenge for health-policy makers. The reasons a burger and fries cost less than lettuce are many and complicated. Food-industry critics often start by pointing to the billions of dollars in federal subsidies that go to corn farmers. Corn is used to feed cattle and chickens, and to produce high fructose syrup. It's key to fast-food profits. "For the last 50 years we've worked on making corn as cheap as possible," says renowned food writer Michael Pollan, who is currently a fellow at Harvard University's Radcliffe Institute for Advanced Study. "Our agricultural policies are at war with our health policies and objectives." Realigning government priorities to encourage farm products with greater nutritional value might help tip the scales, but fresh-food advocates acknowledge that overhauling the subsidy system is politically daunting. "A handful of corporations control our food system from farm to fork," reads a statement on the website of Farm Aid, a nonprofit that backs the so-called Good Food Movement. Indeed. The food industry spends tens of millions of dollars annually on lobbying lawmakers to keep it that way. Lower-income people — many of whom work in fast-food restaurants — are often reliant on processed food out of necessity. Better choices are either not easily accessible, or they're too expensive. Improving the standing of those at the bottom of the economy would give them options. "It's a myth that low-income people don't want to eat healthy," says Pollan. "McDonald's allows many of them to eat meat who otherwise would not be able to afford to. For a lot of people, cheap food is keeping them whole." He suggests it's time to "change the calculus" on pricing. That could be accomplished by requiring fast-food companies to pay the true cost of producing their products, while adding financial incentives — perhaps through subsidies — for commercial sellers and buyers of nutritious food. That could help level out price differences between good and bad food, minimizing cost as the primary factor in consumers' purchasing decisions. More emphasis also should be placed on the savings that could be realized throughout the nation's health care system by turning fast food into an occasional indulgence instead of a diet staple. One example: Obesity increases the chances of developing diabetes, a disease that the Centers for Disease Control and Prevention estimated cost about $245 billion to treat in 2012 alone. The opposition to all of these measures is practiced and well-funded, as evidenced by the barrage of ads. For some corporations, Americans' poor health is good business.  The previously slumping McDonald's on Monday exceeded analysts' expectations by reporting strong sales for the last quarter, mainly because it began offering breakfast all day. That sent the company's stock up at the start of trading. Wall Street, like most of the country, can't resist a Sausage McMuffin."

Many experts believe that the giant corporates selling unhealthy foods are able to sustain their business for long time because of their deep pockets and economic resilience in absorbing financial losses. Besides the mainstay raw material used by the meat industry, Corn is heavily subsidized by the American government in the name of supporting the farmers which is enabling them to make their products at ridiculously low prices. Compare this to the dilemma of the small players who have to buy healthy but costly food ingredients like fruits and vegetables which naturally pushes the cost of the prepared products and unfair competition from low cost junk foods makes their existence precarious. It is time government there comes out with a policy to heavily tax such products with proven unhealthy credentials such as high sugar and high fat containing products and no dietary fiber. Such foods must be put on a par with tobacco when it comes to taxing and there is salvation only if this issue is tackled fearlessly without succumbing to pressures from the "bad food" industry.

V.H.POTTY
http://vhpotty.blogspot.com
http://foodtechupdates.blogspot.com

Changing face of cooking oil business in India-Shift from loose vending to branded products

Cooking oil is an essential component in the budget of every hold in India. Unlike in western countries most Indians consume home fried snacks in stead of depending on the products offered by the industry. Depending on the region preference varies and some of the commonly used oils include that extracted from groundnut, coconut, sunflower seed, sesame,  rice bran, maize germ, soybean, etc but critical shortage of domestic oils during the last 3 decades set a trend of importing palm oil from Malaysia and Indonesia in sizable quantities. To day the number one cooking oil is Palm oil and its fractionated version Palmolein with most people switching over to it for economic reasons. till 1990 oil was packed in square tins of 18 liter size for retail dispensing in consumer's container. Due to development high function plastic packing materials loose vending started declining and to day more than two third of the oil sold in the market is in plastic unit packs under different brands. Probably Indian consumer embraced plastic packed oils because of rampant adulteration of cooking oil on a massive scale by unscrupulous traders and fraudsters trying to make a fast buck. Here is a report on Indian oil market as it is being developed by a few national players and some strong regional brands. 

"There has been a surge in consumer preference for branded and packed edible oil, as compared to the traditional loose-sold variety. In 2012-13, sales of the former category in the country overall rose 30 per cent. And, the share of branded and packed oil in the overall cooking oil segment shot up to 60 per cent from 45 per cent in the previous year. The packed/branded category has a strong presence among regional companies. The share of national brands continue to remain between 10 and 12 per cent. Consumer awareness of the benefits of using packaged oil from a known brand and the ability to afford the higher price for this (termed 'increased financial scalability' in trade jargon) appears to be the reasons for the shift. Also, the difference in prices has narrowed. "The attraction towards branded and packed products is increasing rapidly. Branded and packed edible oil has replaced the loose commodity in urban areas," said Siraj Choudhary, chairman of Cargill India, producer of edible oil brands, such as Gemini and Sweekar and the Indian arm of the US commodity giant, Cargill International. Manufacturers have also started retailing the commodity with value additions, such as promises of various health benefits over the loose ones. Ruchi Soya Industries, the biggest in the branded category, with Sunrich, Nutrela and Mahakosh as leading brands, has posted 17.4 per cent growth in branded edible oil sales, at Rs 5,413 crore in 2012-13. In the fourth quarter, it registered 10.75 per cent growth in branded edible oil sales at 2.1 million tonnes (mt) as compared to 1.9 mt in the corresponding quarter of the previous year. Says Dinesh Shahra, managing director, "We witnessed a staggering growth in branded sales in the last two quarters. Our focus on the growth of these has helped in achieving better margins." A recent paper presented by Dorab Mistry, director, Godrej International, estimates India's edible oil consumption at 17.6 mt in the oil year of November 2012-October 2013, as against 16.6 mt in the previous year. He forecasts per capita edible oil consumption at 13.9 kg in 2012-13, up from 13.4 kg in the previous year. "Shifting is happening very rapidly from loose to branded and packed edible oil, which can be attributed to a combination of factors, including growing prosperity of the middle class and narrowing of the premium over loose products," said Atul Chaturvedi, chief executive officer of Adani Wilmar, producer of the 'Fortune' brand. The premium for branded and packed products has been narrowing in recent years, with the difference between packed and loose varieties now Rs 10-15 a kg and Rs 15-20 a kg between the loose and branded ones. Branded edible oil was earlier Rs 30 - 40 a kg costlier."

The cooking oil prices are escalating practically every day in spite of galloping imports of palm oil products and there is no sign that this trend is showing any abatement. Imagine some of them like Coconut oil and Sesame oil costing more than Rs 200 per liter, almost 100% increase in 1 year, reasons for which are not clear. Though from the health angle experts frown on too much consumption of oils like Palm oil, the failure of the country to increase the production of oil seeds commensurate with demand has given this sector a golden opportunity to reap higher and higher  each passing day! Annual per capita availability of 13.9 kg of oil working out to about 45 gm per person per day is not bad considering that the recommended fat intake is 50 gm per day per person. After all a significant part of fat needs are met through invisible fat present naturally in the diet. The only worrying fact is that every Indian citizen is forced get 50% of his daily requirement oil through imports! A pathetic situation indeed and shame to the Government of India!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

BUSINESS CAN BE A "BINDING FORCE"-THE "PULSE" AGREEMENT

A hungry China is a sure bet for good business for many developed countries as the Chinese foreign exchange holdings are very high sufficient to pay for import of goods required by the population there. USA and Canada are two countries which produce lot of excess agriculture crops including food which are more than that required by their population. Interestingly pulses are never a significant part of neither American nor Canadian diets but still commodities like dry peas and Lentils are produced in these two countries most of which need to be exported. Chinese is also not a legume consuming country and the recent agreement for China to import legumes from Canada is therefore surprising. Here is a take on this new bon homie between Canada and China. 

"We've been told China is a hungry country looking for partners to help feed it. Canada, a country heavily dependent on exports, is emerging as an important player in this quest. China has the ways and means to pay its bills, and represents a superb opportunity for North American farmers. It's becoming increasingly aggressive in wanting to sign food-related deals with the western world. Although it claims to be about 95 per cent self-sufficient in grains, its agricultural trade deficit grew by almost 50 per cent last year, as its population grows interested in an increasingly varied and healthy menu. Among its new interests are pulses — peas and lentils among them, which despite having been around forever are becoming renowned for their exceptional nutritional benefits. Canadian farmers grow the world's best pulses, and last year Pulse Canada, the progressively minded commodity group representing these crops, began collaborating with the Chinese Cereals and Oils Association to pursue new product development using pulses. Pulse Canada says Canadian and Chinese researchers are now working together to introduce pulses into Chinese staple foods such as noodles, steamed breads and dumplings, as well as snack foods and meat products. Last week, Canada and China signed a new memorandum of agreement — in which education, agriculture, science and technology were specifically mentioned — to increase the connection between the two countries, opening even more doors for development as the two countries drive toward a potential free-trade agreement. At the signing of the memorandum, Prime Minister Stephen Harper said the rapidly increasing commercial, cultural and scholastic ties between our two countries are creating new jobs and economic growth. Indeed, this is a hot market and a growth area that Canada does not want to miss."

One is reminded of the historic attempts in the past by the US in expanding wheat consumption in Asian countries like Korea so that the surplus wheat production can be exported to these countries. Organizations like the Wheat Associates were conspicuous by their promotional activities in countries like India till recently and to day wheat has become a standard item in the menu of many erstwhile rice eating nations. Same is happening in legumes also and the presence of agencies representing the growers in the US and Canada are working over time to find markets for their pulses in these places. The unfortunate aspect of this development is that the imported pulses compete directly with domestic produce and with heavy subsidies received by the farmers in these countries the market price for the imported pulses are invariably much less than that of the local produce. China may well aware of these implications while operationalizing the bilateral agreement.

V.H.POTTY

http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

IS BUSINESS GOVERNMENT'S BUSINESS?-NO LESSONS LEARNT FROM THE PAST!

Public sector industrial entities in India are known to be notoriously inefficient unless they are bestowed with some sort of monopoly guaranteeing little or no competition in the market place. Government of India as well as States receive practically no dividend on the huge investments made on these white elephants set up under the old discredited policy of achieving "commanding heights" in the national economic landscape. In the food area every one knows the tragic fate of companies like the Agro-industries Corporations at state levels, erstwhile Modern Bakeries, Civil Supplies Corporations, NAFED, etc and how these organizations were either wound up or sold to private sector or maintained with no hope of redemption,  bleeding the exchequer. If at all government can claim some credit, it comes rom the cooperative sector companies like dairy cooperatives in different states, chocolate cooperative CAMPCO and a few others. This goes to show that doing business is not government's cup of tea! Food Corporation of India, a monolithic and monopolistic company of the government is limping along with no appreciable efficiency and is continuously being indicted for the food grains mismanagement. Kerala State Cashew Development Corporation (KSCDC) was recently in the news regarding its "ambition" to get into value added segment in Cashewnut, already having a monopoly for procurement of the nuts in the state at government dictated prices from the growers. With no worthwhile technical base within the organization their endeavor has very little chance of assuming any significance. Here is a take on this program as enunciated by its CEO.    

"Three years after introducing branded value-added products in the domestic market, the Kerala State Cashew Development Corporation (KSCDC) is all set to roll out new products. The chocolate-coated cashews are the new addition to the innovative range of products by the KSCDC. The technology for the cashew chocolates has been developed by the Central Food Technology Research Institute (CFTRI), Mysore, and the product is poised to be launched by the end of this financial year. They would be available in milk chocolate and brown chocolate varieties and the production will begin at the Kottiyam and Ayathil units of the KSCDC once the machinery is installed. Another product in the pipeline is cashew noodles. Marketed as 'CDC cashews,' the four value-added products now offered by the KSCDC include Cashew Soup, Cashew Vita, Cashew Powder and Cashew Bits.� KSCDC Managing Director K A Retheesh told 'Express' that the sweet and crunchy chocolate cashews are expected to be� a hit among kids. "The vitamin content in cashew is very important for growing children, but many kids are reluctant to have cashew kernels. On the other hand kids will find the chocolate coated ones attractive,'' he said.While cashew kernels contribute to the lion's� share of exports, the value-added products target the domestic market. The turnover from� value-added products during the previous financial year was Rs 12 crore against the total turnover of Rs 212 crore. Almost 90 per cent of the value-added products of the KSCDC are sold in the domestic market. The CDC cashews are marketed also in the Gulf countries. Establishing a strong domestic market is important for the survival of the industry in the country. ''With countries such as Vietnam giving Indian exporters a run for their money in the international market, we should be able to establish a strong domestic market," he said.

Those, who have some memory of the past track record of this Company, may still remember the fiasco during late nineteen nineties when some attempts were made to develop value added products and get into the market to expand the user base for Cashewnuts. Unfortunately the products, in spite of being excellent in quality, were not marketed successfully for which he Company did not had any expertise and experience. One can only wish the Corporation better luck this time, though it does not require too much intelligence to predict that the result may not be different now too. It is not realized that Cashewnut is one of the costliest nuts in the market and any value addition is bound to make it beyond the reach of many consumers in India. Export option is limited since most value added products in foreign markets are branded with strong recall credentials and it is beyond comprehension as to how the value added products of KSCDC are  going to be sold in such countries.One can only hope that the current plans, if and when executed will not end up as another financial disaster!    

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

"HEALTH" FOOD BUSINESS-MEGA BUCKS BUT NO CONTROLS!

It is amazing how in a country as wealthy as the US, industry interests can override all other interests including citizen welfare. Other wise it is very difficult to explain away the unrestricted deceitful practices to mislead the consumer with tall and unsubstantiated health claims made by industry. In contrast countries in the EU are some what more sensitive to consumer health as evidenced by the recent clamp down on more than 8000 products claiming a multitude of health benefits for probiotic products being marketed. Why should the food safety issue be politicized giving any scope for bargaining with the industry is beyond comprehension. The argument of the industry that forcing them to declare negative quality of a product should be balanced with their right to highlight the strength of their products is perfectly valid provided that is supported by scientific data. The loophole currently available to the industry is going through the "dietary supplement" route which must be closed if the government there is serious in protecting their citizens from fraud.

"Since melatonin is a drug and not an approved food additive, the makers of these products are trying to get around the annoying FDA restrictions by marketing the brownies as "dietary supplements." Supplements, by order of Congress when it passed the Dietary Supplement Health and Education Act (DSHEA) of 1994, do not have to meet FDA's rigorous scientific criteria for safety or efficacy. DSHEA applied to supplements, not foods, but the FDA has chosen to regulate foods containing such additives by the weaker rules applying to supplements and to deal with them as a regulatory gray area. Is melatonin a drug, a supplement, or in brownie form a food? The FDA is going to have to decide, and fast. A much longer story in the business section, "Foods with benefits, or so they say" (in which I am quoted) focuses on the entire poin of functional foods: the ability to put something in a product that allows you to market it using health and wellness claims. Health claims sell food products. People like buying products with a "health aura," no matter how poorly the health claim is supported by science. Science is irrelevant here. Marketing is what's relevant".

It defies logic as to why a food has to be spiked with a drug like Melatonin which is a sleep inducing medical substance. Probably when this is sold as a drug it costs more besides requiring prescription. It is possible that if the concerned authorities do not take any corrective policy measures immediately, a day is not too far off when American consumers will "enjoy" a variety of "foods" containing opiates like Marijuana and other intoxicating substances!

V.H.POTTY

http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

"IDEA INCUBATION"-A NEW APPROACH FOR TECHNOLOGY TRANSFER

Technological self reliance is a desired goal, pursued by all nations and towards this large investments are made in infrastructure and scientific personnel. There are R & D institutions exclusively devoted to evolving appropriate technologies of priority, identified at the national level and also academic institutions like Universities engaged in scientific research, funded from the public exchequer. With intellectual property rights recognized world wide, patenting has become a lucrative business especially in the private sector. While many technologies are developed in the laboratories, the route to industrial exploitation is strewn with countless failures as technology transfer is often hampered by inadequate linkage to and appreciation by the users, the manufacturing industry. There are many ideas floating around like industry sponsored research, setting up proving plants, limited production trials for viability assessment and setting up of venture capital assisted enterprises. Incubation center is another concept where an entrepreneur is able to get acquainted with various facets of technology application and hands on experience regarding market conditions before setting up regular manufacturing entities. The new concept of encouraging business incubator type of centers with financial assistance from out side is meant to encourage academics to convert their ideas into commercial operations.

"By providing academics like Professor Hart a bridge to the business world, M.I.T. is in the vanguard of a movement involving a handful of universities nationwide that work closely with investors to ensure that promising ideas are nurtured and turned into successful start-ups. At first glance, the centers look like academic versions of business incubators. But universities are getting involved now at a much earlier stage than incubators typically do. Rather than offering seed money to businesses that already have a product and a staff, as incubators usually do, the universities are harvesting great ideas and then trying to find investors and businesspeople interested in developing them further and exploring their commercial viability. In the jargon of academia, the locations of such matchmaking are known as "proof-of-concept centers," and they're among a number of new approaches to commercializing university research in more efficient and purposeful ways — and to preventing good ideas from dying quietly. The first proof-of-concept center, the William J. von Liebig Center, was established in 2001 at the University of California, San Diego. So far, the von Liebig Center has helped start 26 companies that have created more than 180 jobs and attracted more than $87 million in financing. Among those companies are Mushroom Networks, a developer of online video technology, and, more recently, Biological Dynamics, a maker of early cancer diagnostic technology. "Many of the great ideas get stuck in labs because scientists don't have access to the kind of ecosystem" that Deshpande and other proof-of-concept centers offer, says Amy Salzhauer, a founder of Ignition Ventures, an investment firm based in Boston and New York that works with scientists to set up companies. "This is a way to better harvest those ideas." WHILE the von Liebig and the Deshpande centers are the highest-profile successes in this realm, similar entrepreneurial surges are occurring at other schools, like the University of Utah, Georgia Tech, the University of Kansas and the University of Southern California".

In a country like India there are many hindrances in converting a lab idea into a commercially viable venture and these include the total isolation of researchers from the potential users, industry's apathy towards scientific establishments, lack of funding for proving plants, inadequate risk coverage against failure, predominance of multi national food companies with strong foreign roots and global competence and many other factors. The fact user linked research has better chance of success is proved beyond doubt by the accomplishments of atomic energy establishment, defense oriented R&D and outer space exploration efforts.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

THE SURGING ORGANIC FOOD BUSINESS-GOOD OMEN?

Organic foods continue to attract consumers in most of the countries because of the common perception that they are much safer than the conventional foods. Though the claims about superior nutrition have been rubbished by many scientific studies, some consumers still believe in such claims, opening up new market opportunities for this industry. In the US where diets are becoming loaded with more sugar, salt and fat and less of dietary fiber, fresh fruits and vegetables are increasingly being sought after. Organic versions of these fresh produce category are displacing conventionally grown ones rapidly.

"Organic fruits and vegetables, which represent 38 percent of total organic food sales, experienced the most growth reaching nearly $9.5 billion in sales in 2009, up 11.4 percent from 2008 sales. Most notable, organic fruits and vegetables now represent 11.4 percent of all U.S. fruit and vegetable sales. Since the approval of the final National Organic Program rule published in 2000, sales of organic fruits and vegetables have grown from $2.55 billion, representing approximately 3 percent of all fruit and vegetable sales, to the nearly $9.5 billion level and 11.4 percent penetration level. Meanwhile, during that time, organic food sales have grown from $6.1 billion to $24.8 billion in 2009, jumping from 1.2 percent of all U.S. food sales to 3.7 percent".

Probably the prevalent belief, that use of chemical fertilizers and pesticides in the conventional production system is wide spread, may be driving the consumers in hordes to organic produce section in the supermarkets. That one is willing to pay a price 50-100% more for organic foods is a telling commentary on the reckless practices of the modern commercially driven agri-food industry, ignoring consumer welfare.

V.H.POTTY

http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

THE CLIMATE CHANGE BAND WAGON-MORE COMING ABOARD

Global warming, CO2 emission, ozone-depletion, green house gases were all meaningless expressions as far as most industrial players were concerned whose main obsession was always business viability. There appears to be a change of heart recently vis-à-vis this issue and 'save the planet" slogan is gathering more and supporters from amongst the industry. Probably long term business interests must have instilled a sense of apprehension, especially after the impact of economic recession being experienced all over the country. Here is a 180 degree about-turn by the premier business conglomerate in the US.

"Climatologists tell us that if we don't enact dramatic reductions in carbon emissions today, within 5 years we could begin facing the propagating feedback loops of runaway climate change. That would mean a disruption of food and water supplies worldwide, with the result of mass migrations, famines, and death on a scale never witnessed before. Needless to say, that would be bad for business".

It is better late than never and if a consensus emerges at the forthcoming Copenhagen climate summit, there cannot be a better gift to the Mother Nature by the humanity. A 2 degree rise in temperature through this century is being talked about as tolerable but even this can bring catastrophe on a scale not imaginable at present. The row between 'haves' and 'have nots' regarding emission limits must be settled without any further delay if the present trend of uncontrolled emissions is to be halted or reversed. Where there is a will, there is a way and one can only hope that the necessary 'will' may emerge at Copenhagen.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com