SMALL IS UGLY, BIG IS BEAUTIFUL-THE AMERICAN FOOD INDUSTRY PHILOSOPHY!

During the recent discussion on the new FDI policy being implemented by Government of India one of the strong arguments used to support the influx of foreign retailing giants was that such a policy would help the farmers of this country to get a better price for their commodities. Here is a contradiction of the above assertion coming from the very same country which has some of the biggest retail giants based there. The sum and substance of the report below is that retail giants will always squeeze their suppliers whether farmers or processors as their focus is is to cultivate the consumer with lowest prices ever possible.   

"When ConAgra ponied up about $5 billion for St. Louis-based Ralcorp this week, the Omaha-based conglomerate did something that food companies have been doing for a while: It got a lot bigger. ConAgra Foods Inc., which produces some 60 brand name products — everything from Slim Jim sausage snacks to Manwich mixes to Wesson cooking oil — will now become one of the largest food companies in the world, with about $18 billion in sales, up from $12.3 billion in the fiscal year ended on May 11. Globally speaking, that would put ConAgra among the top 20 food companies in the world, up from its current spot of 31 and well ahead of food juggernauts General Mills and Kellogg. But ConAgra's new neighbors on the list of global food-and-beverage big shots probably won't be there for long. In a turbulent food marketplace that has struggled in recent years, companies are trying to out-big each other — or, at least, redefine what they are, by splitting, spinning off and window-shopping for each other's discards".

Also well known is that in countries like the UK and the US, less than 30% of the consumer dollar goes to the farmers while 70% is gobbled up by the retailer who is a glorified super middle man! Consider the situation that is prevalent in India where farmer gets about 70% of the consumer rupee, at least in two organized sectors like sugarcane and milk. A million dollar question that deserves an honest answer is whether foreign retailer chains would squeeze the already famished farmer of this country through strategies they have perfected in different wealthy countries. No wonder that progressive states like New York are coming out increasingly against such monolithic giants whose agenda is solely to increase their margin by what ever strategy it takes with no consideration for the development of the country where they are allowed to operate.

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