Soda market moving to India? Latest investment on soft drinks in Hyderabad

When we are being bombarded with the Prime Minister's pet theme of "Make in India", day in and day out, there was great hope that products identified for manufacture, both for domestic and export consumption would be highly relevant to the country's needs. Of course the relevance of a product is determined by factors like consumer demand, environmental hazard, health implications, employment generated, water exploitation, farmer linkages etc. By no stretch of imagination manufacture of soft drinks can fit into this bill but if current trend is any indication foreign investors will invest only if they have a market for their products, rightly so.  Is soft drink an item of consumption that must be encouraged in our country when world over these products are being condemned for their empty calories and vulnerability of consumers to a host of diseases including CVD, blood pressure, kidney ailments, obesity, diabetes etc ? Recent report coming from Andhra Pradesh claiming that an MNC is investing in that state on a piece of land measuring 85 acres of government land for setting up a mega bottling plant is indeed disturbing. Should India be rolling red carpet to such investors who have very little regard for the well being of the citizens in this country? It is difficult to justify or rationalize this industry as the highly automated plant is unlikely to provide much employment or earn any foreign exchange! Here is a take on this paradox that is happening in front of our eyes with all and sundry paying obeisance to the dollar lord!   

"For the past 25 years, PepsiCo has been investing in the Indian economy and its people. As we move forward into our next 25 years, that commitment is stronger than ever. This plant is an investment in India's bright future," said Nooyi. Spread across 86 acres, the first line of the plant started manufacturing on Friday. When it becomes fully operational, it would benefit nearly 33,000 farmers thanks to local sourcing of mangoes and other fruits, Nooyi said. Speaking on the occasion, Naidu said local sourcing of mangoes would immensely benefit the region economically. Complimenting the Sri City management for attracting dozens of companies to set up shop there, Naidu said it could become India's largest industrial park in 10 years. The PepsiCo plantwill manufacture fruit juice-based drinks, carbonated soft drinks, and sports drinks, among other beverages. PepsiCo has deployed state-of-the-art technologies with an emphasis on production efficiencies, environment protection and safety. The plant will be PepsiCo's most water-efficient beverage plant in India and the firm aims to procure LEED certification for this facility, company officials said. a LEED, or Leadership in Energy & Environmental Design, is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighborhoods. It is developed by the US Green Building Council. PepsiCo has a large manufacturing facility, with seven production lines in Telangana to cater to the markets of the undivided Andhra Pradesh and parts of Karnataka. The company, which has 22 brands in its product portfolio comprising food and beverages, has annual retail sales of about $1 billion. Sitting on a land bank of 8,000 acres, Sri City currently houses 106 companies employing 25,000 directly The GVK group plans to set up a hospital, medical college and a research centre at Sri City with an initial investment of Rs 100 crore, according to officials."

Andhra Pradesh government which is bending backwards to please the MNC seems to be forgetting what happened in Kerala years ago when the people of Plachimeda, a small hamlet in that state where a similar bottling plant was allowed to be set up led to one of the most virulent opposition campaigns India has ever seen against the corporate investor. Besides over exploiting water resources, the spent water polluted the area heavily causing many problems to the local population and thanks to people's power the bottling plant was forced to be shut down once for all. Interestingly the investors in A.P are using sugar coated words like employment generation, benefiting the farmer, high technology, research and innovation etc to mislead the government. It is difficult to imagine how farmers are going to benefited if the major product made is flavored sugary water, though there is a sprinkling of fruit based but sugar sweetened drinks containing traces of natural fruit solids! Unhealthy products like potato chips, fried and heavily salted extruded snacks etc are going to be the major part of the turn over expected from this factory. There is not even a single healthy product in the portfolio of products churned out by this company justifying conferring so much favors on it. If this is the forerunner of things to come under the "make in India" slogan, where is this country going to end up? God save the country!

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

FOOD ESTATES-THE INDONESIAN VERSION

Land for food production is a burning issue to day as fertile lands are being diverted for other industrial operations and food production is on the decline in many countries due to uncertainties associated with cultivation. Indonesian initiative in converting its low quality land areas into food bowls through leasing and joint ventures is based on its perception that much more returns can be derived by attracting foreign investments in agriculture and deployment of modern cultivation technologies.

"One of the main priorities related to the agricultural and economic development of the first 100 days of the second term of SBY's administration is the preparation of a regulation on a large-scale food production system, the so-called "food estates". President Susilo Bambang Yudhoyono is scheduled to launch the "food estate" program in February. There are many controversies regarding the expected positive and negative impacts of the program and consideration of the potential benefits and losses after the program implementation has been hotly debated. While the formal regulation on the food estate program has not yet been announced, various national media have reported on the main ideas behind the food estate organization, citing information from officials at the Ministry of Agriculture. Food estates will be implemented in areas where huge tracts of empty land are still available and where it is not so populous, such as Merauke in Papua. In Merauke, only 2.49 million hectares of cultivable land is suitable for food production. Food and biofuel products will be produced under the program".

"The government will invite foreign and national corporations to participate in the program. Each investor can manage 100,000 hectares of land at the most under a first management rights agreement for a 35-year term, which can be extended for up to 90 years. Foreign investors from China, the United Arab Emirates, Korea and Singapore have shown keen interest in food estate investment. Major national investors reportedly have a similar interest in taking advantage of the opportunity to benefit from the program. Investors will be given various incentives and benefits, such as the food produced will be for export as the world food market is commonly better on price. In order to promote and protect national interests, the government will impose a maximum stake ownership for foreign investors at a level of 49 percent on each food estate".

It is surprising that Indian investors are not showing much interest in bidding for a "slice of the cake", knowing their appetite for highly profitable foreign investments in other countries. Chinese adventurism in agriculture is demonstrated again by their readiness to invest in Indonesia on food estate program. How Indonesia will react to the Chinese "mode" project management involving Chinese workers in large number is worth watching since such investments cannot generate significant employment generation locally.

V.H.POTTY

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