GOBBLING UP INDIAN COMPANIES-WHAT ARE THE REPERCUSSIONS?

To day Indian processed food and beverage market is more or less dominated by multi-national companies which are supposed to bring new technologies and products to the country and upgrade the infrastructure for distribution. However what is happening is a series of take overs of Indian companies by some of these big fishes obliterating the domestic entities totally. As early as 1977 Coca Cola was forced to leave India by the then government for not being transparent in their activities but in came Pepsi during early nineteen nineties piggy riding on  a domestic public sector company in Punjab. Consequent to opening up of the Indian economy Coca Cola also returned to restart its operations in the highly lucrative beverage market. It is history as to how this MNC gobbled up the most successful national brand Thumsup and competition from local players was effectively extinguished. Same happened with potato chips market when Pepsi swallowed the domestic player Uncle Chips. It was not long ago that the Bangalore based MTR brand was acquired by a Norway company at an astronomical price. No one seems to be clear regarding what this trend bodes for the country. Here is the latest acquisition of a purely domestic brand in Pune by no less than the world's largest food processor and here are some sketchy information released by this MNC giant in its web site.

"Parampara's products join General Mills' growing portfolio of consumer food brands in India, including Pillsbury range of atta (flour) and cake mixes, Betty Crocker dessert mixes, Green Giant frozen vegetables, Nature Valley granola bars and Häagen-Dazs ice-cream. General Mills is one of the major food companies in the US, and operates in over 100 countries. Headquartered in Minneapolis, Minnesota, US, General Mills had net sales of $14.9 billion in fiscal 2011. Parampara, which started as a pickles, pappad and spices outfit 60 years ago, currently has the capacity to manufacture five million spice mix packs a year". 

Views may differ regarding the implications of these transactions with many impartial observers questioning the purpose behind these acquisitions at exorbitantly high prices, a temptation hard to resist for many domestic players. India may have a policy of inviting foreign investors with open arms but in a sensitive sector like food or pharmaceuticals, some policy orchestration is necessary to protect country's population from unhealthy foods turned out by these foreign companies. A common man may ask regarding the need for foreign investment in an area like beverages or for that matter the relevance of junk food peddling in this country and wonder whether India is going the US way in converting a healthy population into obese people! Having learned no lesson from history, Indian government seems to be bending backwards to welcome foreign direct investment in the highly profitable retail sector though this was thwarted by the vigilant citizens for the time being. It is time a broad consensus is reached among the political class and economic pundits for evolving an acquisition policy that will preserve the domestic food players without succumbing to the foreign money power.  

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

FOOD OR BIOFUEL-FARMERS' DILEMMA

The raging controversy regarding diversion of farm lands which produce valuable staple food crops for biofuel yielding plants like Jatropa does not seem to be fading away as many multinational and large players in this field are eying fertile lands in African continent for cultivation of such plants. This raises the pertinent question as to what will happen to the food security in these countries since food production is bound to suffer in the long run. No doubt fuel supply for running the modern industrial society is crucial but it cannot get precedence over food that is critical for very survival. If the recent reports are to be believed, many countries in Africa and other regions of the world are increasingly diverting their food farm lands for biofuel production.

"Over 20 companies from around the world, including from Brazil, China, Germany, Italy, The Netherlands and Norway, are acquiring land in Ghana to produce biofuels, according to the Ministry of Agriculture. Between 15 million and 20 million hectares of farmland around the world have been subject to biofuels negotiations since 2006, according to the Washington-based International Food Policy Research Institute (IFPRI)".

Past experience of Palm oil diversion for biofuel use clearly showed how such changes can affect the global prices of a commodity, which cannot be considered as absolutely essential though nutritionally it is required at certain levels. Already most of the African countries are net importers of food commodities and biofuel 'invasion' will reduce food production significantly making the matter worse for the poor citizens of the countries involved in such activities.

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