AGRI BUSINESS & FOOD INDUSTRY- January Issue by Media Today Pvt. Ltd.

AgriBusiness & Food Industry w January 2012

AgriBusiness & Food Industry w November January 2012 2011

AgriBusiness & Food Industry w January 2012

Interview ...10

EDITORIAL

processing

Thailand’s position as top rice exporter threatened by floods and government policy

Netherlands & India

Government to Government ooperation on IPR issues & Food Processing

— Sanjeev Chopra

Breakfast ...16

Britannia to Move from Side Plate to the Centre, Despite Several OddsNow, a Britannia Breakfast! – Vinita Bali

AgriBusiness & Food Industry w January 2012

Wheat supplies for 2011/12 discussed at IAOM Conference – June Arnold

post event Report

Fine Food India 2011 tastes success in its inaugural edition

honey

No To GM Pollen In Honey -Says ECJ [Indian Perspective] – A.k.Singh

Fruits & vegetables

South Africa — Potential market for agri-food products

retail 28

How FDI in retail will hurt farmers

Global retailers prefer to wait, for now

Corporate Hijack of Retail

RETAIL NEWS

l Future Group buys Transmart India warehousing business

l Best Foods bets on retail plan

33 CORPORATE NEWS

l Amul sues Nestle for copying A+ brand l Coffee export orders drop on sluggish Europe demand

FOOD & BEVERAGES NEWS

l Coca-Cola creating independent unit for non-fizzy drinks

– Sundar Ramakrishnan

Agri Affairs ...14

Multifunctionality of Agriculture

inside...

l KFC,Big Mac Feast on Indias Chicken Mania

DAIRY NEWS

l Amul is way ahead in dairy products l Milk output rebounds; sours returns for farmers

AgriBusiness & Food Industry w January 2012

orial Edit

hether it is industry or agriculture, India seems to be nowhere near richer nations in terms of R & D investment. A recent report by the World Intellectual Property Rights entitled “The Changing Face of Innovation” shows companies world-wide are spending more and more on research and development to ensure that they remain competitive in a globalised world.

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In agriculture, available figures show the total government spending on R & D in India has stagnated at about 0.6 per cent for the last one decade, against three times that figure in developed countries. Now, on the eve of the launching of India’s 12th Five-year Plan, policy makers are tirelessly – and rightly – stressing the need to usher in a Second Green Revolution, a Productivity Revolution or an Evergreen Revolution through a farmercentric, industry-driven and knowledge-based strategy. For achieving the objective, it is clear, a sharp increase in R & D spend is a ‘must’. Studies show that every rupee spent on research in food crops yields a return ranging from Rs.1.4 to Rs 3.6, depending on the crop. One area that demands utmost attention in regard to research is rain-fed or dryland agriculture, where the productivity levels are abysmally low. Researchers need to focus on developing low cost technologies – farming systems with low levels of inputs – to suit particularly the needs of marginal and small farmers in the rain-fed-areas. Higher allocation for research on farming systems in drylands is all the more important since these areas support 40 per cent of the population, many of whom belong to the underprivileged category. Of India’s total agricultural output, 44 per cent comes from the rain-fed areas, which account for 80 per cent of the total pulses production, 80 per cent of oilseeds, 65 per cent of cotton and 45 per cent of rice, besides a very high percentage of coarse cereals. Along with agriculture research, the outlay for extension activities also needs to be stepped up substantially, since the figure at present is a pathetic 0.14 per cent of the agriculture GDP. No wonder, a big gap exists in the productivity levels in research farms on the one hand and the farms of average farmers on the other. Several expert committees, including parliamentary committees, have gone into the question of investment in farm research, leading to the conclusion that funds equivalent to at least one percent of the agricultural GDP need to be spent on farm research. In its study on the total factor productivity in agriculture and the contribution of research investment, the National Centre for Agricultural Economics and Policy Research has highlighted the highly haphazard annual increases in research financing in the last few years. Such unevenness, it argues, leads to inefficiency and constraints in attaining desired results. What is needed is to maintain a smooth growth in resources allocation. The watchword now is a more broad-based, more inclusive and more sustainable agriculture development. This slogan cannot be translated into reality without greater thrust on research.

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Vol 9....... Issue 1 ...... January 2012

Views expressed by individuals and contributors in the magazine are their own and do not necessarily represent the views of “AgriBusiness & Food Industry” editorial board. AgriBusiness & Food Industry does not accept any responsibility of any direct, indirect or consequential damage caused to any party due to views expressed by any one or more persons in the trade. All disputes are to be referred to Delhi Jurisdiction only. .....Editor

AgriBusiness & Food Industry w January 2012

Interview

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Netherlands & India

Government to Government Cooperation on IPR issues & Food Processing Marcel Vernooji, Director, Agro Chain International Ministry of Economic Affairs, Agriculture and Innovation of Netherlands was recently in India to facilitate inter-action between their agriculture department and Protection of Plant Varieties & Farmers' Rights Authority, India (PPV & FR Authority). He had a series of meetings with officials in the union Ministry of Agriculture. Media Today had an exclusive interview with him to understand their future plans, the outcome of their active participation in exhibition and other related issues. Excerpts:

As the Director of the Department of Agro Chain International, Govt. of the Netherlands, what are your views on the current phase of IndoDutch co-operation in Agri and Food business?

Marcel Vernooji with an Indian Agri Entrepreneur during recent visit

The Netherlands agribusiness wants to be local, a reason why a Dutch seed companies invest in India and why the most important gherkin variety is Dutch in India.

AgriBusiness & Food Industry w January 2012

Our Indo-Dutch co-operation in the Agri and food business is taking off smoothly since the last one and a half year. Agriculture trade is one of the pillars of the Dutch economy. The Netherlands is the second largest agriculture exporter in the world. Our foreign agriculture network works to facilitate that trade. India is one of our partners of upcoming importance. To secure trade, our strategy is to invest in India in local production facilities and enhance local capabilities through technology transfer. We believe we have to be in India in order to integrate into the total Indo-Dutch trade chain. The Indian Agri and Food business and market are in transition and are growing rapidly. Indian farmers and Agri business are demanding new seed varieties, modern production technologies, post harvest technologies, cold chain and new concepts of retail. The present discussion on FDI in retail in India illustrates the importance and sensitivity of the transition of the

Interview whole agriculture chain, from farmer to consumer. A development we see as a stimulus for more empowerment of farmers and less food inflation.

Two memorandum of understanding between India and Netherlands were signed recently during the visit of Mr Henk Bleker, Minister of Agriculture and Foreign Trade, the Netherlands. What are the main features of these?

The visit of our Minister for Agriculture and Foreign Trade this November and a visit of a high official delegation in June 2011 indicates the growing importance of India in our bilateral agriculture trade, facilitating the ambition to triple our trade to 1 billion US$ in the next five to ten years. In close co-operation with the Ministry of Food Processing Industries two cooperation programs were signed on behalf of both governments between Wageningen University of Technology, the NIFTEM and the Indian Institute on Crop Processing Technology (IICPT). The two programs will facilitate exchange of technology, research & development and capacity building in the field of supply chain management, Food Processing, post harvesting technology and crop production & processing technologies.

We have seen that there are many Dutch investments in China and African countries, especially in Horti and Floriculture sectors. But India is not getting such investments. What, according to you, are the reasons?

The Netherlands is one of the top 5 largest investors in the world, also in India. Investments in agriculture mostly start small and with the necessary protection of plant breedersâ&#x20AC;&#x2122; rights, institutional and infrastructural condition (in place) investment will take- off in a big way. In Africa and China Dutch agribusiness is offered this condition. In India the Dutch vegetable seed sector and some companies in the floriculture and fruit sector are investing in R&D facilities, production facilities and tissue culture labs. New investment in post harvesting technologies, fruit and vegetable production and processing,

cold chain and logistics will come in the future. The Netherlands agribusiness wants to be local, a reason why Dutch seed companies invest in India and why the most important gherkin variety is Dutch in India.

What are your views on the participation of Dutch companies in Indian Exhibitions like Agri Tech,

Over 25 companies participated in the last edition of the exhibition in Bangalore in September 2011. Our companies were satisfied with the professional and business driven visitors and we had the opportunity to introduce our companies to different State Horticulture, Agriculture or Food Processing departments in the country.

Grain tech and India Foodex? Are you satisfied with the results? What are your future plans to display more and more Dutch products and technologies in India?

The Netherlands agribusiness is always looking for partners especially in India at the moment. Exhibition like AgriTech, DairyTech, FoodEx are of major importance at this moment to introduce Dutch companies who are new to the Indian market; especially in Dairy, Animal husbandry, Greenhouse Management and Horticulture, Cold Chain and Food Processing. Over 25 companies participated in the last edition of the exhibition in Bangalore in September 2011. Our companies were satisfied with the professional and business driven visitors and we had the opportunity to introduce our companies to different State Horticulture, Agriculture or Food Processing departments in the country.

On supply chain management and allied areas, where the Dutch are strong and India is lacking, do you feel more attention or investment is needed by private sector?

The supply chain is lacking in India. In the Netherlands the government and the private sector invested jointly in infrastructure, post harvesting facilities, cold chain logistics, distribution centers,

AgriBusiness & Food Industry w January 2012

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Interview

markets and the financial system. A development model which would be suitable for India, besides the huge government subsidy scheme in the supply chain. We see a good example in Karnataka, where the government, the development agency and the agribusiness together invest in the supply chain. As mentioned we see also important opportunities in co-operation in establishing a strong supply chain in India. In close cooperation with the National Horticulture Mission, National Horticulture Board, the Cold Chain Development Center of NHB, the Ministry of Food Processing Industries and the private association and individual through capacity building, demonstration projects and investments. During the visit of our Minister in November our focal point was for business development in the supply chain. The Netherlands Agro & Food Technology Center India was also launched.

Import of planting material and IPR are other areas where, we understand, the Dutch Government is talking with Indian Agriculture Ministry. Could you please elaborate the developments and outcome to facilitate better understanding among floriculture and horticulture growers?

As mentioned earlier the Netherlands agribusiness need some institutional condition especially in plant breeders right before large investment in production, greenhouses, introduction and development of new varieties will take off. In close cooperation with the Ministry of Agriculture and the

protection of plant varieties & farmers' rights authorities of India, we would work on a government to government program to facilitate and strengthen these conditions. Plant breeding takes time and to develop a new variety of roses, it takes a major investment and 8-10 years of time. That is why plant breeders become owner of a new variety. Plant breeders worldwide are united in an association called UPOV. This organization drafted regulation how plant breeders are protected and how farmer may use the new varieties. The last ratified set of regulation was UPOV 1991. Plant breeders in all member countries are protected accordingly when they register a variety and farmers are not allowed to propagate and market these varieties without paying royalties to the breeder. A number of Indian companies work according UPOV 1991 and produce new varieties of Dutch flowers and seeds. Still a lot of farmers and growers "illegally" copy varieties in a vegetative or tissue culture way without paying royalties while selling the products to the market. How it feels when a plant breeder sees a field of over 100 acres with an illegal copied variety of his roses in India! There is a major Horticulture event to be organized in India called â&#x20AC;&#x2DC;International Horti 2012â&#x20AC;&#x2122; where Holland is the partner country. What are your plans to give greater exposure to Dutch varieties and technologies at this platform? The Netherlands is world leader in horticulture and we know how important exhibitions are. With world class tradeshows as Hortifair, IFTF, the Hortiweek and the Floriade world largest

AgriBusiness & Food Industry w January 2012

Horticulture outdoor experience once every ten years, which will be organized in 2012, in the south of the Netherlands, Venlo. Netherlands is the Partner Country of the International FloraExpo and HortiExpo in Delhi, March 3-5. With over 600 square meter of Holland Pavilion all Dutch-Indo companies in floriculture and horticulture will show new varieties, new production and post harvesting techniques, the latest water management and bio security techniques of the Netherlands. During the show we will organize in close cooperation with NHM the technical seminars and workshops on different topics relevant in the floriculture and horticulture supply chain.

What are the areas, according to you, where Indo-Dutch joint ventures are feasible?

I already see a growing number of joint ventures in Floriculture and Horticulture producing products for the export and domestic market. The Dutch government would like to stimulate this private initiative in the future. Other areas of cooperation and joint venture opportunities we see, is in potato production and processing, dairy production, animal husbandry (poultry and piggery) and fruit production and processing, cold chain and logistics and last but not least capacity building on vocational education level as well on B-Tec and M.Sc. level. Creating a flourishing and above all a profitable joint future in the supply chain in India is ahead of us. Marcel Vernooij can be Contacted on: nde-lnv@minbuza.nl

AgriBusiness & Food Industry w January 2012

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Agri Affairs

Multi-functionality of Agriculture — Sanjeev Chopra

eaders may recall the report of the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), and the need to place ‘production issues’ in perspective. Agriculture was not about producing more and more crops alone – it was, first and foremost, about farmers and their livelihood systems, and their intimate connection with land. Typically, a farm family engages itself in multi-cropping, rearing livestock, primary processing and value addition at the farm level, and in many cases also supports the local handicrafts and services sector. Farmers also make the best possible use of farm residues, and there is practically nothing that does not get recycled. However, these attributes of the farming system are sometimes missed out in the conventional assessment of the farmer’s contribution to the larger systems of economy and ecology within which the farmers operate. However, of late, it has become quite fashionable in the OECD world, and especially in Europe to talk of the multifunctionality of agriculture. However, the way the term is interpreted by WTO and IAASTD is different. According to the IASTD, multi-functionality is used solely to express the ‘inescapable connectedness of the different roles of agriculture to each other’. As is commonly understood, there can be no

livestock rearing and backyard poultry independent of some ‘farming system’, and also that, if a farm does not have its own contingent of cattle, poultry and fish pond, the livelihood potential would be much below par. However, the IAASTD definition goes beyond this. It recognizes agriculture as a multi-output activity, producing not only commodities (food, feed, fiber, agro fuels, medicinal products and ornamentals) but also non-commodity outputs such as environmental services, landscape amenities and cultural heritages. Thus the preservation of green cover and the possible sequestration of carbon credits from agriculture open up new vistas for assessing the true worth of agriculture. The real dilemma lies in making a realistic assessment of the noncommodity outputs (environment, landscapes, bird species, including migratory birds) which may exhibit characteristics of externalities or public goods, but the markets for these are not properly defined. True, some beginning has been made with reference to ‘sequestration’ of carbon, but we are still a long way from making an assessment of how to value the ‘landscape’. Also, these externalities cannot be produced in isolation, but only as an adjunct to the multiple commodity production system. In the context of the WTO, the issue relates to the effect of ‘trade distorting subsidies’ on the ‘related and interconnected aspects of a multi-

AgriBusiness & Food Industry w January 2012

functional agriculture’. While it is known that subsidies to the dairy farmers in Europe and US depresses the domestic price of milk and milk products for the milk producers of the developing countries, it is difficult to assess the impact that non-rearing of cattle as an adjunct to the family farm will have on the ‘multi-functionality ‘of agriculture in larger parts of Asia and Africa. At a more fundamental level, the question is – should the term for the milk and meat products of Europe and US be called the dairy farm sector, or the dairy industry – for it is more in the nature of an industrial production process, rather than an agricultural operation. Proponents argue that the current patterns of agricultural subsidies, international trade and the related policy frameworks do not facilitate a transition towards an equitable agriculture and food trade relations or sustainable food and farming systems. On the contrary, these have given rise to perverse impacts on natural resources and agro ecologies, as well as on human health and nutrition. Raj Patel’s book “Stuffed and Starved” which was reviewed by this column, subscribes to this view. They suggest that while knowledge, information and technologies of agriculture should have free circulation, agriculture production should be rooted in the local context and respond to the multiple needs of the community, and contribute those resources to the community which have traditionally been

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Agri Affairs associated with agriculture. However, the other view, which also has a fair number of proponents, including those from the Consultative Group on International Agricultural Research (CGIAR) affiliated International Food Policy Research Institute (IFPRI) argues that any attempt to remedy these outcomes by means of trade related instruments will weaken the efficiency of agricultural trade and lead to further distortions in the market. They argue that the number of rural households which do not depend on any kind of agricultural activity is rising, and therefore the â&#x20AC;&#x2DC;multi-functionalityâ&#x20AC;&#x2122; has little meaning, especially for the poorest and most deprived sections, which do not have access to any land, including homestead land. There is some empirical truth in this fact as well, for the numbers of landless labour in India (who do not have any rights over land) are more than the total number of marginal and small farmers. Thus, multi-functionality has no meaning for them, or the large numbers of the urban poor, whose primary concern is the access to affordable nutrition, rather than a return to the highly romanticized versions of bucolic climes!

AgriMatters would go with the proponents, because there are ways in which multi-functionality can be integrated into the lives of almost everyone who lives in the countryside. As governments and communities across the world recognize the right to shelter, and the provision of a small plot for homestead land is getting the status of a Fundamental Right, it would be possible for landless workers to grow

timber, vegetable, fruits and nuts â&#x20AC;&#x201C; both for self consumption, and the market, as also keep engaged in backyard poultry, duckery and a few goats and/or milch cattle. In other words, agriculture is so integral to the farmers and farm workers that it cannot be subject to decisions based on the manipulation /calibration of statistical tables and projected scenarios. n The Author is JS(MoA) & Director, NHM

AgriBusiness & Food Industry w January 2012

Breakfast

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Britannia to Move from Side Plate to the Centre, Despite Several Odds-

Now, a Britannia Breakfast!

The Biscuit Industry is booming. So is the leading biscuit manufacturer company, Britannia, which is now likely to serve India with breakfast too, after snacks (for which it is famous). Despite, tough times, the company launched it’s ‘healthy snacks’ range of eatable products. These would be on-the-go snacks, which are high on energy and low on calories. Moving from side of plate to the centre of plate isn't a simple exercise. It is quite a task. As it transits from being a pure biscuit maker to a foods company, Britannia Industries sees opportunities aplenty. Managing Director Vinita Bali discussed the road ahead and challenges in the way. Here are some excerpts and some quotes of other officials of Britannia, along with the Market’s say.

"We are slowly moving from side of plate to centre of plate with a range of breakfast products,” Vinita Bali

Metamorphosis in Britannia

Traditionally known as a biscuit maker, Britannia Industries has already undergone a major metamorphosis to become a snack brand in India. In the changed modern environment,

AgriBusiness & Food Industry w January 2012

it is now pining to become more of a foods company. “We are slowly moving from side of plate to centre of plate with a range of breakfast products,” says Vinita Bali, Managing Director. Bali asserted that, “we are looking not just at foods which a lot of people are doing but at a range of what we can do with oats.'' This perfectly fitted with Britannia's slogan ‘eat healthy, think better’. Pointing out that ‘India is changing’, she said “people are looking for convenient options.'' In this context, she felt that addition of oats would be an extension of the company's offerings in the breakfast product category. Britannia, she said, had launched a range of breakfast foods under the brand Healthy Start. Four variants of oats had been test-marketed in Mumbai a few months ago. These had now been launched in the south, she added. Britannia had launched plain, strawberry, savoury and a multi-grain porridge in oats. The Rs.200-crore oats category, she pointed out, had seen 25-30 per cent growth rates. She attributed this primarily to changes in breakfast habits, in particular, lifestyles, in general. The Mumbai launch, she said, had fetched Britannia a 15 per cent share of the category. In the light of this, Britannia was now planning to take these products to other parts of the country. Britannia, Bali, said, also had a small range of Indian breakfast options: plain, broken wheat and a poha upma. Fielding a range of questions, she said, “We are becoming a complete foods company with these launches. Britannia, she pointed out, “operates in the space between snacks and foods.'' The consumption behaviour had been influenced by very many changes happening these days, she said. “You have more women working, more people are crunched for time and looking for smart solutions from a time and convenience perspective,'' she pointed out.

Managing costs and quality of revenue

Vinita Bali, knows she has a tough task for the next several months. The fluctuating rupee, high commodity and inputs costs (milk and milk product prices have gone up by 26 per cent), volatile fuel prices — all make for a dizzying mix. “We are talking about the basket of food inflation still being 12-13 per cent, so the next few months are going to be uncertain,” she says. Britannia imports refined palm oil and it will cost the

Breakfast company more, while cashewnut prices have gone up, too, along with milk. While its profits have gone up in the last two quarters, margins have been under pressure given this cost impact. So, how has the company tackled it? Bali says the company is dealing with margin pressure in three ways. “We are improving quality of revenues, managing costs and innovating to add higher value,” she says. By quality of revenue, Bali means the price premium that certain brands in the Britannia portfolio have managed to command by launching or innovating to create differentiated products. “Creating differentiated products gives us an advantage; we launched Vita Marie, then fortified Vita Marie, then extended it to Marie with oats and honey and each time we do that we are going up the value chain,” she elaborates. While a 154.5 gm pack of Marie Gold biscuits is priced at Rs 13, a 181 gm pack is at Rs 15. A 136 gm pack of Vita Marie Gold is priced at Rs 15, while a Vita Marie Gold with honey and oats is priced at Rs 12 for a 103 gm pack. Clearly, the value-added pack of Marie is able to extract a price premium to a plain Marie.

Breakfast for a Healthy Start

Says Bali, “So, in terms of the mix of products, mix of geographies, there are differential margins we make on different brands, if I sell more of a value-added brand, I improve margins and the quality of revenues improve.” In its quest to become more of a foods company, Britannia has launched a range of breakfast foods under the brand Healthy Start. Four variants of oats, test marketed in Mumbai a few months ago, have now been launched in the south. “We are slowly moving from side of plate to centre of plate with a range of breakfast products,” says Bali. In oats, a fast growing category, albeit on a low base, Britannia has launched plain, strawberry, savoury and a multi-grain porridge. The Rs 200-crore oats category has suddenly seen 25-30 per cent growth rates as lifestyles and breakfast habits change. But with brands such as Saffola and Kellogg's jumping into the fray even as the existing brands such as Quaker and Baggry's step up their activity, Britannia has its work cut out. The Mumbai launch says. Bali, has already given Britannia a 15 per cent share of the category, enough encouragement to extend it to other parts of the country. Britannia also has a small range of Indian breakfast options — a plain, broken wheat and a poha upma.

Capacity Expansion

Britannia is also expanding capacity. One new plant in Patna is already operational while one each is coming up in Orissa and Karnataka, all with an average investment of Rs 60-80 crore each. “We are growing top line 20 per cent so we have to scale up capacity at least by 20 per cent if not more. Our investment in the back end is a reflection of what's happening in the front end,” adds Bali. Thins so ‘Snexy’, says Britannia Say ‘healthy snacks' and ‘tasty' in the same breath and you can be sure of an incredulous, even scornful, reaction. However, Britannia Industries claims to have come up with something 'Snexy' that doesn't compromise on taste, and through its so-named teaser digital campaign, a 'snack reality show', has attempted to create a buzz around its latest launch, Nutrichoice Multigrain Thins. People can vote for their favourite snack ( samosa, panipuri, popcorn, burger, chips, tedhimedhi and namkeen) but the voting reveals they are quite unhealthy because of ingredients such as transfats.

There are half-a-dozen different shades of meaning for ‘snexy' in the Urban Dictionary but according to Britannia Industries, it's a term used to describe a snack that is “mysteriously alluring, almost divine.” Anuradha Narasimhan, Category Director - Health & Wellness, Britannia Industries, tells, “Health is seen as boring and difficult, but we're saying it can be cool and aspirational. We'll get the right association this way. We're not talking to people only at the rational level.” Britannia expects to “wean away stomach share from unhealthy snacks by gaining mindshare about healthier snacking.” A Rs 10, 25 gm pack of Multigrain Thins yields 23-24 “trips to mouth” (a measure of satisfaction and fulfillment) and only 105 calories. It is positioned as ‘a snack that loves you back'. Nutrichoice is Britannia's brand for health and wellness, and some other recent launches have included Diabetic-Friendly Oat and Ragi Cookies. Narasimhan says the packaged and branded snacks market can be valued at over Rs 4,500 crore. In recent years, manufacturers such as Frito Lay and ITC have announced eliminating MSG and transfats from their snacks. In fact, PepsiCo chief Indra Nooyi is under fire from observers for shifting the focus from the company's core category of soft drinks to healthy snacks. In some other cases, some snacks on the health platform have been withdrawn or have announced rejigs, such as Parle's Smart Chips.

Wrong Timing

Sreekanth P. V. S., Research Associate (FMCG and Media), Angel Broking, says some snacks could have failed because of timing, being ahead of their time. In the last 2-3 years, though, awareness of health and wellness has risen and most companies have launched foods fitting that profile, including oats, biscuits, cereal/granola bars and even noodles. According to Narasimhan, Nutrichoice biscuits have grown 1.5 times the market rate of staple (glucose, milk and Marie) biscuits. When asked about the Brand Loyalty, Vinita said that Loyalty today is not to a brand but to a range of brands. In any case, consumers are not buying one brand. It is not a medicine that they can not change it. People want variety. The fact that more people are working today has created opportunities for companies like ours. You look at BPO companies. More people are working through the night there, munching something. BPOs are a great opportunity. (Source: Info available in public domain and News item in The Hindu)

AgriBusiness & Food Industry w January 2012

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Rice Trade

Thailandâ&#x20AC;&#x2122;s position as top rice exporter threatened by floods and government policy â&#x20AC;&#x201C; Sundar Ramakrishnan, Vice President, Trading, Agrocorp International Pte Ltd

ll eyes had been on Thailand's new government since they came into power. The Pheu Thai Party has implemented a buy back policy of rice from famers since 7th October, to fulfil its election promise. The government will pay farmers baht 15,000 (USD500) per tonne for unmilled paddy rice and baht 20,000 (USD665) for unmilled jasmine rice. Prices forthese before the election were baht 8,150 (USD271) per tonne and 13,000 (USD432) per tonne respectively. If rice prices rise, farmers can buy the rice back from the government at the price they sold it, less financing, and sell it to the market (for a profit). Alternatively, they can leave the rice with the government, essentially selling it at the aforementioned price. in reality, this move has affected Thai rice exports more than the on-going floods. A significant increase in Thai rice prices can be expected once floods recede and farmers are allowed to sell their rice to the government. This will

Thailand, the world's largest exporter of rice, has been unsettled by heavy floods from tropical storms for the past few months. Though the floods have started to recede, it is only now that the damage incurred can be evaluated. This unexpected calamity is predicted to have potentially erased the global rice glut that was previously forecast (and yet has the FAG estimating a 3% production growth despite damages in Thailand). To date, the floods have damaged about 104M ha of rice land, mostly in the Chao Phraya River Basin, reducing the main harvest by about 24% from a previous forecast of 25.1 M tonnes to 16M tonnes (paddy basis). This untimely disaster has come into play just as the Pheu Thai Party had won the elections on 3rd July 2011.

definitely take a toll on the country's exports. Market volatility is the concern for some, with government stock release in the future which cannot realistically be executed at the buyback price (ie any releases in the future will have to consider world market prices). On the other hand, all these are also seen as drivers of productivity in competing export destinations, with some circles also speaking of how Thailand's neighbours might see their paddy enter the Thai rice pledging scheme. On account of the prevailing scenario, India is in a commanding position with the Thai economy crippled by Thailand's policy regurations and the natural calamity that has hit the country. As the world's second biggest producer and the third largest shipper of rice, India lifted the suspension of non-basmati rice exports in September after the staterun stockpiles reached record figures in July 2011 while a record harvest was also expected (which is in the process of being harvested today). The country was then authorised to export 2M tonnes of non-basmati rice in September, 2011. The lifting of the Indian export ban has effectively cut the number of orders going to Thailand, particularly in the parboiled rice segment. With Thailand's tender with Indonesia falling through the cracks over disagreements of the contractual terms, Indonesia has opened up to other options, having made recent purchases of 250,000 tonnes of rice from India and 300,000 tonnes from Vietnam. The rice market seems to be going on

AgriBusiness & Food Industry w January 2012

smoothly without the major presence of Thailand. The increase in Thai prices has led to the market opening up to other origins, led by India's timely return to exports. Instead of pushing prices up in countries of origin, the situation now promotes competitive pricing between the export' origins (other than Thailand) as market players seek to increase their slice of the-cake. Thailand has the primary task of rebuilding the country from the damage done by the floods. Its role as the world's largest rice exporter is at stake due to the buyback policy put in place by the new government. The policy will help farmers limit their losses from the floods but the question on everyone's mind is what the government is going to do with the rice they are buying if nobody is, willing to pay such a premium over other origins. Thailand can also expect a record crop in March, partly due to the positive externalities from the floods that are expected to reveal ideal planting conditions, minimal pest and disease problems as well as a highly motivated farmer who seeks to take full advantage of the rice policy and its benefits.

Headquartered in Singapore, Agrocorp International Pte Ltd is one of the key agricultural commodities international trade houses with selective origin presence across the globe. From modest beginnings in the early nineties, Agrocorp has become a sizable player in Asia Pacific, South East Asia and the Indian Subcontinent trading in rice, pulses, grains, sugar and cotton. The company's extensive procurement network is geared to bulk purchases and shipments while ensuring quality and competitive pricing.

Source: Gaftaworld

AgriBusiness & Food Industry w January 2012

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Wheat Supplies

Wheat supplies for 2011/12 discussed at IAOM Conference â&#x20AC;&#x201C; June Arnold, Head of Policy, Gafta

The 22nd annual Conference of the International Association of Operative Millers ((AOM) Mid East and Africa District. took place in the Dead Sea, Jordan from 2nd to 5th October. Other than technical papers, the third day was dedicated to the trading seminar looking at world wheat and maize supply and demand for 2011/12 from major exporters. Since last year, prices have come down with a good crop availability, a falling euro, more difficult funding and liquidity which have resulted in it being very much a cash market and a buyer's market which is good for the millers. World wheat production increased significantly this year and discussions centered on whether the main issue would be quality rather than quantity as in previous years, and whether we will see increased wheat feeding to replace maize.

US production down on last year

Milling industry in Jordan

Jordan imports around 900,000 tonnes of wheat annually through government tenders by the Ministry of Trade and Industry (MOTI). There are 13 private mills and one government mill with a total nominal grinding capacity of1.6M tonnes annually, and actual grinding at around 800,000 tonnes annually. The milling industry in Jordan is government regulated. In the past, the government used to subsidise all wheat that was sold to the mills. Three years ago the government redirected the subsidy solely towards the 78% extraction rate flour that is used for the production of Arabic bread in order to maintain a fixed bread price. MOTI

allocates quotas for the subsidised flour for each bakery according to the capacity of Arabic bread production. MOTI sells wheat to the Jordanian millers at cost price, and the mills receive a government subsidy for each tonne of flour sold to the pre-approved bakeries. Around 90% of the flour produced is sold as subsidised flour; the rest is patent flour that is sold at market rate. All the 78% extraction flour is fortified with a blend of vitamins and minerals. The fortification programme is sponsored by the Jordanian government, through the Ministry of Health, which distributes the vitamin pre-mix to the mills for free and the mills add it to flour at no extra cost.

AgriBusiness & Food Industry w January 2012

Total US wheat production is estimated at 56.5M tonnes, 6% down on last year. Production includes 21.6M tonnes of hard, red winter wheat, 12.9M tonnes of hard red spring wheat, 123M tonnes of soft red winter wheat, 8.1 M tonnes of soft white wheat and 1.6M tonnes of durum wheat. Exports are seen down on the last campaign at 27.9M tonnes (35.1 M). There were very favourable harvest conditions for soft white wheat with low moisture and proteins and good test weights. The quality of soft red winter wheat was similar to last year but more uniform in quality with less DON. There were extreme wet conditions which prevented planting and delayed the harvest for hard red spring wheat which is showing higher than average proteins and shrunken and broken grains. There was greater variability in hard red winter wheat with exceptional yields' in the Pacific North West but wetter weather delayed harvest in the northern Great Plains and no rain meant early harvest in the southern Great Plains.

Canadian wheat production seen higher

The results of the Canadian harvest are very promising considering the

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Wheat Supplies poor weather conditions up to June followed by ideal growing conditions up to September. Quality is looking good with 70% 'of the harvest achieving the top two grades. Wheat production is estimated at 25.12M tonnes with an export potential of 18.13M tonnes. The durum crop is much improved on last year and forecast at 4.08M tonnes, with an export potential of 3,70M. Last year there were difficulties experienced with high grades but grades are above average this year although the market is not expected to be fluid due to the tight world supply/demand situation.

EU faces strong export competition from Black Sea

EU wheat production was estimated at 135M tonnes for 2011/12. It was estimated that EU wheat exports, at 15M tonnes, would represent 12% of world exports. The conclusion was that massively increased export supply from

Russia, Kazakhstan and Ukraine would not require any greater exports from the EU where the supply and demand, as elsewhere, is considered comfortable.

Recovery in BlackSea wheat supplies

The Black Sea presentation focused on the production in Kazakhstan, Russia and Ukraine who are now contributing to nearly 30% of world wheat trade. World wheat production has recovered strongly due to a historical record crop in the Black Sea, forecast at nearly 99M tonnes from a planted area of 65M ha. Winter wheat yields in Russia have increased by 40% over the ten years since 2001. Wheat exports are expected 'to be strong in 2011 at 35M tonnes. The cost of production (FOB) varies across the Black Sea with cost of product, logistics and government support amounting to very different results,

Estimates of 200 USD/tonne for Russia, 233 USD/tonne for Ukraine and 240 USD/tonne for Kazakhstan were given. Healthy exports from this region are expected during this campaign and sharp increases in ending stocks are expected in the region despite export capacity. The Black Sea needs to stay competitive all year round to export availability and will rely on North African demand.

Maize market is now closely aligned to wheat market

In conclusion, wheat was in good supply, and the general price was more influenced by the US maize supply and demand with a possible yield reduction and acreage reduction expected in the USDA report in January. The macros including the financial situation in EU was also to have a major impact on the price movements for commodities. n

Mark your dates 25-26-27, August 2012 International Exibition on Grains, Cereals, Spices, Oil Seeds, Products & Technologies

3rd

Gayathri Vihar, Palace Ground, Bangalore, India www.graintechindia.com AgriBusiness & Food Industry w January 2012

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Post Event Report

2011 tastes success in its inaugural edition

iversified Communications, the leading convenor of Food Exhibitions across four continents, has completed Fine Food India 2011 to great reviews from both exhibitors and visitors alike. This threeday extravaganza of food and wine held at the Pragati Maidan, New Delhi from 5 – 7 December, 2011 united the entire food and beverage industry. 138 exhibitors from 17 different countries graced the Exhibition floor, with celebrated International brands from such exhibitors as Sopexa France, Austrade, Southern United States Trade Association (SUSTA), Dabon International, Foods and Wines of Spain, The Tree of Life, Dilmah Teas and a host of other quality food companies. Indian exhibitors were also plentiful with large pavilions arranged by Ministry of Food Processing Industries (MOFPI) and Agricultural & Processed Food Products Export Development Authority (APEDA). The Event was run by the motto “For the Industry, By the Industry”, and the Industry was out in full force with 3445 attendees reaching the venue across the three days. The visitors were educated and entertained in various forums available to them - the Business Forum, the Food Theatre, the Drinks Theatre, the Bocuse d’Or Chef Championship and the 4th Indian Sommelier Championship. Often all seats were taken and it was standing room only. The aroma of the delicacies prepared by the Indian and International cooking experts, including Chef Dani López from Spain, Chef Saby of Olive Bar Kitchen, Chef Nishant Choubey, Chef Umesh Mattoo, Chef Ashu Chug, Chef Tarun Kapoor, Chef Akshay Malhotra and Chef Shivneet Pohoja, pulled the food enthusiasts in huge numbers towards the Food Theatre. Among other activities in the

Food Theatre were the Spanish Olive Oil Tasting hosted by Chef Xabier Monreal Rozas from Spain and a well-attended Masterclass on Secrets of French Cuisine by Chef Jerome Cousin of the Le P’tit Bar. Chef Manjit Gill, President, IFCA / Executive Chef, ITC Group, noted, “Fine Food India was a great start. The Event was very well-organized and managed. The Food Theatre was quite busy on all the three days. The setup of the Food Theatre is worth appreciating. Like this year, IFCA will extend its support and encourage the Event next year too.” The Drinks Theatre invited the discerning wine lovers and beverage makers for numerous interesting activities like the wine tastings of Fratelli Wines, Reveilo Wines and Foods and Wines from Spain, Drinks Forum by Sopexa and UBI France, learning sessions conducted by Sommelier Magandeep Singh, Sommelier Gagan Sharma and Sommelier Gurjit Singh Barry, Cocktail making session by professional mixologist Yangdup Lama, and the popular 4th Indian Sommeliers Championship. Celebrating excellence in culinary talent, the Bocuse d’Or Chef Championship awarded the best chefs to compete in the Bocuse d’Or Asia 2012 Championship. Another value-packed feature at Fine Food India was the Business Forum. The Forum featured highly informative sessions on the growth of the food processing sector, trends in modern retail, etc. conducted by industry experts belonging to trade bodies like Forum of Food Importers (FIFI), Hospitality Purchasing Managers’ Forum (HPMF) and more. The Exhibition Floor was adorned by products from leading companies such as Foods and Wines from Spain, Juberfam & Mittal, Tree of Life, SUSTA, Austrade and its Australian representatives, Dilmah Tea, Dabon

AgriBusiness & Food Industry w January 2012

International, Guangxi Forise Yeast Co., a number of French wineries including Domaine Seguin Manuel, Chateau La Tour Marchillanet, Domaine De Nalys, Chateaux Solidaires, Eurial, Chateau La Nerthe, Federation Des Producteurs De Chateauneuf Du Pape, and Indian wines including Fratelli Wines, Sula Vineyards, Reveilo and Wi-Not Beverage Solutions. Harshita Gandhi, Director, Tree of Life, commented, “Fine Food India was extremely beneficial for us. It gave us the right exposure and an excellent opportunity to reach out to our customers. Fine Food is undoubtedly the best platform to communicate to the retailers about our company and business. We extend our support whole-heartedly to Fine Food India and its future endeavours.” On the successful launch of Fine Food India from the global Fine Food portfolio, Paul Phelan, International Director, Diversified Communications, said “Diversified are ecstatic with the market response for Fine Food India, from both the Exhibitor and the Visitor feedback. Our Exhibitor feedback especially has been extremely encouraging, with high quality visitors a highlight. Over half of the 2011 Exhibitors have already committed for our 2012 Show. The Visitor feedback has also been pleasing with trade visitors commenting on the range of foods and wines, and also various classes and forums to keep them engaged during their stay. We now can’t wait for the 2012 edition.” The organisers of Fine Food India are committed to deliver an enriching experience with every passing year. The next show is scheduled on 17 – 19 September, 2012 at Pragati Maidan Exhibition Complex, New Delhi and promises a bigger and better experience. n

Corporate

PepsiCo to Take on Regional Food Biggies

ood and beverages firm PepsiCo has consolidated traditional packaged snacks such as namkeens for the mass market under a new entity, Lehar Foods, to take on regional brands such as Balaji, Bikanerwala and A-Top Foods. Lehar Foods will operate on a lowcost model with its own profit and loss account, and will use Lehar brand name. "We were under-represented in traditional snacks in the lower-income population strata," Varun Berry, PepsiCo India Holdings CEO (foods) said. "Mass-priced snacks have the potential to explode and we want to address this market." Berry expects Lehar to contribute 50% to PepsiCo's foods division Frito-Lay by 2015, up from just 10% now. Lehar Foods has a lean team of 35 employees under CEO Sudipto Mozumdar, who reports to Berry. "The mandate of the team is to move fast in the market," said Berry. That means, there won't be multiple rounds

of research and Power Point presentations in Lehar Foods. He also played down market speculation that PepsiCo may buy snacks major Haldiram's and regional players such as Gujarat-based Balaji Wafers and A-Top Foods. "I don't think buy-outs are required. We can grow organically," he said. The overall salty snacks market in the country is estimated at $3 billion, or about Rs 15,800 crore. Lehar Foods will operate on a low, fixed cost model. It will not get into manufacturing, but will operate through eight third-party partners. Delhi-NCR, Haryana, UP, Maharashtra and Gujarat have been identified as the priority markets for Lehar Foods for now, which covers onefourth of Frito-Lay's distribution strength. It will be scaled up to other markets gradually. For now, Lehar will not diversify beyond traditional namkeens. "We don't want to fritter away energies by entering other categories at this stage," Berry said. The move comes at a time when Frito-Lay is facing strong competition

across its product portfolio. Though it was an early mover in categories like oats and baked snacks, rivals such as Kellogg, GlaxoSmithKline Consumer and Marico have entered the oats market to challenge Frito-Lay's Quaker oats. Biscuit makerBritannia launched a product similar to Frito-Lay's Aliva snacks last month, while confectionery player PerfettiVan Melle too has rolled out packaged snacks. Then there are regional competition from brands such as Bikano and Balaji, and private labels in organised trade. Berry declined to comment on how PepsiCo's market shares are being impacted by rivals, but said: "The competitive intensity is stirring up growth...it's keeping us on our toes."

AgriBusiness & Food Industry w January 2012

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Honey

No To GM Pollen In Honey -Says ECJ [Indian Perspective]

by A.k.Singh (President & CEO Little Bee Impex)

he European Court of Justice (ECJ): Case -442[FR][DE] through Regulation [EC] 1829/2003 ruled on 6th September, 2011 that honey containing traces of genetically modified products, even unintentionally, “Must always be regarded as food produced from GMO” paving the way for compensation claims to farmers whose crops are contaminated. Its scope of application is defined by foodstuffs that are manufactured including pollen from the plant in question. The direct consequences of the EU court’s decision are everywhere. In Germany, for example, four fifth of the honey is currently imported, mostly from countries where farmers are already planting genetically modified plants to a high degree. If traces of these GM plants are found in imported honey or foods containing honey, then chances are great that the products will have to be taken off the shelves of the European Supermarkets. The ruling could hit imports of honey from countries like Argentina, Canada, Mexico, Australia, New Zealand, Russia and China where GM crops are widely grown.

ECONOMIC IMPLICATIONS of court decision to the beekeepers: Pollen in honey is now classified as a food ingredient. This will have far reaching consequence for beekeepers and the food industry. Looking at the labeling threshold and total amount of pollen present in honey, GM pollen is very insignificant. In future, pollen must be included in the list of ingredient, meaning every batch of honey will have to be analyzed and tested for the presence of pollen. “In any event, beekeepers and processors are going to find themselves facing yet another unforeseeable financial burden and liability consequences”

CONSUMER’S PERCEPTION ON GMO: Honey, once it is known to consumers to contain traces of genetically engineered organisms, will probably be unsellable, not because of proven risks, but as a result of fabrication of its dangers. The assumed health and environmental risks of genetic engineering have been voiced out for so long that even when scientists almost uniformly declare the health effects to be zero, public opinion remains fixed against it. Consumers just do not want the GMO Products. People do not want to buy it, and that is apparently enough. GMO VS INDIAN POSITION India is very weak country for application of GM seeds and technology because of vehement opposition by NGO and Environment protection group. India as a party to convention on biodiversity and having ratified the Cartogena Protocol (CP) is committed to the use of safe handling of LMOs (Living Modified Organism) or GMOs. CP provides a broad framework on bio safety especially focusing in trans boundary movement of GMOs and also covers seeds that are

AgriBusiness & Food Industry w January 2012

meant for intentional release into the environment, as well as those GMOs that are intended for food feed or used in food processing. In India, the Genetically Modified Organisms are regulated under the Environment Protection Act 1986 (EPA). In addition the Indian bio safety regulatory framework comprises 1989 "Rules for the Manufacture, Use, Import, Export and Storage of Hazardous Microorganisms, genetically Modified Organisms and Cells" (1989 Rules), and Department of Biotechnology guidelines, the 1990 "Recombinant DNA Safety Guidelines" (1990 DBT Guidelines) and 1994 "Revised Guidelines for Safety in Biotechnology" (1994 DBT Guidelines) and 1998 "Revised Guidelines for Research in Transgenic Plants and Guidelines for Toxicity and Allergen city Evaluation of Transgenic Seeds, Plants and Plant Parts" (1998 DBT Guidelines). Bt. Cotton was the first transgenic crop released in India. After the introduction in the year 2002, there has been a lot of controversy surrounding Bt. Cotton. Its performance, impact on the environment, biodiversity and health of cattle has been widely debated. Gene Campaign had organized a national conference on the ‘Relevance of GM Technology to Indian Agriculture and Food Security in 2003. Participants at this conference included the full range of stakeholders from industry, research and academia, civil society, farmers, political leaders, students and concerned citizens. Twenty consensus recommendations were made by this group and sent to the Department of Biotechnology (DBT). DBT rebutted each one of them and refused to even discuss them. After this, Gene Campaign decided to file a Public Interest Litigation in the Supreme Court, asking for improvements in the regulatory system for GMOs. A Fresh PIL was filed in 2007 to block the deregulation of GM food imports. Since

Honey organic production methods. Since 1999, the conditions for organic farming and for the marketing and import of organic products have been legally regulated.

Major Cotton Producing areas in India are mentioned in the Exhibit below. STATE DISTRICT Andhra Pradesh Burgamphad, Chevella, Enkoor, Janagaon, Madhira, Mothkur, Rammanapet Gujarat Amreli Haryana Sirsa Maharastra Yevla Punjab Abohar, Barnala, Bhatinda, Bhikhi, Fazilka, Giddarbana, Lunner, Lahrajaga, Malout, Mansa, Rampuraphul

then, GM movement in India is almost grounded to zero level and we do not see its revival in near future. As far Indian beekeeping is concerned, there is no such incidence of GM Pollen found in honey or having such areas where trans boundary movement of GMOs take place or where GM crops are grown. If one looks at beekeeping floral map of India, the above mentioned areas do not figure out any where for migratory beekeeping. MARKET VIEW: Honey contains very small quantities of pollen. In relation to the total quantity

of honey, the total proportion of honey pollen may lie between 0.1 and 0.5 per cent. The possible proportion of honey from GM plants therefore remains far below the legal threshold value of 0.9 per cent. However, consumer choice should be protected. GMO free should be a verifiable option on the shelf for purchase. In this context, chance of selling GMO free Indian honey in the EU stands better. From the view point of organic sale, India will have greater competitive advantage because in the European Union, genetically modified organisms (GMOs) and products derived from GMOs are explicitly excluded from

CONCLUSION: Honey always contains pollen. Beekeepers do not put pollen in honey as an ingredient. Bees put it in the comb because it gets struck to them when they are foraging. “To say honey contains pollen is like saying milk contains lactose.” We shall be surprised if you find any amount of GM pollen in anyone’s honey in this country. JUDGMENT OF THE COURT (Grand Chamber) 6 September 2011 (*) (Genetically modified food for human consumption – Regulation (EC) No 1829/2003 – Articles 2 to 4 and 12 – Directive 2001/18/EC – Article 2 – Directive 2000/13/ EC – Article 6 – Regulation (EC) No 178/2002 – Article 2 – Apicultural products – Presence of pollen from genetically modified plants – Consequences – Placing on the market – Definition of ‘organism’ and ‘food for human consumption containing ingredients produced from genetically modified organisms’) In Case C 442/09.

EU GMO legislation – recent developments Two reports were published on 28th October evaluating EU GM legislation on food and feed and cultivation. These reports confirm that the problems of implementation are not from its design or objectives but rather the way the GM issue is handled politically.

he reports underline that the authorisation system could be more efficient and that GMO cultivation would benefit more from flexibility and the risk assessment process from further harmonisation. On the authorisation process for food and feed, stakeholders and competent authorities were in favour of keeping the responsibility of the risk assessment with the European Food Safety Authority (EFSA) but suggested the addition of some kind of public comment to the process. They also recommended the tabling of draft decisions in a timely fashion, as well as a solution to move away from zero tolerance to avoid an increasing number of low level presence (LLP) incidents, with international cooperation needed particularly on events where developers have no intent to seek authorisation or export to the

EU. On labeling, there was clear support for maintaining a 0.9% labeling threshold, but a question on negative labeling ("GM free") across many countries in the EU and support for harmonisation on this issue. There was also some discussion about the extension of labeling requirements to cover livestock products, which would have to be < carefully considered in view of thecost implications arising from traceability requirements and consumer reaction. LLP is an issue which does require a solution and this is accepted by the majority of stakeholders and competent authorities but there is no clear support for legislative amendments to address the issue. However, against this background Gafta welcomed the news that Paola Testori Coggi, Director General of the Health and Consumer Directorate of the European Commission recently pledged to come forward with proposals to deal with

adventitious traces of nonauthorised CMOs in food imports, following the entry into force of new rules setting a tolerance threshold of 0.1 % for adventitious traces of non-authorised GMOs in feed imports. It has been reported that the extension of the technical solution to food may be tackled as early as spring/summer 2012 although there is still much political resistance among certain member states. Gafta will continue to lobby for a workable solution to the LLP issue in the EU.

AgriBusiness & Food Industry w January 2012

South Africa â&#x20AC;&#x201D; Potential market for agri-food products

outh Africa imports fruits, vegetables and spices from developing countries. In 2009, total imports of fruits, vegetables and spices in South Africa amounted to 342,698 tonnes by volume and valued at US$ 325.7 million. Of the total imports, vegetables made up to 42 percent, processed fruits and vegetables 36 percent, fruits 16 percent, and the remainder consisted of spices. With the exception of spices, vegetables, fruits, and processed fruits and vegetables imported by South Africa registered significant growth over the period 2005-2009. During the period, imports of vegetables, fruits and processed fruits and vegetables in South Africa grew by a CAGR of 9.39 percent, 9.52 percent, and 8.36 percent, respectively.

Imports of fruits, vegetables and spices by South Africa: 2005-09

between domestic production and demand. The level of imports of the commodity in South Africa thus, largely depends on the success of the local crop. About 10 percent of dried bean usage is for canning, and rest 90 percent is sold directly to packers for distribution to the retail sector. While South Africa is a major producer and exporter of fruit juices, apple juice and grape juice are imported to meet the shortfall in supplies to the domestic market. Apple and grape juices are also used as a base for other flavours by the" large fruit juice producers in the country. South Africa does not import much in the way of fresh vegetables as the country is generally self-sufficient in vegetable production. Imported fresh and chilled vegetables in South Africa are mostly in the form of specially or non-seasonal vegetables, such as baby sweetcorn, mangetour, snow peas, asparagus and fine beans. Dried leguminous vegetables are an important part of the overall import basket of South Africa. In addition to being packaged directly for retail sale, these products are used in the manufacture of stocks and soups. Import of vegetables by South Africa: Share by volume in 2009

Source: UNCTAD

In terms of products, imports are concentrated, with 70 percent of the volume taking place across 10 tariffheadings. Dried kidney beans (HS 071333) are by far the largest imported item in this category, accounting for 27 percent of the total imports of fruits and vegetables in 2009. Other most significant items are apple juice (HS 200979), followed by bananas, dried and shelled peas (HS 071310), prepared potatoes (HS 200410), grape juice (HS 200969) and prepared tomatoes, whole or in pieces (HS 200210). Dried beans are an the South African diet required

important protein source in and imported beans are to make up for the shortfall

AgriBusiness & Food Industry w January 2012

Source: UNCTAD

Bananas are the leading fruit imported by South Africa. Despite South Africa producing around 400,000 tonnes of bananas annually, there is a supply shortage of the fruit in the domestic market, which is supplemented with imports from the regional sources, such as Mozambique and Zimbabwe. Other imported fruits consist of products that are not produced in

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South Africa, such as kiwi fruit; and to meet domestic demand of non-seasonal fruits, such as avocados, mandarins, clementines, nectarines, peaches and oranges. Nuts form an important part of the import basket as South Africa produces only macadamias and pecans. All other nuts are imported. Import of fruits and nuts by South Africa: Share by volume in 2009

Fruits & Vegetables

the catering and food services sector. Other key items imported under this category are canned tomatoes, and prepared and preserved groundnuts. Top six suppliers of fruits, vegetables and spices to South Africa: Share by volume in 2009 Origin

Share in Overall Share of key products in total imports imports of (%) agrifood (%)

China 42 Kidney beans (57), Apple juice (22), Processed tomatoes (6) Canada 6 Peas (80), Lentils (15) Argentina 6 Grape juice (58), Processed groundnut (17), Processed potato (10), Kidney beans (6) Mozambique 6 Bananas (94) India 4 Spices (16), Turmeric (14), Capsicum pimenta (13), Dried onions (9), Sesamum seeds (8) Italy 4 Processed tomatoes (60), Grape juice (9), Beans (6), preserved cherries (5) Source: UNCTAD

Source: UNCTAD

South Africa imports almost all of its requirements of spices. The largest imports in this category consist of dried, crushed and ground chillies, followed by coriander seeds, turmeric and whole pepper. Other significant spice imports are sesame seeds, ginger, cumin, cinnamon, mustard seeds and cloves. Import of spices by South Africa: Share by volume in 2009

Source: UNCTAD

Imports of processed fruits and vegetables in South Africa mainly consist of apple and grape juices to be used in the production of other juice products. Prepared, frozen potatoes are another important item in the processed vegetables category imported by South Africa; these consist of fries primarily for Imports of processed fruits and vegetables by South Africa: Share by volume in 2009

Source: UNCTAD

Six countries account for 70 percent of fruits, vegetables, and spices supplied to South Africa. They are China, Canada, Argentina, Mozambique, India and Italy. Trade Structure South Africa is a member of the Southern African Customs Union (SACU), and also a member of the Southern African Development Community (SADC). The Trade Protocols allows South Africa to have preferential trade regimes with the member countries, such as zero tariff structure. The EU-South Africa Free Trade Agreement also allows preferential trade regime, such as reduced duties under the most-favoured nation (MFN) tariff structure. The International Trade Administration Act of South Africa provides for the control of the import and export of all goods specified by regulation through a permit system. All imports of fresh fruits and vegetables, nuts and spices are inspected by the Directorate of South African Agricultural Food, Quarantine and Inspection Services (SAAFQIS) of the Department of Agriculture for pests and diseases. Opportunities Over the past decade, the increased buying power of South African consumers has created a larger consumer market for convenience and health food, which include 'healthy meals', such as ready-made vegetable and fruit salads, and spicepacks containing all the spice ingredients for variety of curries. Demand has also been rising for certain fruits, such as avocados, and organic fruits and vegetables. In South Africa, opportunities for exporters in the developing countries lie in the supply of non-seasonal or counter-season fruits and vegetables, which include citrus, avocados, grapes, stone fruit and bananas. There are also opportunities for watermelons and fine vegetables, such as longstem broccoli, fine beans, snap peas, mange tout, and baby corn. Opportunities also lay in supplying raw materials for the processing sector, which include dehydrated legumes, dehydrated vegetables for use in soups and stock, and nuts. Private labels in this segment in South Africa also offer retailers and exporters opportunities for differentiation in an increasingly competitive environment and the number of products with them are also rising rapidly, which include canned vegetables, canned beans, counter-season fruits, fine vegetables and spice mixes. Reference: UNCTAD

AgriBusiness & Food Industry w January 2012

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Retail

How FDI in retail will hurt farmers – Shekar Swamy

ith the government stating that its FDI policy on multi-brand retail will be on hold till after the UP elections, the publicity assault to prepare the ground for it to be brought back is palpable. The strategy employed is the classic “divide and rule”. “If the trader groups are against FDI, then let farmer groups be set up to fight the trader groups” seems to be the ploy. We now see repeated stories in the media about how FDI in retail will benefit the farmers of India. We could have taken this seriously, but unfortunately the global evidence points in the other direction. Farmers in the West have paid a big price, with hundreds of thousands forced to shut down their farms, due to corporatisation of the farming sector, along with corporate concentration on the purchasing side among processors and retailers. Big Retailers' Biz Model Big retail in the West and elsewhere functions on a simple business model. Grow bigger and bigger till the market becomes an “oligopsony” — a situation where a small number of buyers exert power over a large number of sellers. The UK food retailing industry, for example, is now dominated by just four supermarket chains who together account for over twothirds of retail food sales. Likewise, the top five chains in the US account for over 60 per cent of food sales. This results in the retailer exercising enormous control over their suppliers, which includes the farmers. This is shown in the diagram above: It is this structure that has reduced farm prices and has forced the closure of farms. Foreign retailers will replicate this structure in India over time, with disastrous consequences for the Indian farmer.

Punjab Example is Wrong A prominent TV channel featured the story of a few farmers in Punjab highlighting how direct purchases of produce by a retailer had given them a higher yield. This is a type of faulty reasoning described in college textbooks as “the fallacy of composition”. The fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some part of the whole. The channel had obviously hand-picked a few farmers who suited its conclusion. The only way to assess the impact on farmers is to look at countries where big retailers dominate the market, and see how the entire farming community has fared. Lower Prices to Farmers A good way to measure the effect of retail power on farmers and farm workers is to look at the portion of each dollar spent on food at the supermarket — referred to as the retail food dollar — that goes back to the farm. By this measure, virtually all food producers in the US have seen their share of the retail food dollar decline over time, at points dropping so low that farmers have been forced out of business in droves. Here are just a few examples: In 1970, hog producers (those who raise pigs) in the US derived 48 cents of the retail dollar spent on pork. Three decades later, they received only 12 cents out of every retail dollar, causing loss to the farmers. While this happened, consumers didn't benefit from the low farm prices at all: retail pork prices stayed stable. (Source: Agribusiness Accountability Initiative) According to the US Department of Agriculture's Economic Research Service, in 1990, ranchers and farmers received 60 cents of the retail dollar spent on beef, retailers received 32.5 cents and meat companies 7.5 cents. In 2009, the numbers were reversed — retailers took 49 cents share of each dollar (up 16.5 cents) consumers spent on beef, while ranchers and farmers got 42.5 cents (reduction of 17.5 cents) and meat packers 8.5 cents. The breed of the small rancher/farmer in the US is under threat as they go out of business in large numbers year on year. (Source: http://bloom.bg/et4eLU) In the UK, the Royal Association of British Dairy Farmers has complained vociferously that prices paid to farmers for fresh milk are simply unsustainable, with the average farmer losing money on each litre of milk produced. This has happened even as the supermarkets' margin on fresh milk has

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increased steadily over the years. While it costs the consumer £1.45 to buy four pints of milk at a supermarket such as Tesco, the farmer receives just 58 pence (40 per cent) of this, causing a loss of 3 pence for every four pints. Small farmers have closed their dairy operations as a result. In India, dairy farmers receive as much as 75 per cent of what the consumer pays for a litre of milk. (Source:http:// news.bbc.co.uk/2/hi/uk_news/ magazine/8103119.stm) Subsidies Prop Farming If big foreign retailers are expected to shore up our farmers as claimed by the publicity reports, there is no evidence of this in the countries where these retailers have spread their wings the widest. In the US, farmers received direct commodity subsidies of over $167 billion in the period 1995-2010 (Source: http:// farm.ewg.org/region.php?fips=00000) The European Union paid direct farmer subsidies of €39 billion ($51 billion) in 2010 alone. Why these subsidies if the big retailers are paying the best prices to the farmers as claimed? Sorry Example of Mexico Mexico (population 112 million) signed the North American Free Trade Agreement in 1994. It has since witnessed a virtual takeover by Walmart which has gained nearly a 50 per cent share of the country's retail market. Mexico can now be described economically as a vassal state. A combination of big retail and imports under NAFTA has driven over 1.25 million small Mexican farmers — 25 per cent of the country's farmers — off their farms. Consequently, the illegal immigration to the US, which was to have been reduced because of NAFTA, has more than doubled to nearly 6 million Mexicans. Even a fraction of such a displacement in India, arising out of misguided policies, will cause social disruption on a vast scale. (Source:http://www.yesmagazine.org/ issues/reclaiming-corn-and-culture) India has more than 58 million small farmers, 12 million small retailers and 26 million small and micro enterprises representing over 450 million people. The 300 MPs of the parties who opposed FDI in retail are right. Disturbing this mass of people is not politically sustainable. The author is Group CEO, R K SWAMY HANSA and Visiting Faculty, Northwestern University, US. The views are personal as expressed in Hindu Business Line.

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Retail

Global retailers prefer to wait, for now – Anjali Prayag

f global retailers have never played on the see-saw, then India is where they should head to in the next few months. Although they have already missed the initial days, it's unlikely the scene will change much in the months to come. Late on November 24, the world hailed the Government for giving the much-awaited nod to 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail. It was a significant decision for the $350-billion Indian retail sector that is looking for funds, apart from help in best practices and technical know-how The Union Cabinet approved foreign players such as Walmart, Tesco and Carrefour to enter the country with a 51 per cent stake in retail ventures. Unabated inflation and supply chain issues would be addressed with this decision, the Government assured dissenting voices. Even before the industry welcomed the ‘good' news, the Opposition, citing issues such as job loss, kirana stores losing business to MNC retail chains and farmers and SMEs being short-changed, ensured that the Government put the decision on freeze. As a result, even as the year comes to a close, global retailers waiting in the wings are in no better position than a year ago. ‘Won't Wait Forever' While the Government is still hesitant

about the next step, it's wrong to assume that global retailers will wait forever, say retail experts. “The Government is sending the wrong signals to global players. While they are wary of the policymaking process in the country, these retailers also now realise it will be a challenging task to tackle each State Government on APMC rules if FDI is ever allowed,” says Mr Arvind Singhal, Chairman, Technopak Advisors. Global retailer Walmart has indicated that India allowing 51 per cent FDI in retail had actually exceeded its expectations. In view of the political sensitivity, the company was comfortable with a 49 per cent FDI. Mr Raj Jain, Managing Director and CEO, Bharti Walmart, had said in November that while the FDI nod was welcome, the company will need to study the conditions and the finer details of the new policy and the impact it will have on its ability to do business in India. The American Chamber of Commerce (AmCham), with about 500 members, has said that given the Government's desire to have a calibrated approach, “Amcham recognises the importance of a phased change of allowing the first step of 49 per cent FDI.” Mr Singhal blames the Government for not being articulate enough about the impact of FDI. “That's because the policymakers themselves have not understood the concept well enough,” he says.

Challenges to Fdi On challenges the foreign retailers could face in the event of FDI opening up, Mr Singhal puts rigid local APMC rules on top, followed by infrastructure inadequacies and unskilled workforce. “APMC rules in various States have to be disbanded and farmers should be free to sell to whoever they want,” says Mr Singhal. Job Generation The issue of talent or job creation can be tackled by the industry, says Mr Kumar Rajagopalan, CEO, Retailers Association of India. “There are a lot of unemployed youth in the country and they can be made employable by effective skill development.” He sees the cost of real estate as a bigger hurdle to retail sector development. “A more comprehensive city development plan by States will help. If we realise that shopping is an integral part of living standards in the cities and the potential of locked real estate with Government entities is planned and used, this can also be tackled.” Currently organised retail penetration in the retail market is about eight per cent, indicating that there is a huge opportunity for growth. Retail business now contributes about 14 per cent to the GDP. Source: Hindu Business Line

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Retail

Corporate Hijack of Retail â&#x20AC;&#x201C; Dr. Vandana Shiva

n November 24,2011, which was the third day of Parliamentary dead lock on issues of rising prices and neoliberal economic policies that had created a severe economic crisis for the majority of Indians, the Government announced 51 % Foreign Direct Investment (FDI) in multi-brand retail. In other words, 'opening the door to retail giants like Walmart to devastate the Indian retail economy as they have destroyed every economy where they have entered. In effect, the Government was saying to the people of India and Parliament "we don't care about democracy", "we will push the agenda of corporate rule even as the model collapses in its own countries of U.S and Europe". Commentators have presented the defense of the small farmers and the small retailer as ideology as if the blind commitment of the Government to giant retails is not an ideological commitment. The Prime Minister Manmohan Singh had made this ideological commitment in 2005 when he signed a US-India Knowledge Initiative in Agriculture to hand over India's seed sector to gene giants Monsanto, India's agricultural trade to grain giants like Cargill and ConAgra and India's retail to retail giants like Walmart. In fact these corporations sat on the board of the U.S -- India Knowledge agreement. There is a claim being made that opening up Indian, retail to FDI will develop backend infrastructure. Firstly, for our decentralized economy we already have a functioning infrastructure of Bazaars, Mandis and Haats which work at low cost and generate high-employment and support the livelihoods of millions' of farmers and 400 million people who are involved in' small retail. This model is "the model

for retail democracy". The contrast is not between an organized retail controlled by Walmart and un-organised indigenous retail model. It is between self-organised and democratic retail vs a centralized corporate controlled model which profits at peoples cost by buying cheap from producers and suppliers. Secondly, the assumption that Walmart will develop backend infrastructure is totally falsified by the fact that since 2007, when Walmart was allowed to enter the wholesale distribution and Cash and Carry outlets 'in a joint venture with Bharti and it started to open Easy Day and Best Price box stores, it has invested nothing in the backend. It has in fact used the existing infrastructure offered by Indian companies. There is no reason to expect the next five year to be different. The Government must do an assessment of Walmart's Cash and Carry venture before opening up the retail market blindly to them. The decision of the Cabinet to allow 51% FDI in multi-brand retail is also constitlltionally violative of the federal structure of our country and takes away the powers over retail that States have under the Constitution. Since this issue has far reaching implications for the livelihood of more than half of India, it must not- be implemented till the States make their democratic decisions. The centre cannot undermine India's federal structure by undemocratic decisions. The so called conditions put on the FDI are an, eyewash and are totally undone by the clause that says that corporations like Walmart will self certify ,whether they are meeting those

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conditions. Self certification by giant corporations is de-regulation. Another myth that is constantly pushed to justify the corporate hijack of retail is the issue of waste. It is argued that 40% of horticulture produce in India is wasted because of the absence of the giant retail. This is totally false. In our decentralized and diversified economy nothing goes waste. Fruits and vegetables that go bad are eaten by cows or are composeted. This recycling of organic matter is only possible in a decentralized system. In fact more and more data is now coming out that giant globalised retail is responsible for the waste of 50% of the food in the world as documented in recent books such as the "American Wasteland by Jonathan Bloom and "Transforming Food Waste into a Resource" by Andrea Segre. The final myth that is being promoted to justify Walmart entry is that farmers will get better' prices. Nowhere in the world have corporations like Walmart and Tesco increased returns to producers. Their "Cheap Prices" policy is based on buying at extremely low prices from farmers often below costs of production, till the farmer is pushed out of farming after a few years of supplying to the retail chains. If the Monsanto model of seed monopoly has pushed our costs of production to such an extent that farmers are trapped in un-payable debt and 250,000 farmers have committed suicide, the Walmart model of retail monopoly will destroy farmers by buying below the cost of production and by robbing them of other markets through destroying other alternatives. This is a model for genocide. It cannot be allowed to spread in India.

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Retail News

Future Group buys Transmart India warehousing business

uture Supply Chains Solutions, the logistics and supply chain arm of Kishore Biyani's Future Group, has bought the warehousing business of Transmart India, including a 2,00,000-sq ft distribution centre on the outskirts of Mumbai and more than a dozen clients, for an undisclosed amount. "It's a game changer for us in the contract division as we will now have the best warehousing facility in western India, which is a scarce commodity," said Anshuman Singh, MD and CEO of Future Supply Chains, which has over 350 customers across sectors. He said the firm will now have readymade infrastructure that can handle goods worth Rs1,500 crore each. Transmart has assets worth $6 million and, according to industry sources, its clients

include Johnson & Johnson and Amway. The acquisition comes at a time when the government has held back its decision to allow foreign direct investment (FDI) in retail, which had several riders including that at least 50% of the total foreign inflow be invested in back-end infrastructure. "Irrespective of FDI, retail logistics is a very strong sector and nowhere in the world does a retailer handles its own supply chain completely," said Amitabh Mall, director at Boston Consulting Group, which estimates the size of India's organised retail market at $28 billion and expects it to grow nine times to $260 billion in 10 years. Future Supply Chains currently has a warehousing storage space of 5 million sq ft with an additional 9 million sq ft being planned by 2014. In 2009, Hong Kong-

based supply chain firm Li & Fung Group had bought a 26% stake in the company for $30 million. But as the scale and f u n c t i o n s Kishore Biyani expands, the business is also increasingly becoming capital intensive and the company plans to at raise around Rs1,000 crore next year through a combination of debt and equity. At present, Future Supply Chain earns more than 70% of its Rs600-crore business from servicing retail operations of its parent company Future Group.

Best Foods bets on retail plan

he boom in modern retail could spell good news for Basmati, feels Dr Aayushman Gupta, Business Director of Best Foods (in picture). The basmati player, which has tied up with 900 large, modern, retail formats and kirana stores across 50 cities, has started setting up its own exclusive outlets as well. Thirty stores have opened in Delhi already. These are small, less than 300 sq. ft. and store in store (SIS) formats in high footfall locations and within malls. The stores stock not just rice, but honey, walnut, and almonds. “We are looking at healthy foods that have a synergy,” says Dr Gupta. In January Best will launch its media campaign. Already below the line activation – cooking demos at the exclusive stores on microwaves – has begun. Currently, the company exports more of its rice. But in three years time, we hope to have a 50:50 presence – half will be exports and half will be domestic market, says Gupta.

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Corporate News

Amul sues Nestle for copying A+ brand

he 'utterly-butterly' girl has threatened to drag the Indian arm of Nestle, the world's biggest food firm, to court. Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets the Amul brand of milk, butter, cheese and ice cream, has shot off a legal notice to Nestle over trademark infringement of its dairy brand A+, four days after the multinational rolled out a new brand of milk and yogurt called Nestle a+. GCMMF is the country's biggest dairy firm with a turnover of Rs 9,800 crore. The notice, sent by the cooperative's lawyers on Monday, alleges that Nestle is 'guilty of passing off its identical products' as

those of GCMMF's. The Gujarat-based dairy firm has been selling fortified cheese under the brand Amul A+ for over a year, and high-calcium milk under the label Amul Calci + for almost four years. Reacting to ET's query, a Nestle India spokesman said: "We own the rights to use a+ as a trademark and therefore do not see why anyone should object to our using it. We have not received any legal notice on our use of a+, and if received, shall respond as appropriate." The legal notice, marked to Nestle

India Chairman and MD Antonio Helio Waszyk, has been sent by Ahmedabadbased legal firm Nanavati Associates. "You (Nestle) have rendered yourself liable for prosecution under the provisions of the Trade Marks Act, 1999, and under the common law rights," the notice reads. (Source: ET).

Coffee export orders drop on sluggish Europe demand

rders for Indian coffee exporters have turned sluggish at the start of new crop year 2011-12 (October-September) as buyers in the key market, the debt-crisis hit Europe, have preferred to keep low inventories. “Our order books are thin this year as buyers, especially in Europe, are not keen on building up their stocks,” said Ramesh Rajah, President of Coffee Exporters Association. Europe accounts for about 70 per cent of India's coffee exports that were valued at Rs 4,737 crore or $1.036 billion in the coffee year that ended in September. The coffee-buying pattern is witnessing a shift in the financial-crisis ridden European markets as customers are now opting to buy as and when they need to cover their requirement for a couple of months rather than buy and stock coffees for six to eight months. “Normally, 30 per cent of the crop is sold by December-

end, but this year we expect to sell only 10 per cent,” Rajah said and added that late arrivals of the crop this year, especially in Tamil Nadu, has compounded the problem. The harvest of arabica variety has already begun in Karnataka, while it has been delayed by a couple of weeks in Tamil Nadu, mainly on account of recent rains. “We expect the arrivals to pick up later this month,” Rajah said.

He expects arrivals and exports to pick up in January-March. India is expecting a bumper crop for 2011-12 similar to that of last year. According to post-blossom estimates of the State-run Coffee Board, the 2011-12 crop size is pegged at 3.22 lakh tonnes. This is against the final estimates of 3.02 lakh tonnes for the 2010-11 season. The volatility in coffee futures is also hurting contract bookings, said M.P. Devaiah, General Manager, Allanasons Ltd, a coffee exporter. “Both buyers and sellers are a bit cautious as the futures prices are volatile. Unless the real flow of coffee starts, bookings may not pick up,” Devaiah said. The Coffee C contract, the world benchmark for arabica coffee at the Inter Continental Exchange in New York, for March delivery settled at $2.364 a pound against $2.86 a pound in September.

ConAgra Foods becomes Agro Tech’s majority owner

orth American food giant ConAgra Foods Inc has emerged as the majority stakeholder in the once ITCowned Agro Tech Foods by acquiring 8.93 lakh shares, or 3.66% stake, of Agro Tech

for Rs 51.82 crore. Agro Tech announced increase in shareholding by its promoter ConAgra, did not however provide details of the seller. As per the latest shareholding pattern

for the quarter ended September, ITC was holding 8.93 lakh shares, or 3.6% stake in Agro Tech, the exact quantity that ConAgra acquired now. Commenting on the development, ConAgra CEO Gary

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Corporate News Rodkin said, "Expanding our International business is a key part of our strategic plan, and India represents an attractive growth market for ConAgra Foods. " When contacted, the Agro Tech president and chief executive officer

Sachin Gopal said, "ITC could be one of the parties from whom ConAgra has purchased the stake through offmarket transaction." An ITC spokesman termed the sale of shares as part of "treasury operations". ITC has been, over the past

couple of years, reducing its stake in Agro Tech. Leading stock broker Rakesh Jhunjhunwala holds 4.52% stake, while his wife Rekha Jhunjhunwala holds 3.18% in the company. (Source: ET)

Foreign food chains queue up to get a taste of India pie

s many as 30 foreign food chains are queuing up to enter India. Many of these are Asian restaurateurs, which operate small format chains. “Thirty-odd food chains are foraying into India as franchises. These are mostly pizza and yogurt chains, quick service restaurants

and food-on the-move concepts,” says Gaurav Marya, President, Franchise India. Among those entering are Loon Tao, Berrylite, Shawarma Xpress, Ci Gusta, Kenny Roger Roasters and Sarpino's Pizzeria — most of whom are salivating at the prospect of feeding a growing middle class. Take Ci Gusta, an Italian

fast food chain for ice-creams, gelato and pastries, which will be entering India by mid next year enthused by the country's huge population. “It's a young country with increasing disposable income and here lies our opportunity,” says Massimo Vinciguerra, Head (International Business Development), Ci Gusta. “We are looking at niche food segment opportunities, our USP being the Italian flavour,” he says. The food chain already has a presence in Italy, Bangladesh, Sri Lanka and Dubai. West Asian food chain Shawarma Xpress, with its specialty in meat, variety of breads and multiple sauce derivatives, too is queuing up to take a bite out of the Indian pie. “We are currently in Bahrain, Eastern Region of Saudi Arabia and The Kingdom of Qatar,” says Andrew H. McNair, Head of Operations, Shawarma Xpress. Using the franchise route, the firm, is looking to launch 100 restaurants here over a ten year period. Mall outlets, restaurants and drive-through types are the formats that it is eying. Sri Lanka-based Loon Tao, which ranks among the top five restaurants in the island nation, is also all set to expand in India via franchising. The brand plans to open its first franchise location in Chandigarh in the first half of 2012. It will extend its footprint to tier-I cities like

Chennai, Mumbai, Pune, Goa, Kolkata, and Bangalore as well. “We are targeting, middle and elite classes, offering fine dining format for Chinese cuisine,” says Janaka Wimalananda, MD and CEO. Berrylite Singapore plans to invest as much as $200,000 in India, setting up its yogurt chains by next summer. “We will expand in India through a master franchise model. The brand has a target to launch about 150 stores in five years,” says Marc Ng, President and CEO (Berrylite). The company is offering kiosks, food courts and café formats in India, its USP being 100 per cent fat-free yogurts with a wide selection of fruit toppings. “We are targeting the young and the trendy who are conscious of their lifestyles,” he adds. According to Marya, these food chains are entering using the franchise route given the chaos over FDI in retail. “Foreign brands are apprehensive because of this whole agitation against the FDI in retail. Therefore, mostly they are coming through the franchise route rather than investing capital. For instance, a major South African food chain dropped out of the agreement due to the opposition to FDI in multi-brand,” adds Marya. In India on an average, an individual eats out once in two weeks. In Jakarta this figure is once per day.

Shoppers Stop open to foreign tie-ups for food, grocery

n the wake of government deciding to allow FDI in multi-brand retail, Shoppers Stop said it is open to strategic tie-ups with foreign retailers, particularly in the food and grocery segment. The firm that runs hypermarket formats under the 'Hypercity' brand said it is more interested in a foreign partner for sourcing and logistics.

"In the food and grocery format -Hypercity, we could actually review any proposal, which would be coming across to us but currently we are not desperately looking out for any tie-up as such," Shoppers Stop CFO CB Navalkar told analysts in a conference call organised by Edelweiss Capital. He said that for a strategic purpose in terms of sourcing

AgriBusiness & Food Industry w January 2012

and logistics strength of a foreign partner, it would definitely interest the company to look at various options available, he said. "Any further tie-ups especially in the department store and the other formats will be towards the food and grocery format," he said. According to Navalkar, international players can bring in best

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Corporate News practices in logistics and supply chain, that will benefit an Indian retailer. "Effectively it will be more towards sourcing and logistics, if you see and the best practices that they have. So, when we are talking about logistics it is also the supply chain and back-end practices which they have. That will be of a definite

advantage for us," he said. Foreign players would come with the best practices which they have experienced but they will have adapted it to the country, he added. Shoppers Stop's a subsidiary Hypercity Retail currently operates ten hypermarkets across India. Hypercity Retail is at present registering losses and

expected to break-even by 2013, as stated by company officials in the past. Recently, government had approved 51% foreign direct investment (FDI) in multi-brand retail and 100% FDI in single brand. Shoppers Stop's scrips were trading at Rs 362 per share, up 1.36% from the previous close on the BSE.

QSR chain Kaati Zone on expansion drive

uick service restaurant (QSR) chain Kaati Zone announced the entry into Hyderabad, while outlining plans to rapidly expand its presence in South and Western part of the country. “We now have 22 outlets across six cities, which includes 10 owned by the company and 12 franchisee outlets. Having tested the business model with our stores, we are now on a rapid expansion drive to reach 100 outlets within 15 months. Even as we started operations in Hyderabad, we are in the process of commissioning 12 more QSRs within two months,” Kiran Nadkarni, Chief

Executive Officer of Kaati Zone, said. The latest outlet in Hyderabad is a franchisee owned store located outside the departure gate of the International Airport, providing an option of quick bite of kaati rolls and other items. “With the business model tested over the years and backed by centralised kitchen concept, we have reached an inflection point and expect to grow the number of stores much aster now,” he said. The Kaati Zone dine-in restaurants and take away stores are designed based on global trends in quick service restaurants, where customers can grab

a quick bite. These outlets offer a wide range of kaati rolls, paratha meals, sides and beverages suitable for all tastes, but standardised in all places.

Reliance Industries to enter fast-food business with its own brand next year

eliance Industries, a $50-billion-plus oil and gas giant, will enter the fastfood business with its own brand next year, opening yet another front to do business directly with India's growing young population after retail and 4G wireless services. Mukesh Ambani has roped in Rishi Negi, COO of multiplex operator Fame India, which is partly owned by his younger brother Anil Ambani, to develop a quick service restaurant (QSR) concept within 3-4 months, two senior Reliance executives said. Negi will spearhead Reliance's entry into a segment that is growing at least 25% a year and where international brands such as McDonald's and Domino's jostle to introduce Indianised cuisines to take on popular local chains such as Jumbo King and Saravana Bhavan. Reliance is exploring a scaleable model like McDonald's and Domino's, complete with a standardised menu and express delivery, the executives said. It plans both independent outlets and presence in food courts.

"The company is looking at anything suitable for Indian palate, be it Chinese, Italian or Indian cuisine," one of them said. The Reliance Industries spokesman declined to comment. The executives said the company has zoomed in on Delhi, Mumbai and Bangalore as the tentative locations to launch the business. "With a hypermarket format already attracting a large number of consumers, it makes sense to bundle in food as well," one of the executives said. The company has already experimented with a fresh bakery at its hypermarkets, Reliance Mart. The move is in line with Mukesh Ambani's aggressive moves to build businesses for the country's consumer class, dominated by demanding and aspirational youngsters. His retail arm, Reliance Retail, operates around 1,146 multi-brand outlets across the country through chains such as Reliance Fresh, Reliance Super and Reliance Mart. That is a long-term growth trend that Reliance like many others would want to feed into, say analysts. Some Indian entities such as Amit Burmanowned Lite

Bite Foods and Amul owner Gujarat Cooperative Milk Marketing Federation too have entered the restaurant business recently. Private equity firms have Mukesh Ambani been upbeat on the sector. India Equity Partners recently bought South Indian restaurant chain Sagar Ratna Hotels for Rs180 crore, while ICICI Ventures invested around Rs250 crore in RJ Corp's Devyani International, which operates KFC, Pizza Hut and Costa Coffee. Besides multi-brand chains, Reliance Retail owns specialty stores such as books and music chain Time Out, footwear chain Footprint, department store Trends, consumer durables chain Digital and home decoration through brand Living.

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News

Rice exports to touch 7 m tonnes in 2011-12

lobal credit ratings agency Crisil has predicted that India's rice exports are set to register a three-fold increase at 7 million tonnes in 2011-12 on growing output and weak production outlook in major exporting countries. “Expectation of a bumper rice crop in India in 2011-12 (October 1 to September 30), lifting of the ban on non-basmati rice exports and a weak production outlook for most rice-exporting countries could lead to a sharp increase in India's share in global rice trade,” the agency has stated in a statement. The agency estimates India's share in global rice trade to triple to 21 per cent in 2011-12 from 7 per cent in 2010-11. “We expect India's rice exports to reach around 7 million tonnes in 2011-12, up from 2.2 million tonnes in 2010-11,” Crisil ratings director Gurpreet Chhatwal said. The benevolent monsoon across rice cultivating states is expected to

help the country's rice production to reach 100 million tonnes in 201112, up 6 per cent over the previous year. Target According to the Agriculture Ministry, India produced 95.32 million tonnes of rice in 2010-11 crop year (July-June) and the government has set a target of producing 102 million tonnes of the essential food crop in 2011-12. “The move to lift the ban on rice exports has come at a great time and could translate into additional $2 billion in export revenue,” Mr. Chhatwal said. Crisil said an expected decline in

rice output in leading rice exporting nations such as Thailand, Vietnam and Pakistan also favoured Indian exporters. “Rice production in Thailand, the largest exporter, is expected to decline in 201112 due to a damaged crop following floods.”

Pulses imports likely to remain high on rising demand

riven by rising consumption, India's pulses imports for the current financial year may stay at last year's levels of around 3 million tonnes. This is despite a record-high output in the 2010-11 crop year, which stood at 18 million tonnes. “Total imports in the current fiscal are expected to be around the same as in 2010-11,” said Mr Rajiv Agarwal, Secretary, Ministry of Consumer Affairs, Food and Public Distribution. The high

imports are on account of growing consumption of pulses, a major source of protein for a large populace. Besides, rising income levels, the adequate availability and lower prices of pulses are also seen aiding consumption. Mr Agarwal was speaking at the launch of the Global Pulses Conclave 2012, to be held in Mumbai in February next year. The imports for the April-October period of current fiscal stood at 1.659 million tonnes as against 1.628 million tonnes in the corresponding period last year. “The current trend shows that imports are likely to be at last year's levels,” Mr Agarwal said. India had imported about 3 million

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tonnes of pulses in 2010-11, lower than the previous year's 3.5 million tonnes. However, the pulses trade estimates that imports this year will be lower on account of higher domestic output and the over 20 per cent devaluation of rupee making imports costlier. “We expect the imports to be in the range of 2.5 to 3 million tonnes this year,” said Mr Pravin Dongre, President of the India Pulses and Grains Association. Importers have so far absorbed the impact of the rupee decline, Mr Dongre said. “If the rupee falls further, then importers will have to start passing on the costs to consumers,” he added. The country had produced a record high of 18 million tonnes of pulses in 2010-11 crop year as against 14.66 million tonnes in the previous year. In the current year, the Government had set a production target of 17 million tonnes, a marginal decline on account of inadequate rains in certain States such as Karnataka, Andhra Pradesh and Maharashtra.

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Kerala Cashew Corp to buy raw nuts to ensure fair prices

he Kerala State Cashew Development Corporation(KSCDC) will procure raw cashew nuts from the market during the current season so as to meet raw material requirements of its processing units and ensure remunerative prices for the growers. The Public Sector Corporation processed around 60,000 tonnes of raw nuts annually and made available 15,000 tonnes of exportable cashew kernels, providing employment for its workers for about 280 days a year. “The Corporation, probably the largest manufacturers and employer of cashew kernels in the country, has been set up by the State Government with a view to grooming it as a model employer in the field providing employment to mainly women and physically challenged and has at present, 30 factories and more than

25,000 workers, out of which 95 per cent are women,” Dr K A Retheesh, Managing Director, KSCDC, told Business Line on a recent interview. By setting up 10 procurement centres in major cashew growing districts of Kannur, Kasargode, Malappuram, Palakkad and Thrissur, the Corporation might be able to do some market intervention exercise, he said. It would buy raw nuts from the growers directly at the prevailing market prices. Last year, it was at around Rs 80 a kg, he said. “If cashew industry is successful it will be beneficial for all stake holders like farmers, farm workers, industrialists, industrial workers, traders, brokers, etc,” he claimed. The primary aim is to enhance production of raw cashew nuts by ensuring fair prices for their produce, he said. KSCDC, he said, focuses on procurement of raw cashew nuts directly from local farmers avoiding intermediaries. “This will guarantee realistic prices to farmers who will then be able to depend on it for their livelihood, thus facilitating the propagation of cashew cultivation in Kerala. Now, middlemen operating

in this sector gather raw material from the farmers at a very low price and sell it in the market with a bulky margin, the beneficiaries being the middlemen and farmers crook up with little to spare,” he said. Corporation has already invited expression of interest for association for purchase from cooperative societies which have infrastructure facilities like drying yards and godowns, he said. “As a government company, KSCDC's purpose of setting up procurement centres is to protect the farmers from traders and middle men, to provide them with a minimum support price and at the same time procure good quality raw material required for its own production.” Dr Rethhesh said. No pricing policy has helped the value of raw cashew nut and cashew kernel so far. However, market intervention of government agencies would protect the farmers from being exploited by middlemen, he said. During the last six years, the intervention of KSCDC in local procurement has helped the farmers to get good price for raw cashew nuts.

Walmart sets up R&D centre in India

S-based retailer Walmart is setting up a research centre in India to develop technologies and solutions for its global e-commerce business. The company, which already has an R&D centre in the Silicon Valley, is setting up another 'WalmartLabs' facility in Bangalore, with plans to hire up to 100 developers here. "At the centre in Bangalore, we will hire 100 developers and cater to Walmart's global e-commerce business," Walmart Global e-Commerce Senior Vice President Anand Rajaraman said. He said the centre is expected to be up and running by the end of this year, but declined to provide the investment details. "We are currently recruiting developers who have deep knowledge and expertise in the areas of machine learning, social analytics and big data infrastructure," he said. The team will lead and own projects to bring new e-commerce, social and mobile

commerce offerings to the global marketplace, he added. "Globally, Walmart has e-commerce businesses in a host of countries, including the US. However, online shopping option is not available to consumers in India yet," he said. In India, Walmart operates 13 wholesale cash-and-carry stores in India in partnership with Bharti Enterprises. Globally, over 200 million visits are made to Walmart stores across 28 countries each week. "New technologies generated from 'WalmartLabs' are designed to eliminate the boundaries between brick-andmortar stores and e-commerce to give shoppers a seamless experience anywhere and on any device," he said.

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Food & Beverages News

Coca-Cola creating independent unit for non-fizzy drinks

n a global first, Coca-Cola India is creating an independent business channel to innovate, sell and distribute its juices, energy drinks, powder drinks and niche products like mixers to increase its stake in the soaring market for non-fizzy drinks. "This will help fortify our existing business and execute the distribution and sales of new products for CocaCola India through a viable alternate sales and distribution system," said T Krishnakumar, CEO of Hindustan CocaCola Beverages, which will run the new vertical, Minute Maid & Alternative

Beverages division. Minute Maid juices, Burn energy drink, Schweppes mixers like tonics and soda, Nestea ice tea and powder drink Fanta Fun Taste will be brought under the new division. It will also manage all non-fizzy beverages that Coca-Cola will launch in the future. "This is first of its kind investment in sales and distribution for the CocaCola system worldwide, where an entire alternate system is being set up within a country for a selective set of beverage offerings," a Coca-Cola spokesman said. The vertical will build new and nascent channels such as office complexes, gyms and spas, food courts, shopping malls and petrol stations for different products under its fold, besides using Coca-Cola's existing network and accelerating its

presence in grocery and convenience stores. Fizzy drinks Coca-Cola, Thums Up, Fanta, Limca and Sprite will continue to be distributed through the firm's existing sales and distribution network that covers more than 1.5 million retail outlets, out of an estimated 8 million potential outlets it can reach in the country. Senior VP Milind Pingle, who was earlier operations VP for the central region, will head the new vertical that will have 200 employees to start with.It will leverage the firm's existing supply chain infrastructure, manufacturing plants, depots and other backend infrastructure to source its supplies and service the markets. The division will be set up in phases across different markets in the country over the next three years.

Packaging costs up 25-30% for food, personal care products

he rising price of international crude oil has increased the packaging costs of fast moving consumer goods companies. Already facing margin pressure due to inflation and rising input costs, this is yet another body blow for the companies. According to the FMCG industry, packaging costs have gone up by 25 to 30 per cent for foods and personal care products over the last year due mainly to the sharp increase in prices of petroleum by-products used in making packaging material and the printing inks used on them. The price of these crude derivatives directly or indirectly dictate about 65 per cent of the overall cost of making packets by packaging companies, according to Essel Propack, which supplies packaging solutions to a host of FMCGs including Procter & Gamble, Hindustan Unilever, Britannia, Cadburys, Emami and Calvin Care. The price of crude oil for the Indian basket has escalated by about 43 per cent between September 2010 and September 2011 according to Indian Oil Corporation. It stood at $108.79 per barrel in September

2011, compared to $76.09 per barrel in the year-ago period. According to Flexible Packaging India Pvt Ltd, a subsidiary of Essel Propack, the extent by which the price increase in crude is actually passed onto its derivatives depends on the demand and supply of the particular derivative. FMCG industry sources say the cost structure for food products is in the ratio of 70:30, where 70 is for raw material costs and 30 for packaging material costs. This varies from industry to industry, with the packaging cost being lower for categories such as noodles and biscuits. Group Product Manager, Parle, Mayank Shah said: “Due to the increase in crude oil prices over the last few months,

our packaging costs have increased 25 to 30 per cent. This is a concern as we have to factor in not just food inflation but inflation in packaging raw material costs, which is hitting our bottom lines.” Apart from reducing packet sizes for their products which has become the norm, companies have not been left with any option but to take a hit on their margins given that packaging costs are at their optimum and product prices cannot be easily increased due to aggressive competition. Flexible Packaging India Pvt Ltd CEO, Thomas Cherian, said: “Besides reducing pack size further, companies also try to reduce their packet thickness and go in for thinner laminates with same functionality but cheaper material cost. Companies could also decide to do away with unnecessary branding elements and keep several other options open when the cost pressure increases.” “However, as most of the variables involved in packaging costs are known, packaging costs are at their optimum level, leaving little scope for manoeuvring,” he added.

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Light weighting to solve a heavyweight problem

ard times call for innovative solutions. As input costs spiral out of control, packaging companies have been forced to come up with design and technological solutions to cut costs. Take the Bangalore-based Manjushree Technopack which has come up with a solution called light weighting by which less plastic is used for developing PET containers. Lower plastic content means lower weight and, in turn, savings in terms of transportation costs. For instance, it has designed bottles with a shorter neck, and changed the

cap design as well — two changes that it claims can save up to two gm of plastic — the result, the price per pack will be 7 per cent lower. Manjushree is working with several FMCG companies to implement this solution. According to Vimal Kedia, MD, Manjushree Technopak, CadburyKraft has recently reduced the weight of their Halls PET jar by 25 per cent by reducing the height of the neck portion of the jar which led to weight saving and, subsequently, cost savings. He says soft drink companies too have done a similar

exercise for PET bottles, where light weighting was done to both bottles and plastic caps. According to the company, each gram saved on a pre-form used for a market of 100 million bottles, saves about 100 tonnes of PET; Rs 1 crore in costs for PET resin @ Rs 1 lakh per tonne. This will also result in energy savings, the company claims; about 80,000 kWh of energy, 2670 kWh of energy for pre-form heating for blow moulding.

New Packaging Law will result in price hikes

ising inflation, coupled with a new packaging legislation, will make price hikes of packaged foods inevitable, says Chitranjan Dar, Divisional Chief Executive, ITC's foods division. On one hand the costs of inputs such as raw material, furnace oil and packaging material and even logistics have gone up, while on the other, the new packaging law that bans producers from reducing the quantity inside the packet, will leave them with no choice but to raise prices. This new Legal Metrology Act is likely to come into force July next year. At present, FMCG companies rely on reduced quantity to tackle rising inflationary pressure on input costs rather than changing the price points owing mainly to coinage issues. The new Act will make the price-

point concept impossible, Dar said. On the demand-supply side, he said the company had to make a lot of efforts to meet the spurt in demand for its cream biscuits. Giving an example, he said the company's premium range offerings such as Dark Fantasy, Dream Cream Bourbon have witnessed a growth of 118 per cent in the second quarter over the first. Even other Sunfeast premium creams have also shown a growth of 72 per cent in Q2 over Q1. Responding to a question on competition from global brands such as Oreo (from Kraft Foods), McVitie's from (United Biscuits), and domestic brands such as Parle and Britannia, he said international competition is a reality. It is good, as it aids “premiumisation”

of the category. He said this has actually enriched Sunfeast's portfolio last year. On the domestic front, given the emerging trends in consumption patterns, the biscuit market offers enormous opportunities, scope for improvement both in terms of new products and segments and also in terms of operational excellence. “The field of play is large and we are encouraged and really excited about the years ahead,” said Dar. At present ITC's Sunfeast is the third largest national player after Parle and Britannia. The brand has 10 per cent share of the Rs 15,000-crore biscuit market. And, within this, in the creams segment (which accounts for over Rs 3,500 crore) Sunfeast commands 15 per cent share.

Rossell wants a slice of fast food, hotels

olkata-headquartered Rossell India Ltd is planning to roll-out an Indian fast-food chain by this fiscal through its newly created Rossell Hospitality division. The company is also eyeing opportunities to enter the hotels sector. “Details on the fast-food chain are yet to be worked out. Initially we plan to roll-out one or two outlets tentatively in Delhi, in a couple of months,” the Vice-President (Finance) and company secretary, N.K. Khurana said. He ruled out setting up the chain

through collaborations or franchise models. “I don't think we have planned anything at the moment,” he said when asked about the possibility of a franchise partner. Rossell India, formerly known as Rossell Tea, reported revenues of Rs 76 crore last fiscal. The company has three divisions – Rossell Tea, Rossell Techsys and the newly created Rossell Hospitality. On possible entry into the hotels sector, Khurana said that the company is already a minority partner in three of Lemon Tree Hotels.

The company has “investments” in Lemon Tree's Vembanad Lake Resort at Alappuzha, Kerala. It also has investments in Lemon Tree's upcoming hotels in Delhi and Bangalore. In the longer run, however, the company is considering an entry into the segment with a controlling stake. “We have an interest to enter the sector (with a controlling stake),” Khurana said. Following the announcement, Rossell India's shares on Tuesday closed at Rs 35.65, down by nearly 4 per cent, on the BSE.

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Food & Beverages News

Japanese Make World’s longest kebab

esidents of small Japanese island cooked up a late night snack that could satisfy even the heartiest appetite, A kebab more than 100 meters (330 feet) long. Thousand of people on southern Ishigaki Island tucked into the 107.6metre long delicacy, the world’s longest, in an event to promote the premium Ishigaki beef, local tourism agency official Shuntaro kosasa said. Organizers had originally planned to make a beef kebab only 25 meters long, believing the world record was just 8.74

meters a agency and set in Texas. “Just three days before the event we were informed that people in Lebanon Actually set a new record of 97.5 meters n August, Kosasa said. ‘We had to hurriedly prepare for four times more beef and cooking utensils and a skewer to make a kebab longer than 100 meters,” he said. The stainless steel skewer had to be repaired twice before the world’s longest kebab was successfully cooked and certified by an official from Guinness World Records, he said.

Some 15,000 people and around onethird of the island’s population, later tucked into the kebab he added.

KFC,Big Mac Feast on Indias Chicken Mania

KFC,

which almost quit India due to protests from health and animal rights activists after its debut in 1995,has overtaken Pizza Hut as the largest-selling fast food chain of Yum! Restaurants,riding on the countrys increasing appetite for chicken. Worlds largest quick-service restaurant (QSR) chain McDonalds,domestic fried chicken chain Bangs and T.G.I.Fridays restaurant chain too have reported a spike in chicken sales this year,confirming the widening appeal of the meat as eating out becomes a habit across the country. KFC is growing faster than Pizza Hut, says Sandeep Kataria,chief marketing officer of Yum! Restaurants India,while McDonalds says the McSpicy chicken

burger range is the fastest growing product across its 240 stores.Driving this chicken mania is a number of factors including rising number of nuclear families,youngsters staying away from home,travel,rising incomes,changing lifestyles and mall culture that has boosted accessibility,competition and innovations. There are a lot more innovations both in QSR formats and packaged readytocook and ready-to-eat formats,visibility of these products has gone up,prices are a lot more aggressive,and marketing spends have increased, says Sushil Sawant,assistant VP of Godrej Tyson Foods,a joint venture between Godrej Agrovet and Tyson Foods Inc that rolled out frozen chicken tikkas and kababs under Yummiez brand this October. T.G.I. Friday's VP (Marketing & Development ) Rohan Jetley says,Chicken is the most neutral non-vegetarian productits consumption is not religiously restricted like beef and pork are,its healthier/safer than red meat,and its not seasonal like fish and seafood. The growth in demand is expected to continue.The Rs 40,000-crore domestic poultry industry expects per head chicken consumption to double to 6 kg a year by 2014-15 from less than 3kg last year.While existing players have drawn up aggressive expansion plans,others such as UK-based Dixy Chicken and Southern Fried Chicken

AgriBusiness & Food Industry w January 2012

are waiting in the wings to expand base in the country.Yum! India plans to have 500 KFC outlets by 2015,up from 156 now.Kataria expects the chain to account for 60% of the $1 billion (approximately Rs 5,400 crore) sales that the company is expected to generate by then. The expansion of Pizza Hut will be slower,rising to 400 by 2015 from 216 now.Bangs,which calls itself the countrys first domestic fried chicken quick service restaurant (QSR) brand having set up in 2009,plans to open 50 outlets within a year to add to 20 it has across 10 states,encouraged by a 30% jump in sales quarter-onquarter.The growth is not restricted to metros and traditional centres.We are surprised our sales in Chennai and Gujarat are doing equally well as in Punjab and Haryana, says bangs Director Asvin Simon. Small towns like Durgapur,Kozhikode and Kochi figure as much as metros in the expansion plans of KFC,which more than doubled the number of stores this year.Its top-selling products Zinger chicken burgers and chicken buckets account for more than two-thirds of its sales.KFC recently launched grilled fiery chicken,a juicier variant of the tandoori chicken,nationally to very encouraging results.Yum! attributes KFCs rapid growth70 % CAGRto a younger,onthe-move target audience,innovative products,and aggressive prices.

Dairy News

Srinivasa Hatcheries to diversify into dairying

rinivasa Hatcheries, a BSE-listed company, will diversify into dairy industry and goat rearing in two phases. The group will withdraw from restaurant and infrastructure businesses to focus on agriculture and allied sectors. Initially, it would focus on breeding of high yielding animals for the dairy industry that registers very low productivity. “We are good at breeding. Though our core activity has been poultry industry, we can bring to the table processes that can ensure production of good breed of animals. We have studied the market and found inefficiencies in the quality of animals,” Suresh Rayudu Chitturi, Managing Director of Srinivasa

Hatcheries Limited, said. The venture would either be a fully-owned subsidiary or a joint venture with a firm that could bring in expertise in the industry. Productivity in the US is put at 10,000 litres per animal as against just 200 litres in India. “Only a handful of companies are focussing on breeding quality animals. There is a severe shortage. We can improve productivity only through improving quality of animals, We will start the breeding programme with 600 animals by April 2012,” he said. For the financial year 2010-11, the poultry firm posted revenues of Rs 143 crore with a net profit of Rs 19.54 crore. The company saw flat growth in

revenues for 2011-12. “But we expect lesser profit this year. We foresee fall of prices from December 15. But the longterm outlook for the poultry industry is bright. Consumption of poultry products is estimated to grow by 280 per cent by 2020,” he said. The biggest challenge for the industry is that companies are not able to manage the demand-supply equation. After two phenomenal growth years, the industry is caught up with over supply. This might lead to reduction in broiler chicken price. The per capita consumption of chicken in India is put at 2.4 kg a year against 44 kg in countries such as Brazil. Industry pegs the figure at 8 kg by 2020.

Amul is way ahead in dairy products

t demands that Nestle discontinue the use of the sign 'a+' on its trademark label, and also give an undertaking on a stamp paper that it will not manufacture, sell or advertise products using the symbol 'A+' or 'a+'. The notice also demands Rs 10 crore as damages, alleging that consumers are 'bound to be confused and deceived' by similar names. "Our clients were shocked and outraged when they came across your trade mark label that uses the sign 'a+' in a prominent manner, and as an essential feature of your trade mark label. This makes your trade mark label deceptively similar to our clients' prior used label Amul A+," the legal notice reads. It adds that 'being the original and prior adopter and prior user of trade marks like A+', GCMMF and Kaira are the sole lawful proprietors of the said trade mark labels and have statutory exclusive rights of the same. Recently Nestle had announced that it was rebranding its milk and dahi as Nestle a+ milk and dahi. Nestle GM (dairy) Kumaran Nowuram had told newspersons while making the announcement: "The quality of milk available in India is inconsistent, but most of us cannot make out the difference.We believe Nestle a+ milk has become the

benchmark of quality." Though Nestle is a dominant player in coffee with its Nescafe brand and in the instant noodles category with Maggi, it's way behind Amul in dairy products. Amul has an overwhelming

85% share in butter and 70% in cheese. Besides milk in cartons and pouches, GCMMF sells cheese, butter, ice cream, yogurt, ghee, paneer and cream under the Amul brand.

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Dairy News

Milk output rebounds; sours returns for farmers

fter potato and onion growers, it is now the turn of milk producers to experience declining price realisations on account of rebound in production as well as a post-festive slump in demand. Since Diwali, the landed prices of raw milk, containing 6.5 per cent fat and 8.5 per cent solids-not-fat (SNF), in most dairies in the North have fallen from around Rs 30 to Rs 24 a litre. Even cooperative unions such as Mehsana affiliated to the Gujarat Cooperative Milk Marketing Federation (GCMMF) are apparently paying farmers now only Rs 420 for every kg of fat, against Rs 450 till two months back. For standing full-cream milk with 6 per cent fat and 9 per cent SNF content, that translates into a reduction from Rs 29.95 to Rs 27.95 a litre. Dry Phase According to industry sources, much of this has to do with the strong rebound in milk procurement, following a ‘dry' 2010-11 that saw prices surge both at the producer and consumer end. GCMMF's member unions paid an average of Rs 400 for a kg of milk fat in 2010-11, compared with Rs 337, Rs 298 and Rs 284 in the preceding three fiscals. The rebound, in turn, is said to reflect a stabilisation of the reproductive-cumlactation cycle of animals from the droughtinduced disruptions of 2009. Although the drought per se happened in 2009-10, its

effects were felt only the subsequent year, when the earlier fodder deprivation led to delayed calving of pregnant animals. This is normal, considering that in droughts, farmers tend to accord higher feeding priority to the animals already in-milk or about to lactate. Higher Procurement “That dry period is now over and which is why we are seeing more milk coming in. Moreover, the price increases in the last 2-3 years have also incentivised farmers to invest more in their animals. And with the good monsoon in 2010 and 2011 also helping improve overall fodder availability and rein-in cattle feed prices, it is all adding up to higher milk procurement by dairies,” the sources pointed out. GCMMF unions are currently procuring around 133 lakh litres per day (LLPD) of milk, including 117 LLPD from Gujarat alone. Last year, at this time, they were collecting only 108 LLPD, of which 104 LLPD was from Gujarat. Even Hatsun Agro Product Ltd, the country's largest private sector dairy, has reported a 10 per cent increase in procurement over last year. No Price Cut The benefits of increased procurement and lower milk prices may, however, not benefit consumers. Neither GCMMF nor other liquid milk marketers such as

Mother Dairy appear to be in any mood to reduce prices at the retail end. Even prices of products such as milk powder or ghee have not fallen as much as raw milk. Skimmed milk powder, which was quoting at Rs 185 a kg three months back, has softened to Rs 165, much less than the Rs 6/litre decline in raw milk cost. Ghee prices have, likewise, gone down marginally from Rs 250 to Rs 240 a kg. “It is not a good thing if lower realisation for farmers is not benefitting consumers. It would be even worse if sustained low prices would lead farmers to send their animals to the slaughter house. The right thing for the Government to do now is to lift the ban on milk power and casein exports,” the sources added. Source: The Hindu

India remains world leader in milk production: NDDB

ndia continues to be the largest milk producing nation in the world in 201011, the National Dairy Development Board (NDDB) said. NDDB's Annual Report for 201011 said the country's estimated milk production for 2010-11 is 121 million tonnes (mt), close to 17 per cent of world milk production. During the year, dairy cooperatives collected 9.6 mt, a growth of around one per cent over last year. Liquid milk marketing by cooperatives increased

by around 4 per cent over the previous year and was about 8.2 mt in 2010-11, according to an NDDB statement. Higher GDP growth, increased incomes in rural areas through schemes such as MGNREGA and growing population are contributing to a rapidly growing demand for milk, said Dr Amrita Patel, Chairman, NDDB. It is, therefore, imperative that a scientifically planned multi-State initiative is launched. The first phase of NDDB's 15-year plan, known as National Dairy Plan

AgriBusiness & Food Industry w January 2012

(NDP), has been appraised by the World Bank and approval for the project is expected in early 2012, she added.

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