AgriBusiness & Food Industry - April 2012 by Media Today Pvt. Ltd.

AgriBusiness & Food Industry w March 2012

Contents.... 8

EDITORIAL

10 Cover Story National Horti Conference Indian Horticulture Marches on Output and exports surge – T V Satyanarayanan 16 Perspective Longer term agri outlook seems constructive – G.Chandrashekhar 18 Cereals India’s Rice Output Touches 100 MT Mark – T Nandakumar 20 Beverages Pepsi – Tata JV to make healthy drinks — Tata's Krishna Kumar answers key questions 26 beverages Pepsi-Coca-Cola War Heats Up Indian Market 28 coffee Coffee Board can protect South Indian Coffee varieties: A case study 30 PROFILE Dhiman Systems (India) Ltd. 34 RETAIL NEWS l HUL chief sees big opportunities in retail, FMCG

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l Carrefour & Metro Cash to compete for Delhi market 35 CORPORATE NEWS l Govt to procure 32mt wheat this season l Iraq-a new market for basmati exporters l Reform PDS before passing Food Security Bill: Pawar l India surges ahead of Thailand in rice exports l FMCG COs aggressive in breakfast segment 39 FOOD & BEVERAGES NEWS l McDonald’s to invest Rs 400-cr to cover South, West l Coca-Cola slices prices l HUL launches Knorr’s cheaper variants l Nestle to open R&D centre in India 43 COMMODITY NEWS l Pulses import may touch 2.8 MT l Govt to launch a task force to boost spices export 44 DAIRY NEWS l Mother Dairy milk procurement rises l CCEA approves Rs.1.7 k-cr National Dairy Plan l Hatsun Agro to invest 50-cr to start ice-cream chain l Dairies want to export as production goes up

AgriBusiness & Food Industry w March 2012

Chief Editor

S. Jafar Naqvi

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T.V. Satyanarayanan K Dharmarajan

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M.B. Naqvi

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orial Edit

gainst the backdrop of reports appearing now and again on rejection of consignments of Indian spices in foreign markets, on grounds that they do not as conform to quality norms, the recently concluded World Spice Congress in Pune was a timely and welcome event. The congress, attended by over 500 spice traders and other stakeholders from India and abroad, focused on such issues as quality, food safety, productivity increase, value addition and harmonizing of standards in international trade. Indian farmers growing major spices were prominently present at the meet, which had in-depth discussions on all issues that are of crucial importance to global trade. The timing of the congress was appropriate for this country, as the Spice Board of India has been formulating the strategy for incorporation in 12th Five Year Plan, scheduled to begin in the coming fiscal. A major thrust of the strategy is on export-oriented production of ten spices – nutmeg, chillies, mint, cumin, fennel, coriander, fenugreek, black pepper, turmeric and ginger. Famous since ages for its spices, India continues to enjoy its position as the world leader in production, consumption as well as exports, though, of late, there has been a marginal decline in export volume. Certainly, no country in the world produces as many spices as India does. India’s total production of spices is in the range of 5 million tonnes, from an area of three million hectares. It is significant that India has taken some initiatives in the wake of the congress deliberations. To give effect to expert recommendations of the congress, it has set up a Task Force, which would seek to link farmers, government departments, regulatory bodies and others concerned with ensuring strict compliance with new standards. Unification of quality standards would, of course, would go a long way towards meeting the challenges of international trade. One main problem afflicting spice cultivation in the country is low productivity. To meet this problem effectively, it is essential to step up research and produce good quality seeds and planting material to benefit the farmers. The Spice Board is sending the message to farmers, through states, that if they produce premium quality spices, especially for exports, their earnings can go up substantially. An important development following the congress deliberations is that the Indian spice industry will take up a quality capacity building exercise jointly with the United States Food and Drug Administration (USFDA) – a body that has in the past offered similar cooperation to aquaculture industry in Bangladesh leading to fruitful results. The Spices Board is already active in taking up a number of programmes to help the farmers. One such scheme seeks to link the farmers with the supply chain to promote exports. Sugandha Sangams, organized by the Board, are bringing under one umbrella the farmers, traders, processors, exporters, scientists, officials, agri departments and agriculture and horticulture universities. To ensure traceability, the Board has set up quality evaluation labs in major centres like Kochi, Chennai, Mumbai, Guntur and Tuticorin. These labs help particularly in testing chillies and turmeric to match international requirements. Kandla, Delhi and Kolkatta will soon have similar labs. Likewise, Spices Parks set up by the Board offer common facilities to do cleaning, grading, value addition, storage and marketing. Hopefully, the interactions promoted by the congress among all stakeholders would pave the way for further strengthening this important segment of horticulture.

Editor : S. Jafar Naqvi

Comments are welcome at: mediatoday@vsnl.com

Vol 9....... Issue 3 ...... March 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

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Cover Story National Horti Conference

Indian Horticulture Marches on Output and exports surge – T V Satyanarayanan

While we have achieved success on the production front, the supply chain issues still need to be addressed. The Vegetable Initiative for Urban Clusters is an important step in this direction. The scheme, launched this year with an outlay of Rs. 300 crore, is being implemented with focus on sustained supply of good quality vegetables to urban centres having a population of one million and above – Sharad Pawar

ndia has achieved an all time high production of over 240 million tonnes of horticulture produce, raising the per capita availability of fruits and vegetables. It has also led to a substantial increase in exports, which in value terms is Rs. 14,000 crore. These figures were unveiled by Union Agriculture Minister Sharad Pawar in his key note address to the National Conference on Horticulture Production and Productivity, organized by the Union Department of Agriculture, in New Delhi. Underscoring the need to strengthen the supply chain to back up the success on the production front, Pawar announced the government’s decision to set up a National Centre for Cold Chain Development (NCCD), which would, among other things, strive to develop standards and protocols relating to cold chain and organize training programmes. The 12th Five-year Plan, beginning in the next fiscal, will have a target of 15 million tonnes of additional cold storage capacity. In a bid to bring India’s horticulture development to the centre stage, Pawar formally announced the launch of 2012 as the “Year of Horticulture,” and to mark its beginning, Pawar said his Ministry is instituting an award for the Best performing States in Horticulture.

Awards

The awards for this year were later presented by Pawar in the presence of Minister of Sate for Agriculture and Food Processing Charan Das Mahant during the Special Plenary session. States which received the excellence awards were: Jharkhand, Tamilnadu,

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Odisha, Andhra Pradesh, Chhatisgarh, Haryana, Mizoram, Sikkim and Himachal Pradesh.

Raising productivity

Since the productivity of many of the horticulture crops are low compared to global standards, Pawar said the Indian Council of Agricultural Research (ICAR), State Agricultural Universities and Krishi Vigyan Kendras were working closely as partners in implementation of various horticulture development schemes. Their role would be critical, particularly in such areas as development and dissemination of technology, evolving new varieties and production of healthy planting material. The highlight of the afternoon session was a special address by Prof Abhijit Sen, Member (Agriculture), Planning Commission. Prof Sen pointed out National Horticulture Mission was created five years back to support horticulture growers, to enable them to get good planting material and to provide them forward linkage in the form of market support. Horticulture in the country, undoubtedly, has made progress, but much more needs to be done. While growers are complaining about inadequate supply of planting material, forward linkages are missing in many areas. These weaknesses need to be corrected.

NHM’s term

Prof Sen indicated the term of NHM was being extended for another five years, after which there could be no extension. The Mission would have to “deliver now”, he stressed. The inaugural session was addressed

Cover Story by Union Agriculture Secretary P K Basu, Joint Secretary and Director NHM Sanjeev Chopra, Horticulture Commissioner Dr Gorakh Singh and President of Confederation of Indian Horticulture Sopan Kanchan. After the Agriculture Secretary’s opening remarks, Sanjeev Chopra made a presentation on ‘Year of Agriculture.’ Pravesh Sharma then made a presentation on Vegetable Initiatives for Urban Clusters, while Dr Gorakh Singh focused his address on issues concerning horticulture development. ‘Concerns of grower associations’ was the theme of Sopan Kanchan’s speech. The conference was attended by principal secretaries and directors of horticulture from state governments, agriculture and commercial Counsellors from High Commissions and embassies, managing directors of national level agencies, representatives of growers’ associations and members of the Confederation of Indian Horticulture. Following are extracts from Pawar’s key note address, giving an overall view of Horticulture development in the country and the Ministry’s new initiatives Year of Horticulture Let me, at the outset, announce the formal launch of the 'Year of Horticulture' celebrations being organized during this year to provide special impetus to horticulture development in the country. This Conference is also of particular significance, as we are finalizing the development strategy for the Twelfth Five Year Plan. I take this opportunity to compliment our farmers and all those associated with the development of horticulture in the country in achieving an all time record production of over 240 million tonnes of horticulture produce from about 22 million hectares of land. The increased production has resulted in higher per capita availability of fruits and vegetables, besides substantial increase in exports, which has helped the country to earn Rs 14,000 crore in foreign exchange. Fruits and vegetables constitute more than 90 percent of the horticulture

produce, which is also the main source of nutrition to the population. The total production of fruits is approximately 75 million tonnes from an area of about 6 million hectares. Similarly, the production of vegetables has been 147 million tonnes from an area of about 8 million ha. While we have achieved success on the production front, the supply chain issues still need to be addressed. The Vegetable Initiative for Urban Clusters is an important step in this direction. The scheme was launched during the current year with an outlay of Rs. 300 crore under the aegis of Rashtriya Krishi Vigyan Yojana. To start with, the scheme is being implemented with focus on sustained supply of good quality vegetables to urban centres having a population of one million and above. The scheme lays special emphasis on promoting protected cultivation

of vegetables in greenhouses and shade-net houses for enhancing productivity. Besides, formation of Farmer Producer Organizations (FPO) and linkage with financial institutions through Aggregators is an innovative feature of the Scheme. Over 62,000 farmers have already been mobilized into over 3000 Farmer Interest Groups (FIG) and 50 FPOs under this scheme.

Centre for Cold Chain Development

I am happy to share with you that the Government of India has taken a decision to set up the National Centre for Cold Chain Development (NCCD). This will go a long way in addressing the issues relating to the gaps in cold chain infrastructure in the country. While the Government of India would be infusing funds

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Cover Story

National Horti Conference

Raising Production and Productivity of Horti crops Some critical issues – Anwar Huda The Union Agriculture Ministry has introduced through National Horticulture Board a Nursery Accreditation Scheme to ensure availability of quality planting material to farmers. The scheme, to facilitate nurseries to get accredited, needs to be promoted on a large scale, said Union Agriculture Secretary P K Basu. in his address at the National Conference on Horticulture. The Agriculture Secretary briefly outlined some of the initiatives taken by the ministry, like Precision Farming Development Centres and use of micro irrigation technology to enhance production and productivity of horticulture crops. He also stressed the importance of reducing post harvest losses and effectively linking the farm with the market. Here are extracts from his address: The initiatives taken by the Department has certainly made a significant impact in terms of increased production of horticultural crops. The emerging trend world wide and also within the country indicate a paradigm shift in dietary needs of the people with rise in the income levels, resulting in demand for more horticultural produce both for consumption as well as for ornamental purpose, such as floriculture products. Since growing of horticultural crops is rewarding to the farmers in terms of increased returns per unit area, the sector is expected to contribute significantly in accelerating the growth in the overall agriculture sector. This Conference, which is being organized as a part of ‘Year of Horticulture’ celebrations assumes greater significance on account of the fact that it will provide a forum to deliberate upon some of the critical issues related to horticulture production and productivity and plan future strategies for enhancing production and productivity of different crops. In this context, apart from presentation on success stories by various States, a session has been devoted exclusively to deliberate upon crop specific production technologies developed by the Research Institutes under the ICAR. I am sure, this would help to identify the gaps which hinder in increasing the productivity level, which is presently low for most of the

horticultural crops. Needless to stress in this context, that availability of quality planting material assumes paramount importance in the production and productivity improvement programmes, which continue to be weak in many States. Although many new nurseries are being added under the National Horticulture Mission, availability of planting material in adequate quantity and quality continue to be problem. We have, therefore, introduced a Nursery Accreditation Scheme through the National Horticulture Board, which needs to be availed and promoted on a large scale for getting the nurseries accredited so that only good quality planting material is made available to the farmers. Another area which could help in enhancing productivity of horticultural crops is the use of protected cultivation technology, particularly for vegetables, the Precision Farming Development Centres have been conducting trials on this and have brought out package of practices, which needs to be promoted on a large scale. We have, therefore, laid great stress for adoption of protected cultivation under the newly launched scheme on Vegetables Initiative in Urban Clusters. Use of micro irrigation technology through advanced irrigation technology like drip irrigation not only help in enhancing productivity but also help in improving water use efficiency. This technology is being promoted under the National Mission on Micro Irrigation. This technology is yet to penetrate in the North East and Eastern States.

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The phenomenon of gluts and scarcity is an area concern, particularly for vegetables like onion, potato and tomatoes. This calls for the need for advanced planning on production besides tie up with marketing channels. Production enhancement need to be linked with infrastructure for reducing post harvest losses and marketing of produce. Provisions for taking up these activities exist on the ongoing schemes of National Horticulture Mission, Horticulture Mission for North East & Himalayan States, National Horticulture Board and Coconut Development Board which, need to be availed. Constitution of the National Centre for Cold Chain Development is expected to strengthen the cold chain infrastructure sector. The Industry needs to come forward in a big way to carry forward the goals of NCCD. Coinciding with the ‘Year of Celebrations,’ we have instituted an award for the ‘Best Performing States’. This award is mainly an incentive to motivate the States to achieve excellence in delivering the Scheme objective in an effective manner. I urge upon the States to strive for excellence in this performance. I am sure, the deliberations of this conference would accelerate the growth of horticulture sector during the 12th Plan. Looking back to our past achievements and future challenges, I am confident that horticulture will continue to play a key role in years to come, both in the agricultural economy as well as in improving the quality of life of Indian citizens. n

Cover Story totalling Rs. 25 crore, much of the investments will have to come from the Industry. The NCCD will strive to develop standards and protocols related to cold chain, besides organizing training programmes for the stakeholders of the cold chain Industry. It would be relevant to add that we have set ourselves an ambitious target of 15 million tonnes of additional cold storage capacity during the 12th Five Year Plan as against 8.75 million tonnes targeted during the 11th Plan. Let me now add some 'spice' to my address. Spices constitute an important segment of horticulture which helps in producing high value, low volume produce. The total production of spices is 5 million tonnes from an area of 3 million hectares. We have been maintaining the leadership in the exports of spices and spice products. Besides the interventions through mission mode schemes, the Directorate of Arecanut & Spices Development, Kozhikode, has been making concerted efforts in the development of spices, which needs to be intensified. The Spices Board under the Ministry of Commence has also been involved in the development of spices as a National Level Agency under NHM for reviving the pepper crop. A Saffron Mission has also been launched during 2010-11 for the development of saffron in Jammu & Kashmir with an 'end to end' approach involving about 1520 hectares in the Pampore region of Jammu & Kashmir. Another important sector in horticulture is plantation crops such as coconut, cashew, cocoa and areca nut. The Coconut Development Board has been concentrating in the development of coconut in the country. Their efforts have yielded results in terms of .product diversification in coconut, which has resulted in price stabilization of coconut. Cashew nut and cocoa are both being promoted through the mission mode programmes. The Directorate of Cashew & Cocoa Development, Kochi has also been making efforts in promoting these crops. There, however, still exists a huge gap in the production of raw cashew nut when compared to the processing facility available in the country. Similarly, the

production of cocoa also needs to be enhanced to meet the demand of the processing industry.

Floriculture

Floriculture is yet another area which helps in generating quick returns per unit of area for the farmer. With a production of nearly 7000 million cut flowers, there has been significant improvement in the production of cut flowers in the country, which is having good demand in .the domestic and international markets. However, there is much scope to tap the international market through quality and price competitiveness. Hi-tech interventions being promoted under the NHM, HMNEH and NHB schemes need to be availed to fullest extent. Adequate and timely supply of good quality planting material and seeds of horticultural crops play an important role in improving the

productivity of horticultural crops. A large number of nurseries and Tissue Culture Units have been set up under the public and private sector for producing the planting material. A scheme on Nursery Accreditation has been introduced by the NHB, and state governments are being advised to procure their requirements from accredited nurseries only. The ICAR, state agricultural universities and Krishi Vigyan Kendras are close partners in implementation of various horticulture development schemes. Their role will be critical in the coming years, particularly in development and dissemination of technology, development of new varieties, production of healthy planting material and human resource development.

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Cover Story

Micro irrigation

In the face of climate change, water is a critical input which helps in enhancing productivity and improving quality of produce. Towards this end, the National Mission on Micro Irrigation promotes efficient methods of irrigation for both agriculture and horticulture crops. While India has achieved good progress in this sector, there is need to refine the technology to optimize the capital and recurring cost of micro irrigation systems. There is however need to increase the spread and coverage of micro irrigation (MI) in the North East, and also to ensure linkages with financial institutions to provide medium term credit for MI so that the dependence on government support can be rationalized. The Growers Associations represented by the Presidents of various commodities and crops under the Confederation of Indian Horticulture have a significant role to play in promoting the development of respective crops. They need to mobilize more farmers into Farmer Interest Groups and Farmer Producer Organizations, as being done under the Vegetable Initiative Scheme. At this juncture, I wish to compliment the States who are receiving Awards for successful interventions in Cluster formation, High Density planting, Protected cultivation, Creation of Centres of

Excellence for .Fruits and Vegetables, Post Harvest Management, Precision farming and Micro irrigation. I am happy to announce here that from this ‘Year of Horticulture', the DAC is instituting an award for the Best Performing States in Horticulture which will carry handsome prize money. I must also compliment the Horticulture Division’s efforts to bring out a number of publications to coincide with the celebrations. These crop-based publications will be useful to the farmers and field functionaries. A publication on Krishi Sutra by SFAC should prove to be a useful reference document on agri-innovations.

Significant Impact

Earlier, in his inaugural address, PK Basu, Union Agriculture Secretary, commended the work done by the Department of Agriculture, and said, “I have no hesitation in stating here that the initiatives taken by the department have made a significant impact in terms of increased production of horticultural crops. We are not only the second largest producers of fruits and vegetables in the world, but are also the largest producers of a large number of crops.” Pravesh Sharma, Managing Director of Small Farmers’ Agribusiness Consortium presented the progress under the new scheme for developing vegetable supply chains in one pilot city of each state.

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The National Vegetable Initiatives for Urban Clusters provides 100% funding to States to develop model supply chains for vegetables for one selected city by addressing all the issues from producers to the consumer end. Innovative production, aggregation and marketing models are coming up in various parts of the country under this scheme. Farmers are being organised for the first time under the scheme into producer groups for better integration in the value chain. Dr. Gorakh Singh, Horticulture Commissioner said, “States that have been awarded today deserve all the laurels that have been showered on them. On behalf of the department I personally congratulate them and wish them all the luck for future initiatives.” Elaborating, Sanjeev Chopra, Joint Secretary, National Horticulture Mission said, “Horticulture offers better remuneration as compared to cereal crops. With more innovations and optimal utilization of land and water resources, we can bring a paradigm shift in the horticultural scenario in India.” India is now the world’s largest producer of Mango, Banana, Papaya, Pomegranate, Sapota, Aonla and Okra and has the second highest position in Brinjal, Cabbage, Cauliflower, Onion, Potato and Peas. The production of tomatoes is also substantial.

Technical sessions

The conference divided itself into four technical sessions, three of them focusing on states’ perspective and success stories and the last on problems and prospects in selected crops. The first session on seed and planting material was chaired by Anup Kumar Thakur, Additional secretary, while the second on High Density planting and canopy management was chaired by Dr Gorakh Singh. Atanu Purkayastha, Joint Secretary was the chairman of the session devoted to protected cultivation of high value crops and micro irrigation. In the final session, chaired by Dr H P Singh, Deputy Director General (Horti), ICAR, problems of crops like banana, grape, citrus and pomegranate were discussed. n

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Perspective

Longer term agri outlook seems constructive â&#x20AC;&#x201C; G.Chandrashekhar

he year 2012 has begun in an air of uncertainty on the global macroeconomic front with many imponderables currently weighing on the minds of market participants. A significant part of which is, of course, a spill-over from last year which was marked by slowing economic growth, geopolitical instabilities and the European sovereign debt crisis all of which impacted most of the markets â&#x20AC;&#x201C; equities, commodities and currencies. Big Questions If and when the weakened market sentiment will begin to improve? Global agricultural markets have not been insulated from the broad macro dynamics. After two solid seasons of strong prices driven by adverse weather and tight fundamentals, is there hope of abundant supplies and consumer-friendly prices during 2012? Investment in Crops Going by basic economic theory, there will be strong supply response in 2012 as higher cash returns of last year would encourage producers to invest in their crops. Expanded acreage and increased application of nutrients and pesticide can be expected. Higher production would translate to a high probability of agricultural prices consolidating lower this year. Fertiliser While fertiliser prices should also ease in sympathy, the anticipated rise in global crop production this year

will boost fertiliser application. It is likely that the increased demand will support prices through the first half of the year, particularly as the US farmers move towards spring planting. According to experts, while producer restraint will push potash prices higher, balanced supply/demand fundamentals will stem losses in urea. Importantly again, there are signs the current weak La Nina is fading. Weather experts assert that two seasons of unpredictable weather is unlikely to be followed by a third. If we assume a return to â&#x20AC;&#x2DC;normal' weather then yields will return to trend. In the event, with augmented output, farm commodity prices can be expected to gradually ease over the course of the next two seasons. As the next big harvest of major crops will be in the northern hemisphere in the second half of the year, the first half may continue to remain somewhat tight in terms of physical supplies simply because despite an anticipated crop rebound later, demand conditions will remain steady and most likely some inventory rebuild will take place. So a tighter first half will give way to a comfortable second half. In the last few months, we have found extremely limited risk appetite among investors. Funds have stayed in the sidelines waiting for clear signals. It is reasonable to assume that the hedge fund community will be less willing to bid up agricultural prices from the current levels. A strong dollar combined with weakened risk appetite reduces the appeal of commodities. The only caveat one must enter is that weather should stay normal and no anomalies should scupper production hopes. China factor is something to watch. In 2011, through

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steady credit squeeze, the country's monetary policies aimed to cool the economy seen to be overheating. Recent appreciation of the Chinese currency Yuan means imports into China will be less expensive. How crude oil prices will behave in 2102 remains a matter of conjecture and debate. Crude Prices Geopolitical instabilities can potentially lead to crude price spurts. High crude prices push up synthetic fertiliser prices higher and cost of mechanisation especially in the western world. According to the World Bank, prospects for decline in 2012 food prices remain favourable due to weaker consumer demand as a result of sluggish global economy, expected declines in the price of energy and crude oil and strong forecast for 2012 food supplies. As a note of caution, it has added that some upward price pressure will remain nevertheless. These include possible increase in demand for biofuels if oil prices pick up again, very low stock-touse ratio for maize (corn), volatility in oil prices as a result of unrest in producer countries and weather changes. Experts assert that longer term agricultural outlook remains constructive. This year's supply recovery is part of the normal cyclical pattern in agricultural commodities. Things will likely remain bearish in 2013/14 season on the back of ample stocks, beyond that prices may shift higher. Rising incomes, growing population and enhancing dietary needs, not to forget biofuel mandates, will expand demand which will have to be met through area expansion or yield improvement. Will the world rise to the challenge?

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Cereals

Indiaâ&#x20AC;&#x2122;s Rice Output Touches 100 MT Mark â&#x20AC;&#x201C; T Nandakumar, Former Union Secretary, Food & Agriculture

It isn't enough to achieve a productivity increase in one year and revert to the previous level the next year. A moderate increase year after year has to be the mantra

ndia has just recorded a production of 102 million tonnes of rice this year, up from 96 million tonnes last year, and up from the all-time high of 99 million tonnes in 2008-09. Important Landmark Why is this important? First, rice is a staple diet for a large number of poor people in India, particularly in southern and eastern India. Hunger and malnutrition is comparatively higher in most of these regions. An increase in production, resulting in adequate supplies will keep prices under check, and increase access to their preferred food. Second, at the macro level, it is difficult (almost impossible), to import rice in times of shortage. The global rice trade is small, approximately 30-35 million tonnes, of which almost half is high-priced rice like Basmati and Thai scented

rice. If India or China enters the market to buy rice, it can send prices soaring to astronomical levels. India, therefore, cannot afford a shortage of rice at any point in time. Third, this growth has been led by the eastern region. Bihar and Jharkhand have recovered from a drought last year with bumper harvests. The performance of states like Bihar, Uttar Pradesh, Orissa, Chattisgarh, Jharkhand, and West Bengal has been better than their previous best. This is proof that there is a resurgence of agriculture in these regions, and that the new initiatives like Rashtriya Krishi Vikas Yojana (RKVY), National Food Security Mission (NFSM), and the Eastern India Agriculture Initiative, are working. This is an encouraging development from a national point of view, since current levels of rice production in Punjab aren't sustainable. Abundance of water and the potential to increase productivity in Eastern India has long been recognised. However,

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the breakthrough didn't come for a variety of reasons, including low seed replacement ratios, low and injudicious application of fertilisers and poor extension services, among some other factors. Challenges Ahead Sustainable increase in productivity: It isn't enough to achieve a productivity increase in one year and revert to the previous level the next year. 100 million tonnes has to be the benchmark. A moderate increase compared to the previous year's production has to be the mantra for the coming years. It is, therefore, 100-plus million tonnes, year after year. This isn't easy. Given the vagaries of the climate, and the competing priorities for farmers, this would be quite a challenge. Continuous attention to water management, timely availability of quality inputs, and farmer-friendly extension services will have to be provided.

Cereals

Bengal’s rice mills face cash crunch

early 1000 rice mills in Bengal are currently facing a severe cash problem due to the sinking of the prices below minimum support price (MSP). The obvious reason behind this crisis is attributed to over-dependence on the open rice market. In older market system, the government bought nearly 20 percent paddy (dhan), which freed rice mills from cash involvement. The government’s co-operatives procured it at MSP directly from farmers. Then, it was its responsibility to change it into rice which it did by paying milling charge to various rice mills. But now, this system no longer exists, and the new system is very much open to market risks. This time, the mills procured paddy from farmers at the usual rate of Rs.1080 per quintal. Since the milling charge is Rs.65 per 100 kg of paddy, the mills registered loss of nearly Rs.100 per quintal, as it had to sell rice at the prevailing rate of Rs. 1500 per

Ensuring remunerative prices: Most farmers are aware that higher production results in a glut, and a consequential drop in prices. The Minimum Support Price (MSP) mechanism is expected to take care of this. Theoretically, the Commission on Agricultural Costs & Prices (CACP) takes care of this in their recommendations. The Union Government has generally accepted the price recommendations of the CACP, sometimes improving upon them. The catch, however, is in the implementation. There are reports that farmers in some regions don't get the MSP, and are forced to sell at prices that are much lower. CACP itself is on record saying that, in some regions, this is the actual situation. Unfortunately, most of such regions are in eastern India, where we want to see significant growth in agriculture. The Centre expects the States to do a

quintal. This suicidal economy put them in worrying condition financially. Expressing his views on this grim scenario, President, Arambag Rice Mills Association, Dhirandranath Roy said that the condition is in such a terrible shape that rice mills have no money to buy more paddy. “It certainly warrants government attention”, he said. Since there are no middlemen now, rice mills cannot procure any loan from any quarter. To arrest further loss, the mills are not releasing any more rice in the open market. This has left them in red spot. Arambag, which is hub of rice mills, has reported 40 percent less production of rice this season. The state government’s sudden move to terminate the licenses of 500 cooperative societies and banning middlemen has put the rice mills in the troubled spot. The arotdars or middlemen provided cash whenever these mills needed it. The mills were asked to pay farmers through cheques to end cash-based transaction. A mill owner said the government loved to

reform the whole chain system, but it failed to foresee such problems which might appear in such cases. This is basically a policy fallacy. Since, the cash flow dried up, the rice mills are now left with no option but to withhold the rice selling and paddy buying activities. This has put a chain-like hurdle in many sections of this industry. The government pays very late for its procurement, which also affects the poor capital condition of these mills. The 15 or 20 day delay in payment has been a matter of worry for all rice mill owners. The state’s apathy could be guessed from the statement made by State Food and Supplies Minister J Mallick. He said, “This is a matter of rice mills, and the government has no role to play”. He only promised to clear government’s dues and nothing else. This has put off any sign of hope of a government intervention to save the rice mills from this cash crisis.

substantial part of the procurement under MSP, and the States expect the Food Corporation of India (FCI) to do more. For the farmer, it doesn't make a difference. He gets paid much less than what he is entitled to. This failure to ensure MSP could well be counterproductive for plans to sustain the growth of productivity in rice.

to make distress sales. Even the new Warehousing Development & Regulation Act, which enables issue of fungible warehouse receipts, won't help these farmers, since they will have no access to a warehouse. So is the case with roads. In the absence of all-weather road connectivity, procurement and large private purchase is impossible. The inadequacy of rice milling infrastructure in these states is often ignored. The non-availability of power could prove to be a gamespoiler in a year of erratic rainfall. Quite often, the infrastructure for inputs, namely, seed sellers, fertiliser depots, bank branches, is ignored. So, let us celebrate this hundred, but also commit that we will do all that is necessary to ensure this performance, year after year.

Want of infrastructure: One of the most important reasons for low productivity is absence of infrastructure. Most of these regions where production is expected to increase don't have adequate warehousing either in the private or public sector. This causes great difficulties for procurement agencies, companies and individuals who intend to buy paddy in these regions. Also, poor farmers don't get any space to store their crops, thereby forcing them

AgriBusiness & Food Industry w March 2012

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Beverages

Pepsi – Tata JV to make

healthy drinks

—— Tata's Krishna Kumar answers key questions ——

epsiCo India and Tata Global Beverages have formed a joint venture to make nutritious beverages. The two giants have already started a new company “NourishCo” to achieve their joint goals. The JV rolled out its first product “Tata Water Plus” in Chennai at a press conference. The JV Claims that it is the country's first nutrient water, which is priced at Rs.16 for a 750 ml Pet bottle. The two companies will have equal holding in the joint venture with equal board representation. The joint venture will have an equity component of Rs.50 crore. NourishCo will use PepsiCo's distribution strength and the research and development capabilities of both parent companies. Soon, NourishCo will cover 20 towns in Tamil Nadu. Developed in tandem with global scientists and Indian nutrient experts, Tata Water Plus will soon be taken to markets across the country. “Its taste is neutral. It looks and tastes like normal water but with added goodness of nutrients that are bioavailable,” says a release. Initially, Tata Water Plus will be available in two variants — zinc and chromium. These two elements are known to strengthen immunity and improve overall health, the release adds. Addressing a press conference, R. K. Krishna Kumar, ViceChairman, Tata Global Beverages, said, “NourishCo would focus on enhancing the hydration category in India. Besides Tata Water Plus, the NourishCo portfolio will include

R. K. Krishna Kumar is also a director in Tata Sons. While launching Tata Water Plus, he answered some key questions regarding the psychological analysis of the new consumers and his company’s strengths and future ambitions. Excerpts:

R. K. Krishna Kumar Tata Gluco Plus, a glucose-based lemon-flavoured drink in a unique cup format, and Himalayan Natural.” Krishna Kumar said the company would outsource the manufacturing of Tata Water Plus to a local bottler in Chennai. The distribution of Tata Water Plus would, however, be handled by PepsiCo. Tata Water Plus was developed by the Tatas. He also said that Tata Gluco Plus, however, was developed by PepsiCo. Manu Anand, Chairman, PepsiCo, India Region, said his company believed in “performance with purpose.” The product was in tune with this philosophy. He felt that Tata Water Plus was not just a game changing product but a commitment from the two organisations to “improve peoples' quality of life”. Ashok Namboodiri, Chief of Sales and Marketing, NourishCo Beverages Ltd., said, “The company had also soft-launched its energy drink — Tata Gluco Plus. It would be priced at Rs.6 for a 200 ml cup. It had also brought the top-end natural mineral water brand Himalayan (priced at Rs.40 a litre) into the NourishCo fold.” * * *

AgriBusiness & Food Industry w March 2012

Good to form a JV with Pepsi — will this leverage Tata’s Himalayan brand as well?

We want to partner PepsiCo to distribute Himalayan widely. They have the liquid bottle distribution strength. We don't have that. We can tap that strength to take Himalayan to international markets. Hopefully soon, we will take it to one or two countries. A product like Evian is a source product. Given the uniqueness of the water sources, there is no reason why Himalayan can't be taken to other markets and compete with brands such as Evian. The source, our aquifer in the Himalayas, is a unique source. We have vast reserves. We can tap it, bottle it and make it a global brand.

Will your company get into bulk water? No. We aren't excited about it.

What are the reasons behind test marketing Tata Water Plus in Tamil Nadu first?

It can be test-marketed anywhere. Tamil Nadu, however, is a market, where Pepsi is strong with Aquafina. It's an indulgent kind of market. If you take one of those states in the north, they may not be able to generate accurate data on how consumption takes place.

Beverages Also, media spends can be uniform, and out of this exercise, you can get a formula.

You bought and sold Glaceau to Coke, which might have enabled you to enter the ‘Vitaminised' water space. Will we see more flavoured and water with Vitamins from Tata Global stable?

That is what triggered us to develop research on this product. The big difference between then and now: the addition of Vitamins to water changes the taste of water, but they mask it with flavours. Here, we wanted to have a product that tastes neutral and yet carried the nutrients and is more accessible to common people. That was the biggest technical challenge for us.

When the Starbucks alliance gains traction with 50 stores as you are planning, will it see a good off-take of coffee from Tata Coffee?

Our coffee production is about 10,000

tonnes. And, it has its own mandate and agenda globally. Its high quality Arabica coffee will be used by this network in India and outside. We are setting up a modern roasting facility that can supply Indian and requirements abroad. It may not be economically feasible to supply to the U.S. market (for Starbucks) because Latin America is closer to it. Yes, we can supply to other markets, especially to the eastern ones.

The Tatas bought the Barista brand from Sterling's Sivasankaran. Later, they sold it to Lavazza. But now, you are again venturing into coffee retailing. Why?

When we bought Barista, we saw the Indian market transforming. Out-ofhome consumption was gaining. The experience of going into a store is not about just a product. There are other values that come into the picture. We were a minority stakeholder in Barista. And there was some difference of opinion so we sold out. The same drive

— that there is a change taking place in the market — encouraged us to tie up with Starbucks. It has 17,000 stores around the world. It is opening new stores every month. A product like Himalaya or Tata Water Plus can be in any of those stores or all of those stores. We are opening up a new dimension.

Do you hope Starbucks be a premium offering in the Indian market?

Yes, it will be at a price point higher than other products in the market.

But is the market ready for it?

We are seeing a strong surge in demand for that experience. Starbucks is not just about coffee, but the whole experience. It also includes a whole range of foods as well. This segment is called ‘the third place’. n

AgriBusiness & Food Industry w March 2012

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Beverages

Pepsi-Coca-Cola War Heats Up Indian Market

o discuss future strategy, market segmentation and organisational change, over 30 senior executives of PepsiCo India took part in a one-week leadership development programme, held at Taj Fisherman's Cove near Chennai. It was overseen by their chairman Manu Anand while Varun Berry, CEO, Foods, and Praveen Someshwar, CEO, Beverages supervised the programme. Someshwar was of the opinion that one won't see as much of the ‘cola wars' as in the past. Brands have grown, markets have matured and the focus now is on growing categories rather than slaying the competition. Also, as consumption trends and behaviours change, Pepsico too has to transform itself to feed and satiate the new consumer. As he said: “The metros are behaving differently, so are the next set of cities and rural behaving differently from each other.” In urban areas, modern trade is mushrooming and on-premises consumption is increasing. Today, over 30 per cent of consumption in urban areas comes from this segment. “Food courts, malls, the fine dining, the multiplexes, they are huge consumption points for us and you're seeing that grow at an aggressive pace,” Someshwar said. In the past couple of years, Pepsi as an organisation has had to re-orient itself to cater to these new trends, he said. With sales from modern trade outlets growing at 40 per cent for brand Pepsi, it had to cater differently to this segment in terms of packaging and size of the stock-keeping units (SKUs). It had to serve more singleserve cans and large PET bottles to modern trade, while smaller outlets had to be given returnable glass bottles and smaller PET bottles. Second, Pepsi had to approach the

big consumption driver of ‘on-premise' differently. It invested in a separate team to deal with this category. “These were big changes. Our ‘go-to- market' strategy for each market, our consumer engagement programme and communication is very different and has to be segmented and focused keenly,” explained Someshwar. Not wanting to be caught on the wrong foot when growth in the new urban conglomerates happens, Pepsi is also investing in its distribution in the large towns of the future, such as a Salem or a Hubli, he said. “We aggressively invested in our hub-and-spoke model, where the spokes go to all the smaller markets. With the increase in rural penetration, overall, we saw the number of front-end salesmen increase by 20-25 per cent.” While the cola category has been growing, albeit on a large base, within the carbonated soft drinks category (CSD), it's the lime and clear categories (7 Up, Mountain Dew, Nimbooz) that are growing faster, with juices, on an even lower base, growing even faster, points out the beverages head. “CSD has enough legs to grow, if consumer engagement is appropriate then growth will be there,” he said. And, growth in the overall beverages space has indeed been rapid for the MNC major in the past year in India – although globally it has been on a cost-cutting overdrive. Just last week it announced it would be cutting 8,700 jobs spread across 30 countries and forecast a 5 per cent fall in 2012 earnings. And, in its home market of the US, Pepsi's mainstay cola has been losing share to Coca-Cola. But that is global. In India, Someshwar, believes the opportunity is huge. “Per capita consumption is lower than Pakistan; even if I take Delhi city, it's lower than Sri Lanka and Pakistan. There is space to grow in every category.” Today CSD and hydration (Aquafina

AgriBusiness & Food Industry w March 2012

water) are large, juices and sports drinks (Tropicana/ Gatorade) are low, but has opportunity to be the next big category,” he said.

BERRY NICE FORAY

Varun Berry, the lanky CEO of foods for PepsiCo, believes it isn't enough to be sitting pretty with a lion's share of the potato chips market with its Lays brand. That's only small fry compared to the Rs 12,500-crore salty snacks space, where Pepsi's Lehar brand of traditional namkeens only has a tiny share. This segment is dominated by “backyard upgraders” who can put up an inexpensive extrusion machine and sell their ‘brands' at low price points. To get a larger bite of this traditional snacks category, it started to do the numbers, and figured out its conventional model wouldn't work. Lehar was pretty much under-represented in the traditional snacks market, which is 60 per cent of the total salty snacks market. Pepsico found that the players dominating this segment were operating a backyard kind of businesses, distributed in small areas, fixed costs were very low. “They are very nimble, they launch a product a day if they want. And there are 1,500 operators all over the country. So we had to disguise ourselves as similar operators, if we wanted to get into that category,” explained Berry. So in October 2010, Pepsi took the plunge and created a separate company called Lehar Foods. The objective was simple: have a separate team, be very entrepreneurial, keep the fixed costs down, be nimble, move fast, do local and regional variants and so on. It's a very low-capital model that Lehar Foods evolved. It opted for the co-packing model with a host of small entrepreneurs - independent businessmen who wanted to make money by selling out their capacity.

Beverages

Cola giants to compete in the flavour field

orget the cola war; Coca-Cola and PepsiCo are heading for a highpitched battle in the flavoured soft drinks segment this summer. Soon after reviving lemon drink Citra, CocaCola has decided to give fresh lease of life to orange drink Crush and tonic water Schweppes, says an industry official aware of the development. Rival PepsiCo, which has rolled out two variants of orange drink Mirinda and revived lemon drink Duke’s after a seven-year hiatus, plans to launch more flavours under its clear-lime brand 7Up, trade insiders said. Both are responding to the changes in consumption patterns in India’s Rs. 13,000-crore soft drinks market, experts said. “Flavours are growing faster than colas…heightened focus is recognition of the demand,” Ravi Jaipuria, PepsiCo’s biggest bottler in South Asia said. Crush For The Masses Coca-Cola plans to revive Crush and Schweppes, which it bought along with clear lemon Canada Dry as part of a global acquisition of Cadbury Schweppes soft drink business in 1999. Crush, like Citra, may target the low-income group with a lower price tag than Coca-Cola’s own Fanta

SURFING THE LEHAR

The Lehar Foods team is lean and mean in every sense. Just 35 people are on the rolls, and it has its own CEO, who reports in to Berry. “But we keep him as free from the burdens of internal corporate reporting to keep him very entrepreneurial. I make sure that he is not making presentations to all and sundry; in fact, we banned PowerPoint presentations completely within that company. We started to gain momentum in 2011 and we continue to do so,” Berry said. Lehar today has around 40 SKUs of namkeens and salty snacks. The targets are aggressive and this unconventional model within the MNC framework is looking at garnering big volumes. Berry said, “We are looking, in volume terms, in three years to get to being about 40 per cent of the size of the A business (the chips).” A separate distribution set-up for

orange drink, said an official familiar with the development. “That way, both brands can co-exist.” Schweppes tonic water and premium soda will be taken national across more than 10,000 outlets, and will be packaged in cans, the official says. Currently, Schweppes is available only in nonreturnable glass bottles in a few restaurant channels and select modern trade stores. A Coca-Cola spokesman said: “A combination of our ‘occasion, brand, pack, price, and channel’ architecture along with brand activation plans and route to market focus will help us capitalise on the existing opportunity in the flavours segment.” Coca-Cola is already in the process of reviving Citra, which it had acquired from Ramesh Chauhan two decades ago, priced about 20 per cent cheaper than existing lime lemon drinks Sprite and Limca, mainly to fight smaller regional B-brands. Unprecedented Rush Devendra Chawla, president of food and FMCG businesses at the country's largest retailer Future Group, said launch of so many flavours and brands in one season is unprecedented in the industry. “While there would be some casualties among these by end-season, it’s good Lehar Foods too was created. Berry says Lehar could easily have gotten up to two million outlets if it went through the Pepsi system but decided to keep it separate to avoid any cannibalisation with its main portfolio of Lays as there was a distinct difference between the two categories. Last year, in six States Lehar Foods was distributed directly. In a few other large States, it rode on Lays' distribution. It has touched about four lakh outlets through its own distribution, Berry says.

PEPSI MAANGE MORE

About the competition such as ITC, Parle and Britannia, as well as from regional brands such as Balaji in Gujarat, hurtling at its chips business with a range of baked snacks, he pointed out to the new launch, Lays Baked. This, he said, can't be replicated for a while – baked snacks yes, but not baked potato chips for which Pepsi has imported an

for the industry as India’s share of throat of soft drinks is minuscule; this engagement will grow consumption,” he added. Some experts say that a key factor that helped flavours outgrow colas is the widespread belief among Indian consumers that flavoured soft drinks are less harmful to the body than colas. Ruchira Jaitley, PepsiCo’s executive VP marketing, beverages (flavours), said flavours are growing in high double digits, without sharing exact numbers. But surprisingly, the new Mirinda flavours will be around only for three months and go off the shelves before peak season of May-June. Late last year, PepsiCo had relaunched its age-old Duke's range of beverages, mainly as a regional brand in Mumbai, in lemon, raspberry and gingerale variants. It bought Duke&Sons in 1995. Now, the rush for flavours is in the packaged juice segment as well. expensive machine, he emphasised. “While both Parle and ITC have deep pockets they have also got to make choices. They are getting into so many different categories. They are seeing success in some and facing a wall in others ... What really happens when competition comes in is that there is a lot more excitement in the market. And that excitement creates the buzz. And, we've got to be leaders who innovate and lead from the front,” Berry said. About many launches from Marico, Horlicks, Kellogs, Britannia into the oats category where Quaker Oats is the market leader, he said, “It's a small category of Rs 150 crore, with just one per cent penetration of the population, so there's room for everybody. In the next few months you will see a lot of excitement in this category from us.” n

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Coffee

Coffee Board can protect South Indian Coffee varieties: A case study

offee experts of filter coffee in South India and nonresident South Indians may not appreciate the entry into India of the US coffee chain giant Starbucks, which makes multicolored liquid beverage, and now, which has cemented JV (joint venture) with India’s Tata Global Beverages (TGB), the partner of Tata Coffee to set its shops in the country. Indian coffee producers and lovers of original Indian coffee want the government to empower the Coffee Board to protect South Indian coffee varieties to face challenges posed by such global coffee behemoths. Initially, it will open 50 stores across the country. For this, it will invest $80 million. The alliance was made last year for roast Arabica beans in India. Starbucks will get benefits of Tata Coffee’s massive pile up of experience from this JV. Although the Government is willing to allow 100 per cent foreign direct investment (FDI) in singlebrand retail, Starbucks showed a praiseworthy foresight by forming a joint venture. The Coffee Board was terminated in mid-1990s. It was regulating coffee

production and exports and enjoyed a virtual monopoly over procurement of the beans. The dismantling of the board enabled the private industry to establish itself in the beans business. Tata Coffee emerged as a formidable player in this sector. In fact, the Coffee Board which claims of having several distribution and sales outlets in India is now relying solely on supply from private players. The force of market dynamics is also a major factor. The Department of Commerce failed to comprehend this simple truth. After declaring this Joint Venture with Tata Coffee, President of the Starbucks China and Asia Pacific region, John Culver said, “Starbucks is willing to sell its products in multiple channels such as hotels, restaurants, colleges and universities, as they are youth-friendly places.” His views are similar to many foreign brands who want to reach the youth of India. So, Starbucks' focus on youth is totally justified. For the record, the café market in the country stands at $170 million (2010-11). It is expected to grow at the rate of 30 per cent annually for at least next five years. This growth can be proved by massive success of major coffee café chains like Café Coffee Day (CCD), Barista

AgriBusiness & Food Industry w March 2012

(Lavazza), Costa Coffee and Italian coffee chain Testa Rossa. Simple home-brewed coffee which is being made through using a conventional filter minus any flavour or adornment is still considered good by the South Indian coffee lovers, and it is a quick way to get mind working. It has neither cream nor any flavoured syrup. In fact, most of the coffee lovers who drink daily such a refreshing homemade cup of coffee, praise its therapeutic qualities. As it stimulates the nerves and recharges the tired tissue of the mind Since people are increasingly becoming health-conscious, brands like Starbucks are planning to print calorie and other health information on cups of coffee. Experts believe that sugary flavours and whipped cream are unhealthy and should be avoided. These health concerns are guiding the future strategies of Starbucks. Calorie information is necessary to enable coffee drinkers to know what they are doing to their health. Starbucks claims that over a dozen drinks from its stable contain less than 150 calories, which is almost what is found in one average hot dog. And even a large cup made with skimmed milk may not cross 200 calories, which is

Coffee

Coffee Board predicts 6 % more produce for 2011-12

he country is likely to see nearly 6 per cent higher coffee production at 320,000 tonnes for the crop year 201112 because of better and widespread rains compared with the previous year. Last year's estimate stood at 302,000 tonnes. Of the total estimate, the arabica and robusta break up are 103,725 tonnes and 216,275 tonnes respectively. The Coffee Board which released its latest post-monsoon coffee crop estimate today for the season 2011-12 also forecast a 0.70 per cent lower crop at 320,000 tonnes as against its postblossom estimate of 322,250 tonnes. According to the post-monsoon estimate, arabica production has risen by 10,385 tonnes (11 per cent) over the final estimate of 2010-11, while robusta increased by 9,865 tonnes (4.75 per cent ). When compared with postblossom estimate of 2011-12, the arabica production declined by 800 tonnes (-0.77 per cent) while robusta equivalent to a bowl of plain porridge. What can be called unhealthy for the consumers is basically its Praline Mocha with whipped cream or other servings. But it can be called unhealthy only if someone drinks it 4 times in a day as it would cross 2220 calorie count. In 2009, to help consumers decide the best for themselves, The New York government has ordered all coffee chains which have 15 or more outlets to print the calorie count of each of their offerings. Any outlet not honouring it must pay $2000 penalty. While the developed countries are passing such advanced laws to protect the health of their consumers, Indian government has just started the process of passing such laws, making it mandatory for packaged food industry to print calorie information on each readyto-eat food packets. But more needs to be done in advance than doing it too late. The best possible solution in the coffee case is to empower the Coffee Board by giving it freedom to popularise

fell by 1,450 tonnes (-0.67 per cent). KARNATAKA In Karnataka, the post-monsoon production decline is very marginal (-0.58 per cent) over the post-blossom estimate while it showed an increase of 12,575 tonnes (5.88 per cent) over the final estimate of 2010-11. Hassan district experienced a decline (of 700 tonnes or -2.26 per cent) both in arabica (400 tonnes or -2.14 per cent) and robusta (300 tonnes or -2.45 per cent) followed by Kodagu (475 tonnes or -0.40 per cent) and Chikmagalur (145 tonnes or -0.18 per cent) over the post-blossom forecast. The maximum reduction is seen in Yeslur (-7.7 per cent), Aldur (-5 per cent), Royarkoppal (-2.47 per cent) and Belur (-2.15 per cent) zones due to the normal berry drop during the monsoon period. Overall, the crop estimate for Karnataka is placed at 226,355 tonnes with 81,505 tonnes of arabica and 144,750 tonnes of robusta. all 16 South Indian coffee varieties. Three of these are top-end coffee. The coffee from most of the coffee chains is usually unhealthy than the plain vanilla coffee made at home, or which is being sold by the Coffee Board outlets. The Coffee Board should establish vending machines in places that register high footfalls like malls, multiplexes and metro stations to popularise India-brand Arabica, which is roasted and grounded fresh to please those coffee lovers who want simple coffee taste and no extra stuff in it that may dilute the original taste. Last but not the least, adding cream and other flavours only add up to unhealthy count of calories. It can make people addicted to that particular taste. By providing just coffee, the prices can also be pruned to a satisfactory level. Traditionally speaking, India is still a tea-lover country where per capita coffee intake is not impressive. It is just nearly 90 grams. While, per capita coffee consumption in Brazil is 4.8 KG, and in US, it is 6 KG. In India, coffee is

KERALA Kerala reported a marginal decline in Wayanad (-1.50 per cent), while Travancore showed an increase of 1.20 per cent over the post-blossom estimate. Therefore, the postmonsoon forecast is placed at 68,350 tonnes which is a marginal decline of 775 tonnes (-1.12 per cent) from the post-blossom estimate of 69,125 tonnes, but a 4.11 per cent increase on the final estimate of 2010-11. TAMIL NADU Tamil Nadu production is forecast at 18,390 tonnes as against the estimate of 18,450 tonnes of postblossom which is a marginal decline of 150 tonnes mainly from Shevroys region. In Non-Traditional areas of Andhra Pradesh and Orissa and North Eastern Region, the postmonsoon forecast is placed at 6,905 tonnes against post-blossom estimate of 6,910 tonnes. mostly consumed by the upper class or educated working youth in major cities. In rural belt, it is only tea that rules, though the pouch culture has popularized coffee to some extent. But nonetheless, coffee consumption in India is recording a positive growth in recent years due to opening of several high end coffee chains. This has inspired overseas major brands to set up their shops in the country. And before the situation could go out of control, the government needs to give absolute freedom to the Coffee Board to protect its South Indian coffee varieties. People want pure coffee to rejuvenate their mind, but they are also liable to get attracted to all those decorative cups of coffee sold by global brands. India should learn from developed countries and stop any unhealthy practice which brands like Starbucks can initiate to accumulate profit at the cost of public health and indigenous coffee. n

AgriBusiness & Food Industry w March 2012

Profile

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Dhiman Systems (India) Ltd

Ă&#x2030;clair Forming Machine

DSIL,

India manufactures more than 8 types and various models of Candy forming machines with production capacity from 500kg/shift to 6000 kg/shift and Lab.Candy Forming machine. Different models of machines are suitable for manufacturing different type of Candy. In these machines liquid filled, powder filled and bubble gum filled candy can be produced. DSIL manufactures high speed candy forming machine suitable for filled or unfilled candies up to production of 6000 kgs.in 8 hours depending upon shape, size and weight of the candy. This machine is specially suitable for forming Eclairs.The candy formed in this machine is perfect, uniform and without

any pips. Due to high pressure mechanism the punching of design and logo is very sharp. The scrap formation is also very low. Minimum size of candy that can be formed is 16mmx16mm and maximum 60mmx40mm.Maximum thickness of candy possible is 24mm.Power requirement is only 6 HP in all. There is separate geared motor for Swivel conveyor and wire mesh of conveyor thereby eliminating moving parts and reducing maintenance. With the installation of DSIL electrical control panel fitted with variable speed frequency controller the speed of die, wire mesh and swivel can be varied according to requirement. The speed of sizing wheel can be kept fixed or there is optional provision of installing separate motor and frequency converter for sizer there by giving variable speed to it. With the installation of DSIL Batch Former, DSIL Rope sizer, DSIL Three Way Conveyor and DSIL Electric control panel, this machine will work fully automatic. Apart from Candy forming this machine can also be used for Ă&#x2030;clairs, Bubble gum, Chick let forming and Toffee cutting. Several DSIL machines are working with leading manufacturers in India and abroad. For further information please visit our website www.dsilgroup. com or write to us at dsilgroup@gmail.com or contact Managing Director P.D.Dhiman on +91 98 140 66007

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Retail

News HUL chief sees big opportunities in retail, FMCG

here is s u c h a huge opportunity in Indian retail and fast moving consumer goods (FMCG) that there is Nitin Paranjpe, CEO & MD no need for – Hindustan Unilever players to fight for their share of the pie. Instead, the focus should be to grow this pie, which is small today, and to unlock a closed market, according to Nitin Paranjpe, CEO and Managing Director of Hindustan Unilever. He was speaking at the National Retail and FMCG summit, organised

by the Confederation of Indian Industry (CII). Speaking on the Indian buyer, Paranjpe said, “the same person who will spend Rs.2,000 on a lavish cinema experience will also be seen fighting to save Rs.10 at a grocer. “To understand this behaviour, we need to understand the difference between a shopper and a consumer. They are no longer the same. Both have a unique mission and behaviour that is diametrically different.” A report, ‘The Tiger Roars' by the CII and the Boston Consulting Group was released and it estimated that total consumption expenditure, at $991 billion in 2010, is expected to grow to nearly $3.6 trillion in 2020. Food, housing and consumer durables as well as transport and communications are expected to be the Top 3 categories, accounting for 65 per

cent of consumption in 2020. The professional affluent are expected to dominate consumption in 2020. By contrast, spending by struggler households will decline from 26 per cent in 2010 to 11 per cent in 2020. Manu Anand, Chairman and CEO, PepsiCo — India Region, said, “Almost every FMCG company has been riding the waves of growth in the last 20 years and it won't be any different in future. The winners, however, will innovate more complex but significantly insightful models and use technology to create flexible supply chain, innovative products and communication ideas and satisfy even more consumer requirements. Together with this, government has to create an enabling environment and tackle a number of urban issues for the industry to truly reach its potential.”

Carrefour & Metro Cash to compete for Delhi market

erman retailer Metro Cash and Carry has entered the Capital with its tenth outlet in the country. The Group said it will open seven to eight stores in the coming fiscal with an estimated investment of Rs 70 crore per store on an average. The retail chain, which is present in three metros, said it is also looking to enter Chennai by the end of this year. “We will be launching two more stores in Delhi and one in Jaipur soon. We have a full city strategy. Starting last year, we have been adding more stores,” Rajeev Bakshi, Managing Director, Metro Cash and Carry India, told reporters.

To cover 40 cities

On extending its presence in India, Bakhsi said the company is looking at a 40-city presence. “It will be opportunistic. Personal consumption is riding high and we see scope for growth there. However, real estate is still a key challenge”. Metro will be competing in the cash and carry space with other players

such as French retail chain Carrefour and American retail biggie Walmart. In Delhi, it will compete with Carrefour. Wal-Mart is still to make its Delhi debut. Wal-Mart has 17 stores while Carrefour has two stores in India. Asked if it is considering entering frontend retailing, Bakshi said the company did not have any plans for now. India

AgriBusiness & Food Industry w March 2012

allows 100 per cent FDI in single brand retailing and cash-and-carry. However, in single brand retailing companies must mandatorily source 30 per cent from the domestic market. Metro said it has invested approximately Rs 45 crore for its Delhi store, spread over 80,000 sq. ft. It has an assortment of 10,000 products.

Corporate

News Govt to procure 32mt wheat this season

heat procurement by the Government for the Rabi marketing season 2012-13 is expected to rise by over 12.5 per cent to a record 31.89 million tonnes. Last year, the Government had procured 28.34 million tonnes for subsidised sales under the public distribution system. The procurement in majority of States such as Punjab, Uttar Pradesh, Haryana and Rajasthan will begin from April 1 and continue till June 30. In States such as Maharashtra, Madhya Pradesh and Gujarat the procurement will start from March 15. Bihar and Jammu & Kashmir are likely to begin procurement from April 15. The Union Food Secretary, Dr B.C.Gupta, reviewed the State-wise procurement strategy with the Food Secretaries of some 13 wheat procuring states on Tuesday. Madhya Pradesh has indicated a record estimate of 6.5 mt for 2012-13, according to the Food Ministry statement. The Government has announced a minimum support price of Rs 1,285 a quintal for wheat this year. The procurement strategy assumes

significance as the country is poised for an all time record harvest of wheat exceeding 88.31 million tonnes in 201112, India harvested a record 86.87 million tonnes of wheat. Purchase Centres The arrangements discussed include among others, the number of purchase centres to be opened in each State, the route for MSP payment through account payee cheques or bank transfers direct to the farmers, quality control measures, storage and movement of food grains. The States have assured that they are fully

gear up to make record procurement this time and they are in process of setting up control room to monitor it. Meanwhile, the Union Agriculture Minister, Sharad Pawar, has stated that the co-operatives have a distinct role in post-harvest management and storage. He was speaking at the 72nd General Council meeting of the National Co-operative Development Corporation (NCDC). Pawar said NCDC has been appointed as an agency for accreditation of warehouses by the Warehouse Development and Regulatory Authority.

WTO ruling may boost shrimp exports

ndian shrimp exporters to the US are hoping to get out of the antidumping duty net. In a notification dated February 14, the International Trade Administration coming under the US Department of Commerce said that they will be doing away with zeroing methodology on imports. This, the Seafood Exporters Association of India (SEAI) said, could be first step in getting out of the US anti-dumping duty for Indian shrimp exports. The US Department of Commerce's move comes in the wake of several adverse rulings from the World Trade Organisation. Countries including Argentina, Brazil, Canada, Ecuador, EU, Japan, Mexico, South Korea and Thailand had taken the process of zeroing to the WTO and were relieved of the need to pay anti-dumping duty for their exports to the US. The Government of India was yet to take the issue to the WTO and Indian shrimp exporters had been paying anti-dumping duties on their shrimp

consignments all this while, SEAI sources said. Zeroing is the practice under which a very small percentage of the country's exports are sold at sub-fair value prices because of some extraneous consideration or other - often under distress conditions. Under the previous practice, the US Customs used to zero in on these consignments and charge all consignments from that exporter with anti-dumping duty. This practice was deemed unfair by the WTO and countries which had approached it earlier were granted relief. In earlier judgments, the WTO had ruled that the US was violating global trade rules in using its controversial â&#x20AC;&#x153;zeroingâ&#x20AC;? method to impose anti-dumping tariffs on shrimp from Vietnam. The decision by a three-member panel of WTO was one among several such rulings in which zeroing had been found illegal under WTO agreement. The panel said the US had acted inconsistently with provisions of the Anti-Dumping Agreement and the GATT and said the US should bring its

calculation method in line with the two agreements. Now the US Department of Commerce has recommended revocation of the practice, SEAI said. They said that India would have got relief earlier if the Government had taken the matter to the WTO. Successive administrative review of Indian shrimp imports to the US was found to carry sub-minimus status; the anti-dumping duty level would be 0.5 per cent or less. Indian shrimp exports to the US would not have carried the anti-dumping duty burden in the absence of zeroing, SEAI sources said. But for the current move of the US Department of Commerce to abide the WTO ruling, India would have had to pay anti-dumping until March 2014 when the results of the Seventh Administrative Review would have been published, SEAI said. We are currently paying anti-dumping duty of 1.69 per cent on shrimp exports to the US.

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Iraq-a new market for basmati exporters

fter Iran, Iraq is too emerging as a potential market for Indian basmati as exports of the best-quality rice have picked up now. Exporters are aggressive on the prospects and hope to double shipments to about 2.5 lakh tonnes in the current financial year. Vijay Sethia, President of the AllIndia Rice Exporters Association, said, “People are shifting to quality products due to the openness in the system in the post-Saddam era. This is resulting in increased demand for the quality Indian rice”. Basmati exports to Iraq in 2010-11 were around 1.25 lakh tonnes, according to him. Of this, direct exports were about 31,239 tonnes, while the rest was shipped indirectly through Dubai.

“Now the direct exports have picked up and we hope to do a total of around 2.5 lakh tonnes this year”. Iraq accounts for a fraction of the country's total basmati consignments. Neighbouring Iran is the largest buyer of Indian aromatic rice and shipments stood at close a million tonnes last year. However, the recent instances of payment defaults from Iran could possibly hamper the volumes this year even though exporters have welcomed the Government's recent move to allow opening of letter of credits in rupee terms. Sethia said the recent reduction of minimum export price (MEP) on basmati to $700 from $900 per tonne should aid the shipments. In the current fiscal, the Indian basmati exports could touch 2.5

million tonnes, up from 2.18 mt in the previous year. “The reduction in MEP will also aid the shipments of par-boiled and unpolished basmati rice, which are relatively less priced,” he said. Europe mainly prefers the unpolished rice, while the par-boiled or semi-processed rice is exported to Saudi Arabia.

Marico connects youth consumers after buying Paras

he acquisition of the erstwhile Paras personal care brands from Reckitt Benckiser gives Marico a foothold in the ‘youth brands' and male grooming space, said Saugata Gupta, CEO, Consumer Products Business. After the announcement of the deal with Reckitt, Gupta said, “We've now got a strong position in styling with brands such as Set Wet and Livon. Our international brands give us a large product portfolio and also allow us a readymade funnel for innovation.” This is Marico's second large acquisition in India post the acquisition of the Nihar brand from Unilever a

few years ago. Earlier, it had made six brand acquisitions in Egypt, Vietnam, Malaysia and South Africa. Through these acquisitions it is present in these overseas markets in grooming, hair styling, deos, which was lacking in its Indian portfolio. Gupta said the acquisition of Set Wet, Zatak and Eclipse gives Marico an entry into the rapidly growing deodorants market. The Rs 1,200-crore deos category is registering over 40 per cent growth annually and is dominated by HUL's Axe with a 17 per cent share of the market. Zatak and Set Wet together have a 6 per cent share of this market. “It's a fragmented market but consolidation will happen.”

The other categories of personal care such as hair gels, hair care, talc, creams are all growing at over 25 per cent so the potential is huge, he said. Gupta said while Marico has a larger distribution overall, this acquisition will give it a “20 per cent incremental distribution” as the Paras brands are strong in the north and west while Marico's brands are strong in the east and southern India. The Paras brands are expected to achieve a turnover of Rs 150 crore during FY 12. The acquisition of this business is expected to further reduce Marico's dependence on edible oils and hair oils.

Reform PDS before passing Food Security Bill: Pawar

nion Agriculture Minister Sharad Pawar feels that the National Food Security Bill would not take off without massive reforms in the public distribution system (PDS) and the farm infrastructure. He was addressing a meeting of state food and agriculture ministers in New Delhi. Emphasizing his point, he said, “I will be failing in my duty if I do not emphasize the fact that the Food Security Act will never succeed in achieving its goal in letter and spirit if we try to push the same through

the existing PDS apparatus. A massive process re-engineering is required to make the PDS compatible with the goals of the Act and modern day requirement. He said that at this juncture, the country has serious limitations on all fronts like capacities of mandis, financial position of state agencies, manpower, quality inspection mechanism, storage, movement etc. He, however, stressed that he was not opposed to the objective of the scheme, and that his concerns were limited to its implementation aspect. “There is a

AgriBusiness & Food Industry w March 2012

general perception that I have reservations about Food Security Act. However, reservations apart, there is no denying the fact that as a welfare nation, time has really come to ensure that each and every citizen of this country gets two square meals a day. My only concern is whether the existing mechanism is compatible enough with the spirit of this Act,” the minister said.

Corporate

News India surges ahead of Thailand in rice exports

ndia and Thailand are caught in a race for the top slot in farm exports from Southeast Asia. India has pipped Thailand to become the top rice exporter but the latter has won the day in sugar exports. For the first time in four years, India has overtaken Thailand in rice exports. According to industry estimates, India exported 2.3 million tonnes of rice including basmati between October 2011 and January 2012 while Thailand could export around 2 million tonnes during the period. But Thailand, the second largest exporter after Brazil, shipped 6.68 million tonnes sugar in 2011 while Indian sugar exporters have been allowed to export only 2 million tonnes till now. India has always had a price advantage over Thailand, which sells at a premium in the world market. Last year, the export price of Thai rice ranged between $525 and $575 per tonne. But this year, the price swelled to $660 tonne on the back of the Thai government's high support price to farmers. The government paid farmers 15,000 baht a tonne for 100% white paddy and 20,000 baht for fragrant paddy to fulfill its election promise. This raised the export price of Thai rice, making it non-competitive in global markets. India

recently raised its export quota of nonbasmati rice from 2 million tonnes to 4 million tonnes to boost exports further. "Rice-importing countries got a good alternative in India to expensive Thai varieties. While Indian rice costs $500$530 per tonne, Thai rice costs $660 per tonne. This has led a surge in demand from countries like Indonesia and other African countries," said Om Prakash Arora, president Punjab-Haryana Rice Broker Association. The rise in exports is supported by the expected bumper production of rice this year. The estimated record output of 102 million tonnes allows the government to shed worries on food security. Besides, high inventories of more than 30 million tonnes paves the way for smooth exports. The economical Indian rice is making inroads into major Thai markets such as Africa, Indonesia, Malaysia, Bangladesh and Nepal. "We are getting good demand from overseas markets. We will cross the 3.5million tonnes mark this year. We expect to gain momentum in basmati once a formal order is issued on lowering the floor price from $900 to $700," said Vijay Setia, president, All-India Rice Exporters Association. However, India is way

behind Thailand in sugar shipment. A good crop and a buoyant overseas demand keep Thai sugar steady in the global market. According to media reports, about 33 million tonnes of cane have been crushed since the season started in mid-November in Thailand, with around 2.3 million tonnes of raw sugar and around 913,000 tonnes of white sugar produced till now. India is struggling to export one million tonnes even as the government has further allowed the export of an additional one million tonnes. Indian millers expect to produce 26 million tonnes of sugar in 2011-12 while sugarcane production is likely to stand at 347.87 million tonnes - higher by 5.09 million tonnes over the previous year. "We have given a release order for over 9.9 lakh tonnes. But we are not sure about their physical delivery. The release orders have to be consumed within 60 days. Given the capacity of our ports, we don't think we will able to export more than 3 lakh sugar a month. This poses a big question mark over the second tranche of 1 million tonnes," said a sugar directorate official.

Demand for farmed shrimp rises in overseas markets

he rising demands of farmed shrimps in the overseas market have caused waves of enthusiasm among Indian aquaculture farms owners. Both the black tiger and vannamei varieties from India have been going strong in the foreign markets, particularly in Southeast Asia. The sudden rise in demands could be attributed to a shortage of shrimps in countries like Thailand, Vietnam, Japan and China. The domestic farms are making all efforts to increase the production. Surya Rao, an aquaculture farmer in Andhra Pradesh, said, "The production could see a jump of 3040% if the seeds are available. We are experiencing a slight shortage of seeds because of the sudden rise in

demand''. According to him, around 70% of the production is vannamei shrimps. Medium-size vannamie fetches Rs 220 to 230 per kg for a farmer against a cost of Rs 150 to 160 per kg. Higher demand has resulted in the mushrooming of several new farms in Andhra Pradesh, where the majority of shrimp farms are located. A senior official of the Marine Products Export Development Authority (MPEDA) said, â&#x20AC;&#x153;The total production of farmed shrimp in the country is expected to touch 1.40 lakh tonnes this fiscal year. Since the sea catch has shown a decline this year, there is more dependence on farmed shrimp. There are a lot of unregistered farms operating to cash in on the demandâ&#x20AC;?. Most of the farms are at the harvesting stage. The international market is rather

subdued now, which has pushed down the prices. Indian vannamei was fetching $5.50 to $7.25 a kg in the overseas market. The exporters are expecting the demand to pick up in the coming weeks with China becoming active in the market. However, a slight appreciation in rupee may not help the exports.

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FMCG COs aggressive in breakfast segment

MCG companies are competing for Rs 2,000 crore breakfast table with most of them vying for a greater share of the fast growing industry. Major brands like PepsiCo, Marico, GlaxoSmithKline, ITC foods and

others have joined the fray, with a slew of launches planned in the segment this year. Marico, which has primarily been in the beauty and wellness category, says it is ramping up its presence in the nutritional food segment under Saffola brand to boost growth. The company launched several products in the Rs 600-crore oats category last year and plans to continue with newer product innovations in this category this year. "In view of the high inflation, we have consciously decided to drive growth even at the cost of margins. We want to get into the health space in a big way,"

said Marico CMD, Harsh Mariwala. The company is also restructuring its wellness arm, Kaya, and expects to break-even in one to two years. Britannia's Nutrichoice brand has grown twice that of the entire biscuits category, said health and wellness category director, Anuradha Narasimhan. The company is now focusing on turning indulgent delights into wholesome delights across various categories. Nutritious food items account for anywhere between 10 to 50 per cent of the product portfolio of companies, which is set to grow further. The category itself is growing in double digits per annum. PepsiCo India recently launched Lays in the baked segment. The company, which has products like Aliva, Quaker Oats in the breakfast cereal segment, said it is planning to introduce many other products in this space this year. "The launch of the Lays Baked is not a flash in the pan. We have recorded excellent growth in the health food category and we will continue to launch other products," said Vidur Vyas, MD, foods, PepsiCo India. Nourishco, the joint venture between PepsiCo and Tata Global Beverages, launched Tata Water Plus, India's first nutrient water. Amway says the nutrition and wellness category is fastest growing and accounts for over 20 per cent of its product portfolio. The maker of dietary supplement, Nutrilite, said more than 50 per cent of its turnover comes from the wellness segment. To deal with high global commodity prices, it has resorted to local sourcing to cut down prices. Despite having the first mover advantage in several products, breakfast cereal maker Bagrry's says the stiff competition is making it jittery. "There is increasing competition in this category and of course it gets us jittery, but it will eventually settle down as the market is huge and there is scope for everybody," said Shyam Bagri, MD, Bagrry.

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F&B

News McDonald’s to invest Rs 400-cr to cover South, West

ast Food giant McDonald’s is planning to spend around Rs 400-crore to open up 250 branches in the south and west India. The southern and western markets license of McDonald’s lies with Hardcastle Restaurant Pvt Ltd. The money will be spent in the coming three years to achieve this goal. Currently, there are 53 outlets of the iconic restaurant in the southern part. With the investment of Rs.200 crore, the number will go up to 100. Hardcastle owns 125 restaurants in these south and west regions. This number will double up within 3 years after investment. Amit Jatia, Vice-Chairperson, McDonald’s India said, “We moved out of

the joint venture with the fast food giant in 2011 to become a development licensee that means we are in a strong phase of expansion.” However, McDonald’s continues to be partner in Connaught Plaza Restaurant, which runs its outlets in north and east India. Talking about rising inflation and its impact on the restaurant business, he said that its impact is visible on burger prices. The company has increased its prices by 3-4 per cent. But he added that customers are not complaining as they get value for their money. The Hardcastle employs nearly 6000 people in the south and west region. Jatia said that the company is debt-free now,

and has started registering profits since 2010-11. McDonald’s India does its business via various formats including drivetroughs, restaurants and deliveries and dessert kiosks in places like malls. The first outlet in Kerala will be opened at Kochi and Coimbatore, Jatia said. Vista Foods, which supplies frozen food to McDonald’s, has opened a patty plant in Bangalore to meet new demands.

Genes make us love fatty foods: Research Study

enn State University’s researchers have claimed to have found persons having some specific kinds of CD36 gene tend to love fatty foods while those who lack these genes or have other forms of this gene do not get attracted to such unhealthy fatty foods. The lead researcher claimed that people naturally crave for fatty foods, but some do more than others. They have found that people who have certain forms of the CD36 gene get infatuated by higher fat content in the foods. This is unhealthy but they appear helpless before their craving which is deep and stubborn. Eventually, they become obese and may develop many health complications. Lead researcher Prof Kathleen Keller said while animals must have this CD36 to know their likings about various taste preferences for fat, humans have varying forms of this gene. Keller also added that this is first of its kind study in this field. “We tested 317 African-American people of both sexes because they belong to a certain ethnicity who are highly predisposed to obesity,” said Keller who headed researchers at Penn State, Columbia University, Cornell University and Rutgers University The participants were served Italian salad dressings made with canola oil as it has high content of fatty acids.

The researchers asked them to tell their perceptions of the dressing’s fat content and oiliness on a scale with "too low" and "too high". The researchers used a process which involved asking certain questions regarding taste and food preferences. They gave their answers based on two extreme factors: "do not love at all” and "love very much". The team used such foods in their questionnaire which are not so healthy, or which are used in fast foods. The list included cake, cookies and doughnuts mayonnaise, fries, fried chicken, bacon, cheese, chips, sour cream and hot dogs and other such fast foods. They discovered that respondents having "AA" form of the gene found the salad dressings as “creamier” than those lacking this form of the gene. To know the forms of the gene CD36, researchers took participants’ saliva samples. They extracted DNA fragments from these samples to detect slight or major variations in this gene. Prof Keller elaborated that

it is of course and undoubtedly this CD36 gene which cause differences in perception about the fatty contents in the food. “The gene controls the mind’s perception,” Keller said. Prof was sure from the research’s outcome that obesity is directly linked to this gene.

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News Coca-Cola slices prices

oca-Cola has decided to reduce prices for its 200 ml returnable glass bottle for the coming summer season. The price of Coke glass bottles will be down by a rupee or Rs 2 in select markets to a uniform Rs 8 across the country. Its arch-rival PepsiCo may follow suit as the 200 ml glass bottle segment is extremely price sensitive and mostly sold in rural and semi-rural areas. The last time prices were cut in this segment was in 2003 when Coca-Cola introduced its affordable pricing strategy, according

to which it priced its products at Rs 5. This was followed by Pepsi, only to be withdrawn later by both the companies as it hurt their profitability. Coming at a time when most packaged consumer goods brands have increased prices, the move is being seen as one which will help brand Coke shore up its market share. “Coke as a brand has not been able to garner the same kind of volume growth when compared to its other cola brand Thums Up and rival Pepsi. The price reduction, coupled with good marketing and advertising, could help them prop up sales,” said Gautam Duggad, research analyst, Prabhudas Lilladher. The price cut won’t be applicable to Coca-Cola’s other cola Thums Up or any of its other brands. While glass bottles account for around 35% of sales, the PET

bottles have cornered 65% of sales and are growing rapidly in the urban markets. “Cola is coming back to the centre stage in the US as well after having gone on a health plank in the last few years. Both the cola majors, especially Pepsi, are starting to build their communication and advertising around the staple cola brands in the last year or so,” said Harish Bijoor, CEO, Harish Bijoor Consults, a brand consultancy firm. Coca-Cola said 200ml pack, being the entry point into the category, will recruit new consumers into the cola segment since it is an innovative and a very attractive price point. “In a move that will further fuel growth of the cola category, we will be offering this new entry level pack for brand CocaCola,” said a company spokesperson.

Chennai restaurant offers mix-n-match foods

f a man wants to order a spicy chicken dish from Nalas Aappakadai, but his better half demands curd rice and “kaapi” from a traditional South Indian place, and their kids want pastas and steaks from Bella Ciao. What should he do? Ordering in has its pitfalls — it may not satisfy the taste buds of all members of the family. This is where the Chennai-based

Yo! Potato, a “passionate invitation” to couch potatoes to order away, steps in. This innovative food delivery start-up offers a mix and match of meals from any restaurant in just one delivery, and with no minimum order limit! What's more, this brainchild of Showkath Jamal and Krishna Chidambaresh does not even charge you extra for the trouble. “In the home delivery market, families end up paying more just to meet the minimum order limit. Imagine the thin variety an office party will have if it orders from just one restaurant,” says Chidambaresh, an engineer in his early thirties who worked in the BPO sector before teaming with Jamal a lawyer at the Madras High Court. The company, piloted in Chennai's food district of Nungambakkam with an initial investment of Rs 50,000 and seven deliverymen, has entered into deals with 12 restaurants. It will get a percentage of the restaurants' income generated through deliveries. Seven of the deals are for complete delivery outsourcing where restaurants pay monthly retainers, while the rest are on pay-per-delivery basis.

AgriBusiness & Food Industry w March 2012

Yo! Potato has spread out recently to other parts of the city as well. “In the orders where customers call us directly, we buy on their behalf, and thus don't make a profit. But restaurants with which we have a tie-up give us discounts on the order — which become our earnings,” says Chidambaresh. Yo! Potato manages to service 30 calls a day, but on weekends, the orders jump to 60-70, and the workforce crunch begins to tell. Yo! Potato downs shutters at 11-30 p.m., but is negotiating tie-ups with the few restaurants that are open late into the night. Another start-up in Adyar with a similar operational model is StorElf, which offers around 15 menu cards but only of restaurants that have their own delivery men. Sahil Gore, Chief Technology officer, says, “Restaurants always have surplus food capacity that a home delivery company can tap into.” Other than seasonal dishes like fresh mango juice in summer, he says the company is sure of availability of dishes at restaurants. Yo! Potato's Chidambaresh, however, says knowing real-time availability of dishes at a restaurant is impossible.

F&B

News HUL launches Knorr’s cheaper variants

industan Uniliver Ltd (HUL) is eying mass markets by launching Knorr’s cheaper variants. It has launched a new sub brand - Cupa-Soup - priced at Rs 12 and expects to garner more volumes through smaller packages. Grappling with muted sales for Knorr soups, the company hopes to register a massive response with this launch. Premium Knorr soups are priced between Rs 30 and Rs 35. Sometimes back, HUL had tried to introduce small pack sized soup powders (at Rs 5) under Knorr Annapurna with Soupy Snax which failed to take off. But this time, the company is hoping to appeal to the consumer's taste buds with variants such as Tomato Chatpata and Mixed Vegetable. During its third-quarter results, the HUL management said that Knorr soups' performance was muted on account of a slowdown in the market, while Knorr Soupy Noodles were in line with plans. The soups range was expanded during the quarter with noodle variants such as Cup-a-Soup.

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According to Mr Kaustubh Pawaskar (research analyst, Sharekhan), “HUL has been working towards a strategy for Knorr as the brand has not performed in line with the expectations of the company. Foods as a category is also growing in the rural markets and with lower priced packs under Knorr, HUL is hoping to capture the soups segment in these markets.' However, unlike in the case of Nestle's Maggi, which draws its equity from the mother brand of noodles for the soups franchise, Knorr lacks the presence of a parent brand. Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants explained: “In the branded soups category, it is necessary to have the goodwill of a mother brand and Knorr misses that. Nestle's Maggi has the goodwill of its mother brand, which has been extended in categories such as soups and ketchup, unlike Knorr which is primarily a soup

brand.'' Both Knorr and Maggi today exist in almost similar categories. The pioneer of instant noodles, Nestle's Maggi transformed itself into a health and wellness company with the launch of a series of health foods in 2005. This was led by the launch of Maggi Vegetable Atta Noodles followed by healthy soups and cup soups. Currently, the mass brand of Sanjeevni Maggi healthy cup soup is available in four flavours — amla, spinach, dal and tomato. According to a report from brokerage firm Motilal Oswal, “With new launches in the Kissan and Knorr range not delivering significant traction, packaged food sales are unlikely to sustain 20 per cent-plus growth.” During the third-quarter, HUL registered revenue growth at 13 per cent from 270 crore to Rs 306 crore in the packaged foods category, which is quite an impressive growth.

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News Nestle to open R&D centre in India

o strengthen its presence in India, Nestle is soon going to open its own R&D centre. Justifying the new move, Patrice Bula, global head, sales and marketing, Nestle, said during his recent visit to India, “We will be quicker to market once the R&D centre comes up”. Nestlé’s upcoming Rs 230 crore R&D centre at Manesar will become operational sometime between October to December, 2012. Bula said, “By bringing R&D closer to the consumer, the company will help

itself develop more relevant products for Indian markets. If our customer wants Bhuna Masala, by getting closer, we can offer it faster.” The Nestlé’s R&D centre in China uses know-how from Chinese medicine. In India too, it will use local know-how from Indian Ayurveda traditions. Manesarbased R&D would do researches in the field of basic food science, nutrition and agriculture developments. It would also focus on developing affordable fortified popularly positioned products (PPPs) like calcium enriched Maggi noodles. Nestle SA will directly control the R&D centre in India, and is looking at a team of about 100 employees. Interestingly, Nestle which is only 25 years old in China has already got R&D going there, while

it has taken the company hundred years of presence in India to set up a research centre. Bula, who has been the market head for China earlier, pointed out that both the countries offer a combination of scale and high growth for Nestle. But, he said that managing organizations through high growth environment is a challenge. He also pointed out that increasingly in both countries Nestle is meeting new competition from the local players who understand the consumer well. “And that is a new paradigm. Because of the size, the local companies are also getting very big. But we embrace this challenge as competition among brands is good for the consumers. It makes you come up with new ideas,” he said.

Kellogg offers $ 2.7 b to buy Pringles

roubled snack food maker Diamond Foods Inc. and Procter & Gamble Co. have called off their $1.5 billion deal for Diamond to buy the Pringles brand. Cereal maker Kellogg Co. is swooping in and made a $2.7 billion deal to purchase the brand. Diamond Foods, which makes Emerald Nuts and Pop Secret popcorn, and Procter & Gamble, said that they mutually agreed to end their proposed deal. With Diamond out of the picture, the Pringles brand is headed to Kellogg. The company said the transaction will help to strengthen its snacks business, which it is trying to make as big globally as its cereal business. Kellogg's snack brands include Keebler, Cheez-It and Special K Cracker Chips. "Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company," Kellogg President

and CEO John Bryant said in a statement. Diamond's stock gained $1.10, or 4.9 per cent, to $23.40 in pre-market trading, while Procter & Gamble's stock dipped 16 cents to $64.32. Kellogg's stock added $2.15, or 4.3 per cent, to $52.45. Speculation had been growing that Diamond's proposed acquisition of Pringles was in trouble, particularly after the San Francisco company announced a week ago that it was replacing its CEO and CFO following an internal investigation that found that the Diamond improperly accounted for payments to walnut growers. The company now needs to restate two years of financial results. After those announcements, Diamond's stock slid, which hurt its ability to finance the Pringles' deal. Diamond Foods' proposed buyout of Pringles was worth $1.5 billion when it was announced in April, last year. It would have been the company's biggest acquisition ever and made it the secondlargest snack maker in the nation behind PepsiCo Inc. Last week, Cincinnati-based Procter & Gamble said it was evaluating the deal and keeping all options open, even stating that Pringles had "attracted considerable interest from other outside parties." No breakup or other fees will be

AgriBusiness & Food Industry w March 2012

paid tied to the Diamond deal. Industry experts had believed that Diamond would possibly have to pay a $60 million breakup fee to Procter & Gamble and potentially up to $6 million in related costs. Kellogg will pay Procter & Gamble $2.7 billion in cash. The company said that its outstanding debt will like increase by about $2 billion and that it will limit buybacks to proceeds received by the company from employee option exercises for about two years to allow the company to reduce its debt. Kellogg expects to complete the Pringles acquisition during the summer. If the deal closes around that time, Kellogg anticipates that the acquisition will add about 8 cents to 10 cents per share to its 2012 earnings before accounting for the acquisition and onetime costs and changes to its buyback program.

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Pulses import may touch 2.8 MT

ndia is likely to import 2.75-2.80 million tonnes of pulses in the current financial year, slightly higher compared with last year's 2.6 million tonnes, Rajiv Agarwal, Secretary, Ministry of Consumer Affairs, Food and Public Distribution, said. During April-December, 2.4 million tonnes of pulses have been imported, a tad up compared with last year's imports of 2.25 million tonnes, Agarwal said on the sidelines of a three-day global pulses conference in Mumbai. Pulses imported so far include 1 million tonne yellow peas. The rest include black matpe or urad, pigeon pea

or tur and gram or chana. The country currently has record stocks of yellow peas. “There are over 500,000 tonnes of yellow peas in four ports,” said Pravin Dongre, President, India Pulses and Grains Association. After a record crop of pulses last year, India is poised for an output of 17.4 million tonnes, according to the second advance estimates of the government. Last year, the country's final pulses production was a record 18.2 million tonnes. Of the 17.4 million tonnes output estimated, gram or chana accounts for 7.66 million tonnes. This compares with 8.22 million

tonnes produced last year. “Climatically, this is a good year. Chana figures may improve,” Agarwal said. According to him, demand for pulses could be slightly lower because of a huge potato crop. Demand for pulses is largely price elastic. Wheat crop is also expected to be a bumper crop at 88.31 million tonnes, he said. Last year, wheat output was 86.87 million tonnes. According to Agarwal, the Government is likely to introduce the amendment bill of Forward Contracts (Regulation) Act in the Budget session of the Parliament.

Govt to launch a task force to boost spices export

he Union Government will form a task force of all stakeholders to implement the recommendations of experts at the XI th Spice Congress held here to promote exports of Indian spices, Dr A.S. Jayatilak, Chairman, Spices Board of India, said. “We will form a task force comprising of representatives from all stakeholders — farmers, exporters, Government, and implement the recommendations on priority basis,” he said at the conclusion of the Congress, organised by the Spices Board. “Our main concern is low productivity due to seed quality,” he said, adding that while budgeting for agriculture, the States allocate very limited resources for spice farming. “We want to bring to the notice of States and farmers, that if they produce export-quality spices, they will get premium above the ruling market price. This assurance should act as an incentive to enhance quality,” Dr Jayathilak said. Geemon Korah, President, Spice Exporters Association of India, said that the major challenges are harmonisation of standards between all the countries and empowering spice growing farmers with access to resources from the Government. The task force will play a major role in linking farmers, Government departments, regulatory bodies and other stakeholders to disseminate knowledge about the new international standards and their impact on the Indian spice industry, he said.

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News Mother Dairy milk procurement rises

other Dairy's d a i l y procurement of milk has increased by around 12 per cent, which has helped the dairy major to pile up stock for the lean summer season. This procurement increase is attributed to the intelligent use of the flush season. Mother Dairy Fruit and Vegetable managing director, Shiva Nagarajan, said, “Mother Dairy is collecting about 60 lakh litres of milk daily. Out of this

38 lakh litres is sold daily and the rest gets converted for the lean season collection in 2011-12 fiscal compared to the last fiscal has increased by about 12 per cent. We have secured the upcoming summer’s requirement and will be able to meet the lean season demand without relying on import of SMP (Skimmed Milk Powder”. He said that due to flush in milk production, the procurement cost of milk has been lowered. “But, farmers have not lost because despite the slash price is still higher by about 10-12 per cent compared with last financial year,” he added. Nagarjan appreciated the fact that with about Rs 5,200 crore in value this financial year, Mother Dairy, which rules the milk and dairy products market in Delhi and

NCR, is growing at around 28 per cent. Mother Dairy is in four businesses – refined vegetable oil (Dhara), dairy products, milk and horticulture. Set up in 1974, Mother Dairy is a wholly owned subsidiary of National Dairy Development Board (NDDB) of India. It collects milk daily from farmers of Punjab, Uttar Pradesh, Maharashtra, Karnataka and Rajasthan. “With handsome growth in all the four businesses, we hope Mother Dairy will be able to keep the inflation at low in the next financial year,” he added. It is paying increased focus in UP region by forging partnership with Pradeshik Cooperative Dairy Federation (PCDF) in the most populous State.

CCEA approves Rs.1.7 k-cr National Dairy Plan

abinet Committee for Economic Affairs has approved the National Dairy Development Board's ambitious

National Dairy Plan for the 12th Five-Year Plan starting this year. The government will launch this countrywide plan with an outlay of Rs 1,760 crore. International Development Association will provide Rs 1,584 crore towards the project and the rest Rs 176 crore will come from the Union government. “The cabinet panel has given its clearance to the longawaited project. However, due to the election code of conduct in various states, a formal announcement has not been made, “according to a source. The project aims at boosting milk production using scientific breeding and feeding programmes covering about 2.7 million milch animals in 40,000 villages. It will also focus on

AgriBusiness & Food Industry w March 2012

modernising village-level infrastructure for milk collection and bulking such as milk cans, bulk milk coolers for a cluster of villages, associated weighing and testing equipment and related IT equipment. National Dairy Development Board says the demand for milk is likely to be about 150 million tonne by 2016-17 and 200-210 million tonnes by 2021-22. “India was the largest milk producing nation in 2010-11 with a production of 116.2 million tonnes. This was close to 16 per cent of world milk production. Milk production in the country is growing at 3.3 per cent per annum while consumption is growing at 5 per cent leaving a gap in demand and supply. We need to plug that gap to steady the domestic supply and milk prices," said a source. "It is estimated that the capacity created by the private sector in the last 15 years equals that set up by cooperatives in over 30 years. In the changing scenario, cooperatives currently procure about 16 per cent of the national marketable milk surplus covering around 21 per cent of the country's villages and 18 per cent of rural milk producing households. It is desirable that the cooperative sector achieves a procurement share of at least 20 per cent of the marketable milk surplus by 201617 so as to retain an overall 50 per cent share of the marketable surplus handled by the organised sector," an NDDB report on National Dairy Plan said. The project took five years to get the clearance.

DAIRY

News Hatsun Agro to invest 50-cr to start ice-cream chain

hennai-based Hatsun Agro Product Ltd will invest over Rs 50 crore to set up a national chain of ice cream parlours over the next one year. The exclusive chain, under the brand name Ibaco, will be a stand alone format, offering a range distinct from its flagship Arun Ice Creams brand. The company plans to set up a chain of 250 Ibaco outlets including 70 in Tamil Nadu. As of now, there are 45 Arun Ice Creams Unlimited exclusive ice cream parlours which will be rebranded, and in the next one month 25 Ibaco outlets will be added. R. G. Chandramogan, Managing Director, Hatsun Agro, said the company plans to establish a strong presence across South India and in stages will enter the

markets in the North over the next one year, when 180 Ibaco outlets will be added to gain a national presence. Each outlet will involve an investment of about Rs 25 lakh-30 lakh. The company has roped in international consultants for an aggressive expansion. For Hatsun Agro, the largest private sector dairy with a turnover of Rs 1,355 crore last year, Ibaco will be the second national brand after the Hatsun range of dairy products such as ghee, butter, dairy whitener and milk powder. Its flagship brand Arokya milk and Arun Ice Creams are regional brands restricted to the South. As of now, the ice cream business, including Arun Ice Creams and the parlour chain, account for about 7-8 per cent of its total turnover amounting

to about Rs 95 crore. Its ice cream parlours contributed to about Rs 10 crore. Arun Ice Creams will constitute the ice cream range in cups, cones, sticks and bars. Hatsun has two ice cream factories in Chennai and Salem with a total capacity of about 70,000 litres a day. Its existing cold chain infrastructure can be used to expand the ice cream distribution, he said. The company announced to the BSE that it has resolved to sell a new range of ice creams under the Ibaco brand and open 70 outlets in Tamil Nadu and 250 across South India, including select outlets in North India by March 2013.

Hatsun Agroâ&#x20AC;&#x2122;s profits up by 66 %

tabilisation of the milk ingredients business in the domestic markets has contributed to a steep jump in net profits for Hatsun Agro. The company has reported a 66 per cent jump in net profit for the third quarter ended December 31, compared with the corresponding quarter in the previous year. The net profit was Rs 10.66 crore (Rs 6.42 crore) on an income of Rs 404.56 crore (Rs 340.36 crore) for the quarter. Mr R.G. Chandramogan, Managing Director, Hatsun Agro told Business Line the growth in profits has been due to the establishment of dairy products such as ghee, dairy whitener, milk powder and butter in the domestic

market and improved contribution from them. The company has launched these products over the last two years after it exited the milk powder exports business following the changes in Government policy. The last two years' focus and expenditure on these products are now starting to pay off, he said. In addition to Arun Ice Cream and Arokya milk brands in the south, the company now has a national brand in the Hatsun range of dairy products which are available up to J&K, the North-East and the West. The company has established 38 branches in various markets and the related infrastructure, he said. Previously, branded products

contributed to 72 per cent of its business and the balance was commodity business, primarily exports. Now, over 94 per cent of its business is from branded, value added products, which has a beneficial impact, he said. The company has announced a total interim dividend of Rs 1.10 an equity share of Re 1 including Re 0.50 (50 per cent) Silver Jubilee year interim dividend. Hatsun Agro, subject to shareholders' approval, has decided to make a bonus issue of one equity share of Re 1 for every two equity shares. The EGM to seek shareholders approval will be held on March 12.

TN Dairy Minister wants to boost milk production

he Tamil Nadu Milk and Dairy Development Minister, V. Moorthy, called on Dr Amrita Patel, Chairperson, National Dairy Development Board (NDDB), and discussed with her ways and means to increase milk production in the southern State. Moorthy, accompanied by senior officials from Tamil Nadu, was on a twoday visit to Anand in this connection. They also discussed the innovations

introduced by NDDB in animal breeding and nutrition which could contribute to increasing productivity. NDDB explained the National Dairy Plan, which aims to increase milch animal productivity through scientific approach to breeding and feeding. The Minister has sought NDDB's support in studying the existing facilities in Tamil Nadu and assistance in strengthening them for the benefit of the

milk producers in that State, according to an NDDB release here. The Tamil Nadu delegation also visited the Sabarmati Ashram Gaushala, which has the largest semen station in the country, being managed by NDDB. Besides, they visited other NDDB-run institutions such as the Centre for Analysis and Learning in Livestock and Food.

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DAIRY

News Mother Dairy to look toward south

other Dairy, the iconic dairy milk and milk product giant of Delhi, is willing to look towards the south region. It may set up a production facility in that region for its ice-creams and fresh dairy products in the next one and a half years. Currently, Mother Dairy has nine manufacturing facilities. Out of these, eight are outsourced units in the North and West. Subhashis Basu, Business Head, Dairy Products Division, Mother Dairy Pvt Ltd, said, “The company has launched its ice-creams in Bangalore recently and will do the same in Chennai and Hyderabad within this year.” For the time being, the company's

production facilities in Delhi, Mumbai and Warana would supply ice-cream for the Bangalore market. “But to launch our fresh dairy items which have short shelflife, like dahi, paneer and buttermilk, we have to set up a production facility in the region,” he said. Mother Dairy ice-creams have about 15 per cent market share of the country's Rs 1,500-crore ice-cream market. It usually

registers sales of Rs 250 crore annually. The volume sales of the company’s icecream brands are around 225 lakh litres during 2011-12, which is an annual growth of 30 per cent. Basu added that just like Delhi, in Bangalore too, the company plans to tap the vending cart channel. Mother Dairy uses about 3,000 carts in Delhi to sell its ice-creams. “We' will start with about 100 carts here and then go up to 400 over a period of time,” he said. The company is expecting a 10 per cent share of the Bangalore ice-cream market, which is around 9 lakh litres per year. “Apart from its ‘impulse category' of ice-creams, Mother Dairy would focus on growing its premium ‘take home' in the Bangalore market,” he said.

Congress smells Cattle Scam in MP

he BJP government of Madhya Pradesh is known for aggressively protecting the animals from the hands of butchers, but its bete-noire Congress party claimed to have detected a massive scam in the cattle sector to the tune of Rs. 250 Crore. The ruling party denies it vehemently. The attack was spearheaded by Assembly’s Leader of Opposition Ajay Singh who said that the ruling BJP Party under Shivraj Singh Chauhan has ruined the cattle and husbandry industry in the state by supervising a 250-Crore dairy development scam. Ajay Singh claimed that a scheme, which is aimed to benefit Adivasi families in the rural areas, get massive fund from the central government. Of which, around Rs. 250 crore was shared like war booty among unscrupulous players connected to

the ruling party. “This fund is meant to strengthen cattle industry in remote areas of the state,” he said. Keeping no bones uncovered, Ajay Singh said, “The CM never tires from taking the credit of cow saving initiative which only exists on paper. He is no cowsaviour as he remained silent while his people looted the central fund.” To give authenticity to his startling discovery, he added that even State's Animal Husbandry Minister Ajay Vishnoi has acknowledged this scam while speaking at an event. Vishnoi lamented the lack of water and resources for the people as well as animals in the state. He said that it is really tough for Adivasi families to survive. The opposition party not only smelled this scam, but also claims to have discovered more anomalies in policies of the state government. Ajay said only two

cows were given to poor tribal people in Gorakhor village of Betul district, which could not survive even few months. The rest of 23 families did not get any cow or any other benefits from this callous government, which is eating away fund sent by the central government for the welfare of the poor. The scheme which has been initiated by the central government needed the state government to hand over three free cows to every tribal family and some monetary help to enable it to build cattle shed and arrange fodder. Ajay Singh says the scheme has no use in the state as the government is unable to stop corruption. Vishnoi’s acceptance about the helplessness of the government and poor condition of the Adivasi people has certainly given credibility to the claims made by the opposition leader.

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DAIRY

News Dairies want to export as production goes up

urplus milk supply is expected to keep prices stable till May, 2012. Though dairy players selling liquid milk will hold on to margins, makers of downstream products are facing pressure on their profits and are banking on the government to allow casein -- a major milk protein -- exports after elections are over. After three years of milk shortage and a steep increase in prices, production has increased this year. Procurement by the largest player, Gujarat Cooperative Milk Marketing Federation (GCMMF) that markets the Amul brand of dairy products has gone up by an all-time high of 20% to 145 lakh litre per day. Owing to a good procurement price and marketing, we have seen an all-time rise in milk procurement this flush season, said GCMMF MD R S Sodhi. GCMMFaffiliated district cooperatives had procured 112 lakh litres per day during last yearâ&#x20AC;&#x2122;s peak season. Surplus milk has become a problem for milk product makers, which are mainly concentrated in the North. There is pressure on profits. Smaller factories have either reduced procurement by up to 50 per cent or closed down their units, said Kuldeep Saluja, managing director, Delhi based Sterling Agro. The demand for allowing casein export is getting stronger. The country has surplus milk production and we think the government might allow the export of casein on the condition that we import skimmed milk powder, said Uttar Pradesh-based VRS Foods MD Rajendra Singh. The company sells liquid milk under the Paras brand. India exported 70,000 tonnes of milk powder, casein and casein products till February 18, 2011 when export was banned. Dairies convert excess milk into powder when there is excess supply but powder prices

too have fallen. In the past fortnight, skimmed milk powder (SMP) prices have fallen to Rs 160-170 a kg. Companies such as Nestle, GSK, ITC and Parle have completed SMP procurement ahead of summer when milk production falls. Others expect a further fall in prices to Rs 140-150 a kg by April. To ensure quality, we procured SMP between December and January at Rs 175 a kg, said Vadilal Industries MD Rajesh Gandhi. The ice cream manufacturer procures over 1,500 tonnes SMP in the flush season. In 2010, it had procured SMP for Rs 140 a kg in the DecemberJanuary period. Casein is used in the manufacturing of protein supplements and health drinks. To manufacture a kg of casein, 33 kg of liquid milk is used. Liquid milk sales are

higher in the south. About 80-100 % of milk goes for sale as liquid milk. Only the surplus, which is marginal, gets converted into products, said Hatsun dairy chairman and managing director RG Chandramogan.

Time to Tap Overseas Demand

After three years of milk shortage and a steep increase in prices, production has increased this year Surplus milk has become a problem for milk product makers, which are mainly concentrated in the North Dairies convert excess milk into powder when there is excess supply but powder prices too have fallen They are banking on the government to allow casein --a major milk protein -- exports after elections are over

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