PepsiCo: The wrong choice, baby! – Vandana Shiva

Vandana Shiva“PepsiCo, with annual revenues of $65 billion, holds the world’s largest portfolio of billion-dollar food and beverages brands. These snacks and soft drinks are also called “junk food”. The impact of such food on public health is well known. Globally two billion people are victims of diseases linked to the junk food industry.” – Vandana Shiva

Indra NooyiOn her recent visit to India, PepsiCo CEO Indra Nooyi detailed how PepsiCo had created two lakh jobs and announced doubling investment in India. In a land rich in indigenous drinks such as panna, nimbu pani, sattu, bel ras, jal jeera and healthy snacks, Pepsi has, in fact, destroyed livelihoods in cottage industry and artisanal processing sector.

For example, 50,000 women in Bikaner made handmade bhujia. Today PepsiCo makes industrially processed bhujia and 50,000 women’s livelihood has been destroyed. If one adds livelihoods lost by such destruction we are talking of millions thrown into the ocean of unemployment. This is why in Navdanya we have created the Mahila Anna Swaraj movement to protect livelihoods in artisanal processing of healthy foods

PepsiCo, with annual revenues of $65 billion, holds the world’s largest portfolio of billion-dollar food and beverages brands. These snacks and soft drinks are also called “junk food”. The impact of such food on public health is well known. Globally two billion people are victims of diseases linked to the junk food industry.

PepsiCo entered India in 1989 during the Punjab crisis. PepsiCo announced its entry as PepsiCo for Peace. It was going to replace rice and wheat with tomatoes and potatoes. The tomatoes were processed into paste at the Zahura plant in Punjab’s Hoshiarpur district which was exported to Japan and the US. Since tomatoes were bred for long-distance transport and industrial processing, their skin was too hard for domestic use.

PepsiCo gave the seedlings to Punjab farmers as loan, sold pesticides and fertilisers at a high price. It paid the farmers 80 paise per kg of tomatoes in 1993, while the market rate was Rs 2. When the cost of seedlings and chemicals are subtracted from the price farmers sold the tomatoes at, the farmers were left with nothing. In 1994, Hoshiarpur mandis were piled with tomatoes no one wanted and the price dropped to Rs 0.50 per kg. By 1996, the PepsiCo experiment had failed. The potatoes were for Lay’s chips. PepsiCo tied up with Tata subsidiary, Voltas, which would take responsibility for distributing chips and bottling soft drinks in western India. Tata ran losses of up to Rs 72 crore and packed up.

Lay's Potato ChipsPepsiCo has since spread to other parts, especially West Bengal. Nineteen blocks of south Bengal districts — Hooghly, Burdwan, Birbhum, Paschim Medinipur, Howrah and Bankura — are becoming potato districts. PepsiCo India, which in 2004 began contract farming in West Bengal with just 800 farmers, now has some 6,500 farmers growing potatoes for it on 2,250 acres.

PepsiCo makes super profits at three levels. First it is creating a seed monopoly in potato. It sells high cost propriety seeds and seedlings to farmers and collects royalties. By 2017, 80 per cent of PepsiCo crisps will be made from new, proprietary potato varieties.

PepsiCo is seeking control over potato biodiversity and has invested in the Agricultural Development Centre of Peru. Pepsi is already using native Andean potatoes for Lay’s Andinas and the yellow potato for Lay’s Peruanisimas.

Secondly, by creating a monopoly through monocultures, PepsiCo pushes farmers into distress and can buy cheap potatoes. Thirdly, it sells chips made from cheap potatoes at high cost. As in the case of Bt cotton, PepsiCo’s potatoes are pushing farmers into a debt trap and suicides. In Bengal, where potato farming costs Rs 14,000 a bigha, roughly one-third of an acre, farmers are getting into debt. Between October 2011 and March 2012, 34 farmers committed suicide in West Bengal. Many of the suicides are among potato farmers. A farmer in Gill Kalan village spent Rs 240,000 on cultivation and had to sell one acre to make up the Rs 100,000 loss. Bhagwan Singh, a potato farmer from Nadao village, committed suicide due to rising costs of production and falling prices. As farmers are encouraged to grow potatoes, there is overproduction and a crash in prices. In 2012, the price had crashed to Rs 0.20 per kg. While farmers’ incomes fall, PepsiCo’s profits rise. When potatoes are selling at Rs 0.20 per kg, industry sells chips at Rs 20 per pack of 90 gm i.e. around Rs 220 per kg. Farmers are receiving 0.1 per cent of what you pay PepsiCo for a packet of Lay’s chips.

This is a transfer of billions of rupees from farmers to corporations. Agrarian distress and corporate profits have an intimate link.

The price of potato in the market has no relationship with the low price farmers receive. Retail prices had shot up to Rs 22 per kg, forcing the state government to offer subsidies — it bought potatoes from cold storages and sold them in 12 retail markets in Kolkata and its suburbs at Rs 13 per kg.

Pepsico's Aquafina Bottled WaterThe state government has asked consumer cooperatives under the West Bengal State Consumers’ Cooperative Federation Ltd (Confed) to procure at least one metric tonne of potatoes from farmers at Rs 175 per 50 kg bag, or Rs 3.50 per kg. It has sanctioned Rs 400 crore for the proposed procurement.

Coca Cola and Pepsi have also created a water crisis wherever they have a bottling plant. That is why the women of Plachimada stood up and saw that the Coca Cola plant is shut.

Plastic water bottles and soft drink bottles are littered everywhere. Non-biodegradable aluminium packets mar our landscape. We are well on our way to becoming a junk food nation. Before we totally trash our farmers, our health, our environment, let us change course. Let us shift to our biodiversity and our foods that bring us health and enrich our diet, our land and society. – The Asian Age, 4 December 2013

» The writer is the executive director of Navdanya Trust

3 Responses

  1. […] to think farmers would be better off as foreign firms enter the supply chain, we need only look at the plight of farmers in India who were tied into contracts with Pepsico. Farmers were pushed into debt, […]

  2. There is absolutely no point in blaming the individual companies/corporations. The real culprits are our policy makers and their junk policies. It is they who are ruining the nation by allowing the multinational corporations inside. They’ve completely succumbed themselves to corporate lobbyists. Unless we bring in drastic changes in our policies none of the problems mentioned in the article are going to be resolved. Multi-national corporations will continue to destroy low level entrepreneurship and they are destined to do so. Their only aim is to acquire enormous financial wealth. Today, in some countries, some corporate giants are as powerful as presidents/prime ministers. They have the power to bring economy to their knees and the politicians are forced to succumb to their demands. It’s high time we should bring in a drastic change in our policies by inducing economic conditions unfavorable for these corporate giants and focus exclusively on heavily decentralized business model based on cultural backing.

  3. PepsiCo India to invest over 1,200 cr on new beverage plant in Andhra Pradesh – PTI – Hyderabad – Dec 21, 2013

    Beverages and snacks major PepsiCo India today said it will invest over Rs 1,200 crore to build a new beverage manufacturing facility in Andhra Pradesh.

    The company plans to build a new greenfield beverage manufacturing plant in Sri City, Andhra Pradesh, which upon completion will be PepsiCo’s largest beverage plant in India, PepsiCo India said in a statement.

    “PepsiCo intends to invest more than Rs 1,200 crore in the project, which is part of the recently announced plans by PepsiCo and its partners to invest Rs 33,000 crore in India by 2020,” it added.

    The company also announced plans to substantially increase sourcing of mango pulp from Andhra Pradesh in the next six years.

    Commenting on the development, PepsiCo India Chairman and CEO D Shivakumar said the new beverage facility is a key part of the company’s growth plans for the Indian market and “we are delighted to locate it in Andhra Pradesh”.

    “Sri City is ideally located and offers the perfect opportunity to harness the benefits of superior connectivity, great infrastructure and an ample talent pool, which are the prerequisites for every industry,” he added.

    The plant will manufacture a range of beverages, including fruit juice based drinks, carbonated soft drinks and sports drinks.

    Welcoming PepsiCo’s investment in the state, Andhra Pradesh Chief Minister N Kiran Kumar Reddy said: “The proposed plant will be completed in three phases and once fully operational, the plant will provide direct and indirect employment to over 8,000 people”.

    PepsiCo Indian already has a beverage manufacturing plant at Sangareddy in Andhra Pradesh.

    With seven production lines, the plant manufactures and supplies PepsiCo products to the entire Andhra Pradesh region and parts of Karnataka.

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