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Posts Tagged ‘emerging markets

Does KFC want 13-month-old infants in India to eat its chicken?

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A schoolgirl walks under the KFC advertisement in Bengaluru (Bangalore). This hoarding is visible to all traffic on one of the city’s major roads, Richmond Road.

Kentucky Fried Chicken (KFC) in India is advertising a chicken meal that costs 35 rupees (USD 0.67, EUR 0.51). Hoardings such as this one are visible now in all the major metropolitan cities (Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Delhi) and KFC has taken outdoor advertising space along major roads in these cities.

This hoarding advertises “Real chicken” for 35 Indian rupees, “KFC wow! price menu”. In small letters on the lower bottom right of the hoarding the advertisement also says: “Products contain added monosodium glutamate. Not recommended for infants below 12 months”.

There are two culprits here at work to further the interests of the junk food/fast food industry. One is the Food Safety and Standards Authority of India which is nowhere near as vigilant as it ought to be, especially given its ‘Advisory on Misbranding/ Misleading claims’ which invokes the Food Safety and Standards (FSS) Act, 2006, Rules & Regulations, 2011. This has said: “(2) The various false claims made by the Food Business Operator about food articles and consequent violation, if any, are punishable under the provisions fo FSS Act, 2006; (3) Violations related to food items, seriously jeopardize public health as well lead to unfair gains to Food Business; (4) Misleading advertisement related to food items are imputed with malafide intent on the part of person making the claim and is normally made to misguide a consumer to purchase food item without disclosing the complete details on the advertisement. Companies (Corporate bodies including firm or other association, individual) are also covered u/s 66, FSS Act, 2006.”

The objectionable disclaimer is in small letters on the lower right edge of the hoarding, unnoticeable to passing traffic.

The other culprit is KFC and its parent company, Yum! Brands, Inc. Just how important is India to Yum! Brands? Consider the statement by the company’s chairman and chief executive officer, David C Novak (available right now on the company website) in which he has mentioned India and its market:

” …we have made incredible progress in India, opening 101 new restaurants in 2011. Ten years ago, we were essentially just beginning with KFC in India, and now it’s our second leading country for new unit development. In fact, we’re so excited about our prospects in India, and its impact on the future growth of Yum!, that we’re going to break it out as a separate division for 2012 reporting directly to me. It’s encouraging to see that our new unit progress with KFC in India is very similar to what we saw in China during its first 10 years. Our India team has identified the key elements driving success in China and are adapting these strategies in India to leverage our iconic brands and build concepts with broad appeal.”

No thank you. We want 0 such restaurants per 1,000,000 people

India’s business and financial English-language dailies, since they function as mouthpieces of industry and propaganda sheets for industry and trade associations, and since they function as uncritical endorsers of the current ruling regime’s reckless gallop into ruin, have had only laudatory noises to make about the invasion under way by KFC and similar global junk food peddlers.

The Economic Times published a gushing interview with Muktesh Pant, CEO of Yum! Restaurants International, which is described as running “the international operations of US quick restaurant chains Kentucky Fried Chicken, Pizza Hut and Taco Bell restaurants”. The newspaper asked: “How is the Indian restaurant market evolving, compared to say China?” and Pant answered: “If you compare the stats of the two countries, the consumer class of 300 million in China has an access to 3,000+ KFCs, while the consumer class of 100 million in India has access to only about 140 KFC outlets. Hence, there is a huge potential for us to leverage our expertise in the untapped market. Our aim is to have 1,000 outlets in India by 2015 and China has helped us provide a blueprint for this rapid growth.”

The influence of KFC on the diet of India’s urban schoolchildren? See the schoolbuses driving past the hoarding.

The same gushing interview contained answers from Niren Chaudhary, president of Yum! Restaurants India, who was described as “reporting directly to Yum! Brands, Inc, Chairman & CEO David Novak after the world’s largest restaurant company last week made India only the third country after the US and China with a standalone reporting division”. How fabulously exciting for all the 13-month-old infants wetting their diapers in anticipation of their next KFC portion.

The question was: “Will it translate into faster expansion and more hires?” And Chaudhary’s answer: “Our goal is to double our store base to at least 1,000 stores, employing 50,000 people, in three years. The new structure is a change in reporting relationship and reflects the importance of India as a future growth opportunity.”

Now we know why the KFC advertisements say what they do (and hide much). This CEO Pant is reported to have studied at the Indian Institute of Technology Kanpur, and if so that particular IIT – and the IITs and IIMs of Bharat – have much to answer for.

Warning from a commodity trader

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Many young male adults have left their villages in search of subsistance means after the poor raining season in 2009 prevented them from harvesting. In the village of Garin Dagabi, north of Tanout in Southern Niger, the population at the beginning of 2010 was mainly made of old people, women and children. Photo: © Anne Isabelle Leclercq/IRIN

Many young male adults have left their villages in search of subsistance means after the poor raining season in 2009 prevented them from harvesting. In the village of Garin Dagabi, north of Tanout in Southern Niger, the population at the beginning of 2010 was mainly made of old people, women and children. Photo: Anne Isabelle Leclercq/IRIN

The news source Emerging Markets has a report based on an interview with financial speculator and commodity trader Jim Rogers. He is reported as saying that “the world is on the brink of a serious food crisis” caused by “decades of failure by governments to invest in farming during an era of low prices” which Rogers explains has now left the world “with insufficient capacity to deal with a likely surge in demand for commodities from both households and investors”.

“I’m worried about the world’s agricultural situation,” he told Emerging Markets. “The world is on a knife-edge. We could have gigantic food problems worldwide.” Commodity prices will rise whatever happens to the global economy, Rogers believes. If the recovery kicks in, then demand for basic foods will rise. On the other hand, if the economy fails to recover and governments ratchet up quantitative easing, the extra liquidity will end up in real assets such as commodities.

“There are shortages of farmers developing, because farming has been such a horrible business for 30 years. If things are going to get worse, then prices are going to go higher,” he said. “The main reason [for that] is a shortage of investment for 30 years.” Rogers founded his own index, the Rogers International Commodity Index. Emerging Markets – which is run by the Euromoney magazine, covers the meetings of the IMF and World Bank. It said that Rogers’s comments “come as the World Bank plans to use this week’s meeting to highlight its concerns over rising food prices”.

Resident Adam Mustafa says recent floods near Kemisse in Ethiopia's Amhara region are the worst in his lifetime. Photo: © Ben Parker/IRIN

Resident Adam Mustafa says recent floods near Kemisse in Ethiopia's Amhara region are the worst in his lifetime. Photo: Ben Parker/IRIN

The report also drew a link between Rogers’ comments and the World Bank’s report, released last month, about the growth of large-scale farmland purchases in the developing world – which the Bank said was alright if managed. Rogers says that politicians who blamed speculative investors for making money out of higher commodity prices would simply deter much-needed investment. “Agricultural prices are going to go up a great deal because of terrible fundamentals over the past 30 years. We even have a shortage of farmers. Politicians will blame the evil speculators, but they had better kiss investors’ feet. Without someone investing and driving up prices, we will soon have no food at any price.”

Meanwhile, The Guardian reports that accurate and timely information on the food stocks held by major grain exporters and importers, or “food intelligence”, could help prevent the sudden and abnormal price hikes that threaten food security. This was one of the proposals put forward at a day-long meeting of the inter-governmental groups (IGGs) on grains and rice at the UN Food and Agriculture Organization (FAO), held in Rome on 24 September.

A rice farmer in Bangladesh. Rice is a staple part of the Bangladeshi diet. Photo: © Matt Crook/IRIN

A rice farmer in Bangladesh. Rice is a staple part of the Bangladeshi diet. Photo: Matt Crook/IRIN

“We need better information on the food stocks, especially from the CIS countries [Commonwealth of Independent States – a regional organisation comprising the Russian Federation and other members of the former Soviet Union] and many other major exporters, such as China and India, and importers of grains,” said Abdolreza Abbassian, an economist who is also secretary of the IGG on grains. “The big drive of commodity price volatility, and of price spikes, is storage volumes, on which we have terribly unreliable and incomplete statistics,” said food security expert Chris Barrett.

“If FAO could develop credible, timely reports on global storage volumes – at least commercially and publicly held – that would help more than … earlier production reports,” he commented. FAO produces reports on crop estimates every two months. “It’s probably too much to ask for reasonable estimates of residential consumer holdings, which can cumulatively have significant effects on the market, as may well have been part of the story in … 2008,” said Barrett, who teaches applied economics at Cornell University in the US.

Abbassian suggested that the FAO should report every month on the area planted in major grain producing and importing countries, rather than every two months. Maximo Torero, head of the markets, trade and institutions division at the International Food Policy Research Institute (IFPRI), a US-based policy thinktank, said an independent “strong, research-based ‘intelligence unit’ was needed to provide information on stocks around the world”.