US cites Pepsis Bengal success as model for future

Kolkata, Jan 19 | Updated: Jan 20 2007, 05:30am hrs
Global beverage major PepsiCos success of partnership farming in West Bengal could be a model for future US investment in Indias retail and food-processing sectors, a senior US diplomat said here on Friday.

The kind of success that Frito-Lay has witnessed in its plant in West Bengal, particularly through the concept of partnership farming, should encourage more US companies to come and invest in the agri-business sector in West Bengal and also in the retail sector, Geoffrey Pyatt, deputy chief of mission, US embassy, told FE.

Frito-Lay, PepsiCos snack and fun food division, makes potato chips and snack food brands like Lays, Uncle Chipps, Kurkure, Twisteez and Cheetos. It started off its Indian operations in 1989 with units in Punjab and Maharashtra, and set up its West Bengal plant in 2005.

Earlier, chief minister Buddhadeb Bhattacharjee, addressing a seminar on opportunities in agri and food processing industry organised by Indo-American Chamber of Commerce, also highlighted Pepsis success here.

Frito-Lay is a success story in West Bengal. When they started their unit in West Bengal we were sceptical. Initially, they werent satisfied with potatoes produced locally and imported them from other states. But now they are helping farmers produce potato which is of better quality than what is grown in Punjab, Bhattacharjee said.

Pyatt, who is the second highest ranking US diplomat in India, told the gathering, which included representatives of around 30 US majors, how the Pepsi success was scripted. When Frito-Lay began to cultivate potatoes in West Bengal, it confronted a challenging situation of small-scale, low-tech farming, with some individual farmers cultivating on average, no more than an acre and a half of land, he said.

He explained how Pepsi then worked closely with local authorities to develop specific agronomic practices and introduced a partnership-farming concept with contracts spelling out the technology, seeds, fertiliser and inputs to be provided by Frito-Lay along with output specification and price at which the produce would be purchased back.

Starting with 140 farmers and 700 acre in 2003, Frito-Lay now collaborates with 4000 farmers over 2,100 acres, he said.

West Bengal recorded the highest yield in India of 23 tonne a hectare among Frito Lay-assisted cultivation projects and, based on its recent successes, it has already announced expansion plans, Pyatt said.

According to latest figures, Pepsi assisted farmers here produced a record crop of 19,500 tonne of the special potato variety that is needed for making chips.

Talking to FE, Pyatt, however, iterated that India should do more to attract US investments in the agri-processing sector like reworking its regulatory set-up.

When it was pointed out that the joint efforts of Frito-Lay and Bengal had worked well within the existing regulatory framework, Pyatt said changes are required to make it more transparent for businesses to work effectively.

Earlier, while addressing the seminar, Pyatt said the recently introduced food safety law in India would help in exports of processed food from India.

This is an important step by the Indian government to build in transparency and reduce bureaucracy and to take into consideration international norms. The use of international food safety standards is critical to the success of Indian food processors, he said.

Subodh Kant Sahai, Union food processing minister, said the new law would come into effect in the next financial year.