WHAT PEPSICO MEANT FOR PUNJAB
T.G. Jacob
[PepsiCo, the US-based multinational food and beverage company, again became controversial in India earlier this year when it filed a lawsuit of Rs 1.05 crores each against some farmers in Gujarat for growing without consent a patented variety of its potatoes, which it uses for the manufacture of its brand of Lay’s chips. Subsequently, after an outcry by farmers, scientists, activists and unions across the country, it offered to come to a settlement with the farmers, if they agreed to either stop growing this variety or collaborate with the company as contract farmers. PepsiCo’s first potato chip plant had been established in 1989 in Sangrur, Punjab. Even before this particular confrontation with farmers in Gujarat this company, through its seed and output market manipulations, had driven many farmers in Bengal to suicide and the situation there could be brought under control only through the intervention of the State government. Presently, the company has all possible legal protection due to the shameless betrayal of the basic interests of the farmers by the central government as per the WTO clauses. It was this legal right that they tried to exert in Gujarat.
What follows is an extract from my book: “Chaos in Nation Formation: The Case of Punjab” published by Odyssey, New Delhi, in 1990.]
The controversial joint venture, The Punjab Voltas PepsiCo Venture, is very important. This venture envisages an agro-research centre, potato and grain processing, fruit and vegetable processing and soft drink concentrate manufacturing in the initial phase of operation. In the words of PepsiCo, they are “bringing to India the largest and most modern integrated (farm-factory-market) processing facility.” Food products are to be treated with irradiation methods and flavours are to be decided by very modern computers. An extensive and varied market is visualised in India and abroad. Diversification of agriculture by cutting down acreage under wheat and paddy and going in for fruits and vegetables is being recommended as the panacea for the current stagnancy in the ‘green revolution’ areas. Punjab being the State with the best infrastructure is deemed most suited for effecting this “breakthrough.” Food processing industry on an extensive and modern level is conceived as the most necessary step in transforming the agricultural hinterland.
A whole lot of spin-off effects are also painted by the backgrounders released by PepsiCo. It is supposed to contribute heavily to the enhancing of the welfare of the farmers. It is also supposed to introduce finer tastes to the Indians (another form of “white man’s burden”), who are currently wallowing in crude and unhealthy food habits, and thereby improve the general level of civilization. PepsiCo is in short promising a giant leap towards the golden age. The examples of countries like Brazil and Argentina are cited which are supposed to have benefited hugely from PepsiCo’s generosity.
Critics of this venture point out that the entry of a giant like PepsiCo will ruin the soft drinks manufacturers (the organised soft drink industry is a cartel of three big manufacturers, and the unorganised sector of this industry is composed of tens of thousands of small manufacturers) and will result in monopoly by PepsiCo. The PepsiCo counter argument is that competition is the dire need of the hour to generate buoyancy in the presently dull and underdeveloped market and, in any case, the soft drink concentrate produced by it will be supplied to the local bottlers, i.e., the giant will try its best to bring all the existing industry under its control. The central government’s policy can be clearly seen in the fact that now there is a full-fledged ministry for food processing. It sees the development of this industry with the most advanced technology as very crucial for preventing, or at least assuaging, the widening of the negative balance of payments position. This is the same point of view (directive) of the World Bank. PepsiCo also points out this factor as one of vital importance for the whole economy. The ten-year export conditionality (50% products are to be exported to hard cash markets) is projected as a great advantage for the Indian economy.
Political parties, like CPI and CPI(M), do not fully approve of the PepsiCo plant in Punjab because of the political conditions existing there. According to them it will not be strategically wise to allow a big multinational any direct accessibility to Punjab because it will try to influence things politically. In principle, they have nothing against multinationals or even against PepsiCo; they themselves are showing keen interest in collaborating with this multinational. According to PepsiCo sources both the West Bengal and Kerala State governments have sounded them out already.
Farmers’ organisations like Shetkari Sangathan and Bharatiya Kisan Union are in support of PepsiCo and more such ventures. They implicitly believe in the prosperity arguments of the government and the multinational corporation and hope to gain higher profits for the capitalist farmers. The urban middle and upper middle classes, who are already opened up to processed food and insipid soft drinks, are bound to be satisfied with state-of-the-art technology produced junk food. At least as a cultural etiquette majority of them are gaga about junk food. Creating specific attitudes and consumer tastes is a highly successful activity of big businesses through advertisements and even ‘scientific’ publications. Advertisement has become big business in India also and it is thoroughly mindless. Even a nonsense like “colourless, odourless, formless” (advertisement for cooking oil) clicks in the urban market. Bizarre consumer tastes can be manufactured by multinational corporations and their agents.
To critics who say that ventures like PepsiCo in Punjab will do nothing but strengthen the stranglehold of multinationals, the government and the multinational reply that PepsiCo does not hold majority shares and that a public sector undertaking, Punjab Agro-Industries Corporation, is a partner besides Voltas, which is associated with the Tatas. The implication is that direct control by PepsiCo will be minimal. This argument is naive to the ridiculous.
The relative strengths of the three different firms involved in this joint venture give away the lie. PepsiCo is a global monopoly; its total system has an annual turnover of Rs 50,000 crores and it employs 470,000. It controls the largest restaurant chain in the world and is a global monopoly in snack foods and soft drinks. Its research units produce 50,000 new strains of potatoes alone every year. More important, its technological base is unassailable by smaller fries. It is one of the first multinationals to spread its operations to countries like China, Russia and East European countries. It is the enormity of this giant that makes the All India Soft drinks Manufacturers Association feel worried about their own survival. Their fears are justified but this is not the sole impact that is going to be there.
It is a government appointed committee (headed by S.S. Johl) that strongly recommended horticultural development and food processing industry as remedies to the stagnating conditions in the “green revolution” areas. The vision of PepsiCo is not limited to establishing one or two plants to manufacture soft drinks concentrate and pack food items. It is a very ambitious one aimed at structurally transforming agriculture by linking it strongly with the global market structure. It aims at transferring 20% of the present area under paddy and wheat into vegetable and fruit growing land. At least this is the initial goal. Its idea is to bring the yield rates of potatoes, tomatoes and fruits to international standards in terms of inputs and output. For this its research findings will be utilized. It is a very comprehensive scheme and within a few years the initial project cost itself has registered an almost 250% increase.
During the initial period of the PepsiCo controversy the company’s public relations department was constantly dinning that the new venture will utilize the fruits and vegetables that are going waste at present, which according to it amount to the worth of Rs 40,000 crores annually. But now the tune is radically different. Now it is a question of developing horticulture as a “high profit” activity by the farmers of Punjab. It is feeling very sorry about the declining incomes of the poor farmers and is out to make them happy.
What PepsiCo is actually aiming at is to transplant the models of banana republics in Latin America. The dependency on global monopolies will take a leap forward in such an eventuality. The government’s foreign exchange logic is only a flimsy argument. It is the past and present experience with multinationals that, as a rule, the net inflow of foreign exchange is always negative, whatever the initial picture painted by them. In any case, why should the farmers of Punjab sweat it out for the luxury cars and other gadgets of the urban new rich (the imports of which play a dominant role in worsening the balance of payments position) or, for that matter, why should they be made to pay for the enormous kickbacks accumulated by the local big commission agents and bureaucrat bourgeoisie? You accumulate foreign debts for your own gains and then raise the patriotic argument of rectifying it through increasing exports. The Export Promotion Zones (EPZs) tell the worst story of labour and raw material exploitation. In fact, they are nothing but enclaves of multinationals and their local agents where no local laws are applicable.
The promised food processing industry expansion is a classic illustration of the anti-people and lop-sided nature of the pattern of development under conditions of neo-colonialism. The much trumpeted ‘self-sufficiency’ in food grains is periodically exploded by reports of extensive starvation conditions. Only last year, the whole central belt of India (from Rajasthan in the west to Orissa in the east) was under severe conditions of starvation. People and cattle perished and huge land areas were laid waste. (Kalahandi in Orissa became a focal point in the press). The massive availability of incredibly cheap labour in the metropolitan areas is mainly due to the starvation or near starvation conditions existing in large rural areas. Vegetables and fruits are a dream where even coarse food grains are considered a luxury.
But now horticultural development is adopted as priority sector by the government to pay for Marutis and Swiss Bank accounts. Already there are big vegetable and fruit growers in Punjab and neighbouring States of Himachal and J&K. Many of them are actively involved in the urban trading centres for these commodities. Due to inadequate or unscientific storage and packaging facilities wastage is routine. But this is no reason why multinationals should be allowed a free hand in developing the whole sector in line with their developed technology and capital base. Alternate technology could be developed and the necessary capital could be internally mobilised for a decentralised growth of this sector. It is a question of policy and indebtedness which finally clinch the issue. Within the last one year itself more than 400 big collaborations with multinational subsidiaries or branches were sanctioned by the government of India. This is the growing trend and hitherto untouched sectors are in for heavy penetration. This is nothing but the logical development of the pattern of development imposed after the transfer of power in 1947.
The government hopes to gain a political advantage also. The political analysts of the government feel that the disenchantment of the Punjab farmers on issues of soaring costs of cultivation and non-remunerative prices received for established crops like paddy and wheat can be mollified with a sudden spurt in vegetable and fruit cultivation, which at least in the initial phase may give them remunerative prices. They hope that the political support extended by the large majority of farmers to the secessionist demands of the Sikh militants on the basis of their economic grievances can be stemmed through such a diversification of agriculture. The support for this diversification strategy by the short-sighted farmers’ organisations like the BKU cements this hope.
It is difficult to see how such a diversification could neutralise the situation. In the case of paddy and wheat it took only a decade for the profits to taper off. And when this happened the targets of attack were the central government and local commission agents and government agencies like the Electricity Board. Now a new dimension is to be added. Imperialist capital is directly stepping in to fleece the farmers and this means the addition of a new enemy. The Sikh militants, who are now sublimely unconcerned about any role of imperialist capital in Punjab, will very soon be compelled to give serious thought to this aspect. The political fall-out of the direct intervention of multinationals is bound to make the already existing situation more complex and serious. Moreover, the development of high technology food processing industries in the State is not going to make any difference to the unemployment situation there because of the very high level of modern technology envisaged. Without importing this high cost technology the multinationals will be least interested in coming and establishing themselves, because selling of this technology is probably the most lucrative avenue.
The gains of horticultural development and the food processing industry to the farmers will not be a uniform one. Horticulture demands more care and capital input, which directly means that only the rich capitalist elements will be able to switch over from crops like paddy and wheat to these crops. In the initial phase of this diversification the multinational and the state agencies will try to ensure remunerative prices because only then adoption of these crops will attain the required level. This means that the possible initial gains to the farming community will primarily go to the rich capitalist farmers, further widening income and wealth inequalities in rural Punjab. Later, when powerful industrial interests start manipulating the prices in the face of cost escalation it will be a different story. But the point is that even in the beginning the gains to the agricultural sector will be limited to a few rich capitalist farmers who are in a position to corner the agricultural credit and utilize it in a fashion which will enable them to gain economies of scale. The role of commission agents will be further strengthened. A decentralised food processing industry can avoid many of these adverse factors. It is really amazing how farmers’ organisations are not seeing this point.
Some of the international experiences generated by PepsiCo ought to be kept in mind. In the neo-colonial world two of their main arenas are Mexico and Argentina. Both these countries are sunk in debt traps of colossal magnitude. In both these countries the multinationals themselves developed the hybrid strains for processing in their plants and are exploiting the internal markets to the full. Multinationals like PepsiCo have fattened themselves so much that they are in a position to destabilise the governments of these countries with the profits raised from the people of these countries. These two countries are very much at the mercy of the multinationals, and the characteristic features of the society include massive growth of slums, inflation and unemployment. No miracles had been worked by the multinationals for these people, in fact, the only miracle was that the multinationals grew enormously and the economic and political conditions of the masses plunged down. We have no reason to expect any other result in India also.
Whatever are the export commitments of PepsiCo, its vulture eye on the vast local market stands out. It is a distinct move towards the monopolisation of the market. This monopolisation need not mean a countrywide PepsiCo presence in a physical sense. Contracting, subcontracting are all means to make the indigenous capital into the position of appendages serving the Moloch’s interest. The marketing tactics and vastly superior technology and credit will see to it that any upstart will be annihilated if it tries to stand on its own legs. Even if we take the upper 5-10% of the population as the market for junk food and insipid drinks it comes to the combined market of many West European countries. It will not be a mean achievement for the multinational and its principal accomplice Voltas, a Swiss multination with the Tata group as the Indian helpmate, and having 100,000 retail outlets all over India. They have 2000 stockists covering this one lakh.
The gains from promoting diversification of fruit and vegetable crops will set off a chain reaction: hybrid seeds, fertilizer, pesticide package etc. In this chain reaction, PepsiCo, according to its own intense propaganda, will be playing the lead role – its R&D and technology being cited as the irrefutable reasons for this – which means itself and associated giants will deepen their penetration in a wider field. In other words, the priority awarded to the food processing industry, under the aegis of the multinationals, explicitly brings out the consolidation of neo-colonial relations of production. Imperialist capital is becoming increasingly visible to the people.
It is the communication gap that is the most curious angle and this gap enormously facilitates the consolidation of neo-colonial relations of production. Any amount of misinformation is possible, if the MNCs have a stake in it. Concealing their viciousness they are openly proclaiming themselves as saviours out to rectify the serious illnesses of the economy. Farmers’ organisations and middle classes are supporting it; some of them, if not supporting, are not exposing and opposing the whole affair. The working class remains uninvolved. Their spokespersons very often support such an intensified penetration. Political parties, like the CPI and CPI(M), are only against the increased presence of MNCs in Punjab, but not for reasons of neo-colonialism. This information gap must be burst asunder; only then can any serious challenge to the strengthening grip of the MNCs and their super bankers effectively come up.