Transformation of the Agrifood Industry in Developing Countries - The Oxford Topic of Food, Politics, and Society - page 801

companies. Some were conglomerates that had food operations and saw the unmet
demand for modern logistics and added logistics; in India, Pantaloon (the leading
retailer)startedamajorlogisticscompany(seeReardonet al.2010forIndiacases).
Athirdelementofthemodernizingwholesalesectoristhe“cash&carry”chain.his
is in direct competition with the traditional wholesalers and stockist networks, supply-
ingtraditionalretailandtraditionalHORECA(hotel,restaurant,andcateringsector).
GlobalchainsoperatinginthissegmentincludeMetro,Walmart(Sam'sClub),Makro,
andothers.Butdomesticretailersalsotendtoopen(orstartas)cash&carries,asthey
areoperatinginmarketsstilldominatedbysmallshops.hecash&carriesusebulk
buying and supply-chain efficiencies to lower costs, and then add services like bun-
dling,delivery,andretailconsulting,tocompetewithtraditionalwholesalers.Oten
thecash&carriesstartaswholesalechainsandtransitionintopartretail.Insomecases,
globalretailersenterascash&carrieswhenretailFDIrestrictionsarestillinplace,as
Walmartdidin2008inIndia(asacash&carryandasa“back-end”orprocurement
partnerwithBharti,adomesticconglomerateoperatingaretailchain),andTescodidin
2009inIndiawithTata(inasimilararrangementtoWalmart's).hecash&carryformat
isotenpoliticallyadvantageousbecauseitisfocusedonservingthesmallretailerswho
form the opposition to the large retailers.
The Two-stage Transformation of
Agrifood Processing
Key Stylized Facts and Trends as Background
Processedfoodsarefromcerealsandpulses(driedpeas,beans,andlentils),tubers,ish,
meat,dairy/eggs,edibleoils,andcondiments.heseareeitherminimally(semi-)pro-
cessed or fully processed. They are sold both packaged (bagged, boxed, wrapped, bot-
tled)andnonpackaged(likelooselour).heprocessedfoodsectorhasgrownquickly
inthepastseveraldecades,overlainwitha“westernization”ofdiets,withashittorice
and wheat (Senauer, Sahn, and Alderman 1986), and to processed meats and dairy
(Pingali2006).hesetrendsaredrivenbyincreasesinincome,urbanization,women
increasing their participation in labor markets outside the home and wanting to save
time cooking, improvements in packaging and processing technologies, and eventually,
by diversification of the variety of processed foods, abetted by modern retail (Gehlhlar
andRegmi2005).
This rise is correlated both with rising incomes in a country over time, and over coun-
tries: using the “packaged food” subset of processed food, the share of packaged food in
foodexpendituresisroughly7 percentinlow,30 percentinlower-middle,and45 per-
cent in upper-middle income countries; total packaged food sales are growing at only
2-3 percentannuallyindevelopedcountries,versus13 percent,28 percent,and7 percent