Transformation of the Agrifood Industry in Developing Countries - The Oxford Topic of Food, Politics, and Society - page 803

Peru, Lajo Lazo, 1983). However, sometimes regulation resisted transformation: for
example, India “reserved” most of food processing for small enterprises until 1998
(Bhavani,Gulati,andRoy2006).
Second Stage of Transformation of Food Processing in
Developing Countries—Driven by Private-sector Investment
helate1980sthroughtodayhasseenrapidgrowthinthefood-processingsectornoted
earlier, combined with rapid consolidation; multinationalization; and technological,
institutional,andorganizationalchange.hereareseveralsalientpoints.
1 . The Initial Impetus for Transformation in the Second Stage: Privatization
and Liberalization and the First Round of Consequences
Inmanycountries,withstructuraladjustmentinthe1980sand1990s,stategrainmills
andslaughterhouseswereprivatizedoreliminated,andimportlicensesdisbanded.his
led to two contrary lines of consequences.
Ontheonehand,especiallyinthe1990s,thedemiseofpublic-sectoroperationsand
delicensing of processing, and diversifying products for growing urban and rural mar-
kets and encouraged by market deregulation led to proliferation of small and medium
scaleenterprise(SME)grainmillsanddairy,meat,ish,andproduceprocessingcom-
peting for the newly opened space. Examples of such proliferation were observed in
diverse settings, from dairy and wheat and horticultural product processing SMEs in
Brazil(Farina2002,1997)tomaizeandvegetableandfruitprocessinginAfrica(Broutin
andBricas2006,Jafee1995,JayneandJones1997,TraubandJayne2008;andRubey
1995).hisloweringofSMEswasindeedagoalofliberalization.
Ontheotherhand,privatizationlednotonlytodomesticprivate-sectorbids,butalso,
duetowidespreadliberalizationofprocessingFDI,anavalancheofFDI.helattercame
first mainly from Western Europe and the United States (with global firms like Nestle,
Krat,Danone,seekinglesssaturatedmarketswithhigherproitrates,Gehlharand
Regmi2005),thenJapan,andeventuallyfromregionalmultinationalssuchasMexico's
BimbointoCentralAmerica,hailand'sCPintoChinaandotherSoutheastAsiancoun-
tries(lastyearCPcreatedthelargestshrimpprocessingirmintheworldinIndonesia),
Philippine'sSanMiguelintoVietnamandDelMonteAsia(Philippines).
The consequence was that foreign firms form a major share of the large processing sec-
torinanumberofirstandsecondwavecountriesbythe2000s,althoughthatprocess
appearstobejuststartinginthird-wavecountrieslikeChinaandIndiainthe2000s.he
consolidationthisproducedisotenstriking.Forexample,bytheearly2000s,Nestle
alonehadamarketshareinLatinAmericaforkeypackagedfoods(speciically,confec-
tions,soups,petfood,babyfood,dairy,andbakedgoods)of61 percent,and26 percent
inEasternEurope;inBrazilthatsharewas83 percent,inPhilippines37 percent,andso
on. Unilever had similar dominance: its market share in a set of key packaged goods was