Transformation of the Agrifood Industry in Developing Countries - The Oxford Topic of Food, Politics, and Society - page 804

38 percentinPoland,43 percentinArgentina,37 percentinIndonesia,47 percentin
SouthAfrica,andsoon(BollingandGehlhar2005).However,thecountrycomposition
oftheFDIsendersmaychangeovertime,indicatingtheimportanceofrisingregional
multinationalsin“south-southFDI”(WilkinsonandRocha2009,Reardon,Henson,
et al.2007).
Moreover,theFDIacquiredlargeoutmodedgrainmillsanddairiesandslaughter-
houses and refurbished and relaunched them as modern, larger operations. For exam-
ple,Smithield's(theleadingporkprocessorintheworld)acquiredRomanianex-state
slaughterhouses at a tenth of the cost of such processing facilities in the United States
inthe2000s(Sharpe,2006).Inthelate1980s,intwoyears,Parmalatbought24SME
Braziliandairyirmsaspartofamuchlargerandlongeracquisitionspree,itselfmuch
smaller than that of rival Nestle, that moved the two foreign firms from minor players
inBraziliandairyin1990tothemajorityofthesectorby2000—asectorthathaditself
grown10-foldoverjustthatperiod.hissamestoryplayeditselfoutinmanycountries
invarioussectors—suchasfordairyinArgentinaandCentralandEasternEuropein
thatsameperiod(Farinaetal.2005;HartmannandWandel1999).
Contrarytoconventionalwisdom,theroleofproducttradeintheglobalizationof
the food-processing sector was small, because the share of imports is small, and those
importshavegrownlittleatertheearlymid1990s.helipsideofthisisthatoutgo-
ingFDIinfoodprocessingfromdeveloped-countryirmsismuchmoreimportant
than processed-food exports from developed countries by those firms; for example,
U.S. processed-food firms produce five times more in foreign countries than they export
toforeigncountries(GehlharandRegmi,2005).Manyreasons(liketransportcostsand
tarifs)makeFDImoreattractivethanexport. Agrifood globalization's main vector of
effects is FDI .Aswiththeothersegments,thedifusionpathofthatFDIwascorrelated
with the waves.
2 . Consolidation in the Processing Segment into the 1990s and 2000s
There has been rapid consolidation in developing-country food processing (Rama and
Wilkinson2008),again,inthesequenceroughlyofthreewaves.hedriversofthiscon-
solidation are as follows.
First, there is evidence that even in the SME subsegment, there has been gradual con-
solidation,withmicro-enterprisesof1-2personsgivingway(growingintoorbeing
out-competedby)SMEsof5andmorepersons.hiswasnotedinIndiabyBhalla(1997),
showing how, over several decades, rural food-processing SMEs had shited gradu-
ally from villages to rural towns along highway corridors, with an increase in average
size.Similarly,inLatinAmerica,theaveragesizeoffood-processingSMEs(andother
ruralnonfarmirms)hasincreasedoverseveraldecades,withwage-laborsharerising
(Reardon,BerdeguéandEscobar2001).hismayhavebeenduetotheriseofsecondary
andtertiarytownsandcitiesinthe1970s-1980sandthe“de-protection”ofruralecon-
omies by improvements in infrastructure and increased competition with processing
irmsinurbanareas(assuggestedbyTaylorinMexico),andlarge-scalefactoriessend-
ing their cheaper goods into rural areas, out-competing traditional micro-enterprises,