PepsiCo Chairperson and CEO Indra Nooyi participated in the World Food Prize during October, providing a keynote address to attendees. Her address focused on the critical role industry can play in helping agriculture better serve the nutritional needs of the globe, highlighting the developments PepsiCo is already making in the areas of distribution and product reformulation. An excerpt of the speech is highlighted below, with the full text available here.
With that as a backdrop, I think there are three specific things that we, the private sector, especially the food and beverage sector can do. We can help across the entire process of our business – from farming, to product formulation to distribution.
First, we can and must share our core “farming” expertise. In the course of doing business we build a great store of knowledge on things like nutrition science, irrigation techniques and the development of resilient crop strains. There is no reason why this knowledge can’t be shared with small-scale farmers to help improve their yields and enrich their crops.
Small-scale farmers who would benefit are vital to the solution. Two-thirds of the 3 billion rural people in the world live off the income generated by farming less than two hectares. And, these small-scale farmers are the ones who are least able to get hold of agriculture advancements, but they are also the ones who have the greatest capacity to turn the sector around.
It’s not well known today, but when PepsiCo launched its business in India in the 1980’s, we began with agriculture. We worked directly with thousands of farmers in Punjab and other states transferring techniques and best practices to improve the yields of tomatoes, chili and rice. We shared technology, including introducing new tomato and chili varieties that tripled yields. Recently, we also started a high yield citrus processing farm, planting millions of orange trees that have the potential to make India a global orange growing base. At the same time, we introduced critical food processing technology. That meant fewer fruits and vegetables would rot on their way to market.
We have also worked with local scientists in India to implement drip irrigation, a paddy field watering technique that uses significantly lower levels of water to produce a rice crop. This saves crops and improves the return to the farmer.
In Inner Mongolia, China, we helped local potato farmers develop thriving crops in the middle of the desert. Water-saving irrigation and crop-rotation methods were shared along with regular training on modern, environmentally friendly technologies. Production per hectare at these farms is world class at 39 tons, more than double the 18 ton average in China. We benefit from these productive farming techniques – we buy the output at competitive prices. The farmers in turn make a good living.
Second, the private sector can use its R&D and product formulation expertise to incent healthier eating by providing consumers with products that are both highly nutritious and taste great. For many years now, at PepsiCo, we’ve found creative ways to reformulate our products. We’ve reduced fat, we’ve reduce sodium and we’ve taken out added sugars. We are now adding whole grains, fruits, and vegetables to our snacks and making many of our drinks healthier too. For example, over the past 5 years, in the US alone, in Beverages our total calories per 8oz serving decreased 11%.
Frito Lay led the industry in 2003 by being the first major food company to remove trans-fats from it entire snack chip portfolio. We are reformulating our packs and products to address obesity with better nutrition labeling and portion control.
The third thing that private sector companies can do is leverage its distribution expertise. Lots of companies have highly developed supply chains and these can be used in the biggest task of all – to distribute food to places where it is needed most.
Take PepsiCo in India, South Africa, Nigeria, Mexico, China as examples. We service between one hundred thousand and one million urban and rural outlets depending on the country and reach these outlets once, sometimes twice, a week. How can we and other companies with similar distribution networks, utilize this precious resource to help address the under-nutrition issues that are so rampant?
At PepsiCo, we recently launched Project Asha (“hope” in Sanskrit). This project draws on the expertise that we have gained through our extensive food R&D. In partnering with several organizations, we have been able to develop highly nutritious products for the under-nourished. We want to augment this development with the reach of our supply chain so we can get it into the hands of the poorest of the poor, in countries like India, Nigeria, Mexico and South Africa. It is a work-in process, we have run into many obstacles; but we are resolute. Finding innovative solutions is what we in the private sector do best.
We also have another great resource: our highly qualified and capable people. We are seconding retirees with expertise in distribution, to the World Food Program, to transfer best practices from our company to them to improve the efficiency of distribution of food aid. We have business initiatives with UNICEF and Valid in Nigeria to support and learn about possible roles in addressing under-nutrition. All these form part of a commitment I made to UNDP and the British Government with 17 other companies to show how we can use our core business capabilities to tackle the MDGs.
Knowledge transfer, understanding of consumers and nudging them to make the right food choices, and reach – that is the holy trinity that the private sector can offer to align agriculture and nutrition.
The picture I have painted is of a company that cares about its responsibilities. Companies, in my view, operate with a license from the societies that host them. They have the privilege of limited liability in return for being a responsible corporate citizen. At PepsiCo we call that obligation “performance with purpose”. It means that we think of these responsibilities as part of our core mission. […]