Wednesday, May 7, 2008

FOOD CRISIS OR IDENTITY CRISIS

I was at Nilgiri's corporate office yesterday, after a months prior appointment. Nilgiri's is a 100 year old store in bangalore, and has earned its reputation of selling genuine food stuff. I Have been trying to do business with them, for while, earlier I did not have a product to place on thier counters. It took us one full year to be able to make something suitable enough for a counter like theirs. This time when I was there, things were different. Nilgiri's just sold of to a British Retail Chain, and now they are corporatised. They are franchising all their outlets, have plans to open 2500 stores in next one year.
So, this poor farmer, was trying to negotiate with a multinational retail giant now, their approach has changed and i was forced to change my colors too. Margins, markups, market share, SKUP name the jargons and this kisan from bihar was supposed to answer all of them.
I grow, most of my food stuff, then process it, like my mom makes pickles and my wife bakes cakes, I eat what I grow and what I manufacture. I consider this a certificate for the quality that I produce, and that is why I had gone to nilgiri's for, as they stood for the same values.
Usually I keep 10 to 15% margins and try to pass on the rest to the consumer. But not now, Organised retail wants, 30 to 50% margins, per product fixed charges, registration charges. So, anything, manufactured at say, $1.00 wil need to be sold at $3 for every mans greed to be met.
The corporates have heavy salaries to pay, advertising costs, average manager does not stay for more than an year, he has to perform for his next salary, so they keep pushing the lines upward. they have an identity crisis. which is leading to the food crisis.
I was in silliguri, vegetable yard, a couple of weeks back and the cost of water melons is less than Rs. 1 a Kg, in delhi it is Rs.12 to 20 a kg, 11 Rs. for transportation, unacceptable.
The food crisis, is not for real, like the value of the shares, one trades in.
Being a free thinker, I have no objections in people marking up on margins, or trading into shares or comodities. But as Rajesh singh, I wouldnt do it. Hoarding comodities, and expecting that people will go hungry on a later date, is not good business. You make more money, and then you pay for the same food 3 times the cost, is not good business. popcorn for 50 bucks, not funny.
Adding value is fine, giving an experience while you munch that popcorn, is creativity and enterprise. Well best part is what's wrong if people are paying for it. i will tell you what's wrong. I produce that Corn that you are eating, and I sell it for Rs. 4 per kg, Rs. 50 is what i have to spend to munch 100 gms of popped corn. I am going to go back learn all the tricks that corporates are upto, and will have a 300% markup on the corn, right from my fields. it would not make much of a difference to the consumers, but surely I should be able to buy my Popcorn.

I am no Adam Smith to forecast the outcome, but, onething is for sure, technology will change the way Farm products have been grown, distirbuted and sold. It is the corporates who are going to be stuck in the web they are knitting.
As for me I just got myself a laptop, and working on starategies and PP presentations.