Industry Spotlight – May 2016

Andhra aims for INR 5,020 cr Investments; 50,000 Jobs

Addressing a seminar on ‘Opportunities, Challenges – Food Processing Industry’ organised by the AP Chambers of Commerce and Industry Federation (APCCIF), M Girija Shankar, Secretary to Government (Mines & Geology), Industries and Development informed that food processing industry is one of the thrust areas of the government.
“The Andhra government aims to attract investments worth INR 5,020 crore in food processing industry and generate employment for 50,000 people in the state by 2020,” said M Girija Shankar.

“Being a primary sector, the food processing industry can bring revolutionary changes, as it provides lot of employment, remunerative prices to farmers, economic and social benefit. Abundantly rich with huge production levels, the state offers enormous opportunities to the entrepreneurs in establishing food processing units with food grains cereals, pulses, fruits, vegetables and spices, dairy, poultry, meat, plantation, horticulture and other agriculture allied products,” he explained.

“After studying the food processing policies of 10 states in India, the state government formulated new policy to meet the requirements in Andhra Pradesh. Out of 66 MoUs signed in the Partnership Summit held in January, 35 companies offered to invest Rs 3,000 crore, which will create employment for 30,000 people. Necessary steps will be taken by the government to promote Farmer Producer Organisations (FPOs) to work collaboratively with the farmers in improving the quality of food products, which is essential to tap the overseas market,” he added.

Oxfam’s Food Industry Report Card: Unilever is No. 1

Unilever received top ratings from Oxfam International for sustainability and human rights, including treatment of women and farm workers, part of an annual ranking that showed industry wide improvement.

Nestle SA and Coca-Cola Co. ranked second and third, the human-rights advocacy group said in a report. Danone and Associated British Foods Plc — the London-based maker of Ovaltine drinks and Twinings teas — tied for last among the 10 companies, according to Oxfam, which has been compiling the ratings since 2013.

Food companies are making their supply chains more transparent and releasing more detailed sustainability policies, said Monique van Zijl, the leader of Oxfam’s Behind the Brands campaign in The Hague, Netherlands.

“We’re in an era of stronger transparency. Consumers have been speaking to the companies, and those companies can’t afford not to let people know what’s going on in their supply chains,” said van Zijl.

The rankings consider corporate policies related to land rights of small farmers; exploitation of women, farmers and workers; climate change; business transparency; and water use. The 10 businesses studied in the report are among the top producers in the global food-and-beverage industry.

Unilever, maker of Dove soap and Hellmann’s mayonnaise, took the No. 1 spot in part by increasing attention to climate change. It was also the only top food company that asked its suppliers to support farmers’ rights organisations.

Danone, meanwhile, has become less transparent in its policies and ABF has lagged behind competitors since the first survey, Oxfam said.

ABF said it doesn’t have the same business model as most other companies included in the study, meaning the survey ‘can never reflect the breadth and depth of our work.’ The company continues to develop plans to further improve its activities.

Danone prefers to experiment and validate the impact of its actions before publishing policies, and said it’s willing to explore new initiatives that could help accounting for progress in its projects.

Tyson Foods Raises Earnings Target on Profit Growth

The US meat group said full-year earnings are now expected to total $4.20 to $4.30 per share, up from $3.85 to $3.95 a share. Sales are expected to total $37 bn, down from $41.4 bn in 2015 due to decline in beef, pork and chicken prices.

For the first half, Tyson revealed operating income of $1.48 bn, up from $1.05 bn in the comparable period of last year. Net earnings totalled $895 mn versus $621 mn.

The company said profitability was helped by ‘record’ operating margins at its chicken and pork segments, as well as growth at its higher value prepared food unit.

Sales were, however, down in the period. Revenue in the 6 months dropped to $18.3 bn from $20.7 bn. The company revealed selling prices were down across its operating segments with beef pricing dropping 15.2 percent, pork down 11.8 percent, chicken declining 4.8 percent and prepared meats pricing falling 3.8 percent. Volumes were flat-to-down across its reporting segments, with prepared food volumes declining 4 percent year-on-year.

“Our business continues to perform very well, delivering record second quarter operating income and return on sales, in what is typically the most challenging quarter of our fiscal year,” Donnie Smith, President and Chief Executive Officer of Tyson Foods, said.

Smith stressed the company is growing the topline in ‘key’ areas of retail. “The pricing and marketing investments we’ve made are paying off in increased volumes in strategic products including Hillshire Farm smoked sausage and lunchmeat, Jimmy Dean breakfast sausage and Ball Park hot dogs. With a focus on the longer term, we have a three-year pipeline of innovation across all segments with exciting new product launches to keep our offerings in the retail, food service and international channels relevant to consumers.”

“We’re in a great position, and we’re generating momentum that will take us into 2017 and beyond. We’ve produced record results in the first half of the fiscal year, and we expect continued strong performance in the second half,” he added.

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