Globalization: PepsiCo’s Deal With Mexican Farmers Is Good for Business

PepsiCo’s Deal With Mexican Farmers Is Good for Business - NYTimes.com: SAN GABRIEL, Jalisco, Mexico"... some 300 small farmers here no longer sell their corn to middlemen but directly to PepsiCo, which guarantees the price it will pay for their crops upfront. The deal enables the small farmers to secure credit to buy seeds and fertilizers, crop insurance and equipment. ...

PepsiCo’s work with the corn farmers reflects a relatively new approach by corporations trying to maintain a business edge while helping out small communities and farmers. Begun as a pilot project by the foundation affiliated with the company’s Sabritas snack foods division, it is expanding to about 850 farmers to develop a local source of sunflower oil, which the company needs to improve the nutritional quality of its products.

The corn project saved PepsiCo transportation costs because the farms were close to two of its factories, and the use of local farms assured it access to types of corn best suited to its products and processes. “That gives us great leverage because corn prices don’t fluctuate so much, but transportation costs do,” said Pedro Padierna, president of PepsiCo’s operations in Mexico, Central America and the Caribbean.

The social benefits of the corn program are obvious in higher incomes that have improved nutritional and educational standards among the participating farmers"