Sunday, 13 April 2014

Source: http://www.pepsico.com

"In global capitalism, economic activity is not only international in scope, it is also global in
organization. Industrial and commercial capital have promoted globalization by establishing two distinct
types of international economic networks, which can be called "producer-driven" and "buyer-driven"
global commodity chains, respectively (Gereffi, 1994; 1999). A commodity chain refers to the whole
range of activities involved in the design, production, and marketing of a product (see Gereffi and
Korzeniewicz, 1994 for an overview of this framework)."

History

Source: http://www.iptv.org
In the year 1901, The Quaker Oats Company comprised of four major oat mills in the United States of America. The Quaker Oats “Quick” Brand is a rolled oat imported from the Quaker Oats Company based in Chicago Illinois to Trinidad and Tobago and is distributed by VEMCO Ltd. to local grocery stores across the country. Henry Parsons Crowell was the founder of the Quaker Mill Company of Ravenna, Ohio. Between the years 1888 to 1943, he occupied general managerial positions, was president and chairman. John Stuart was the founder of another cereal mill which was included in the merger of oat mills. This mill was located in Cedar Rapids, Iowa. In addition, The German Mills American Oatmeal Company owned by Ferdinand Schumacher was the third company to be a part of the merger. Lastly, the fourth company was the Rob Lewis and Co. American Oats and Barley Oatmeal Corporation included in the quartet. Sixty seven years later, a plant was constructed in Danville, Illinois to facilitate the operations at Quaker Oats. After years of successful production, PepsiCo bought The Quaker Oats Company in an effort to diversify their product line and maintain its highest rank as being the fourth, largest producers of consumer goods globally.

                
                   Henry Parsons Crowell 
Source: http://www.quakeroats.com
Ferdinand Schumacher
Source: http://www.quakeroats.com




Where the Oat is grown?
           
The Quaker Oats Company is known to possess the world’s largest cereal mill that mills millions of bushels of oats a year. Therefore it is estimated that the Cedar Rapids plant needs several thousand rail cars of oats in order to mill 5,000 bushels of oats per rail car. So the major question is where are these oats grown?     
The Quaker Oats Company in the 1990s and late mid 2000s was working in collaboration with a grain company named Cargill. A hundred percent of the oats that were provided to the Cedar Rapids plant was coming out of Western Canada. At that time, one can say that the influx of oat grains was coming from Saskatoon to Winnipeg into the USA for human consumption. Interestingly, in the 70s and 80s Quaker Oats did not purchase any oats at all from Western Canada. This was because initially, the quality of oats that were crossing the Minneapolis border were not up to milling standards nor suitable for Quaker production and manufacturing. These oats had wheat and barley mixtures in them, were high in moisture, full of wild oats and the company did not fully understand the quality in Canadian oats based on the misrepresentation under the Canadian Wheat Board. As a result, Quaker invested in a variety research in Winnipeg to gain a better understanding of the oats coming out of Canada. 
From the research and visits to farmers’ fields, it was discovered that the oats exceeded Quaker’s expectations and were indeed of very high quality. Unfortunately, the trading system used to ship the oats devalued the true essence of the plant. Years later, higher quality oats that were then crossing the Minneapolis and North Dakota borders via farmers and grain companies, led Quaker to approach Winnipeg for a share in business. Quaker had also discovered that the Canadian Wheat Board had ceased the marketing of those oats and better representation of the trading systems began happening. Before Quaker purchased the one to five sample grades of oats, the company had to ensure that the quality being produced satisfied their stringent specifications including the mixing of grains, fertility, harvesting storage and specific varieties.


How the Oat is grown?
            Quaker Oats are usually planted in September or October and are ready for harvesting by early August the following year (Quaker UK 2014). For over 70 years, Quaker Oats has worked very closely with farmers who have assisted greatly in giving the company an astound reputation for being the powerful producers of high quality oats. The oat grains are planted closely together and this allows for the plant to grow densely. The purpose of this strategy used by the farmer is to crowd out any potential competition of weeds. Due to the shadows created by the dense growth of grains, sunlight is therefore eliminated thus denying weeds of any opportunity to grow. Another reason for planting the oats closely together is to protect the soil from any potential wind and water erosion. The oat grain is a deep rooted crop therefore its firm grasp of the soil shelters the soil from the effects of erosion. Additionally, less tilling is required which means that the earth is hardly ever disturbed during growth periods.

Source: http://www.hamlynsoats.co.uk

            Though the Quaker oat grows well without utilizing much fertilizer in the fields in which they are grown, the oats do in fact respond greatly to fertilizer when applied.  On average, 200 bushels of oats are yielded per acre with a strict planting regime of testing soils and applying fertilizer. Farmers growing oats for The Quaker Oats Company, use 100 pounds of nitrogen and potash. Potash is needed to increase the efficiency of nutrients added to the plant. The role that application plays in the growing of oats is that it controls the opening and closing of stomata guard cells. Hence, depriving the oats of potash make it more sensitive to moisture or effects of drought. Applying fungicides are forbidden because it can delay the maturity of the oats in some cases.


Harvesting, Storing and Transporting the Oat
                  
Source: http://www.manitobacooperator.ca
            Oats are generally known to dry from the top to the bottom.  The number of kernels increases from the tip of the oat to the bottom of the pinnacle. Visually, the branches turn white when it is ready for harvesting. Farmers then have to ensure that moisture content in the oat is below 30% by inducing dryness if necessary. This procedure needs to be conducted with caution so that both test weight and yield are not affected while harvested. Harvested oats are stored in a clean, dry bin or building where aeration is provided to prevent rodents, insects and birds from attacking the produce. Moisture content levels are to remain below 14%. For Quaker Oats standards, farmers are not encouraged to stack the oats of the ground for sanitation and health threats as the oats are then subject to contamination from weather as well. The Torch River Rail group oversee the transporting of oats to the Quaker factory. They request that farmers who are supplying oats to the company must separate the different variety of oats on each rail car so that recording and traceability are highly maintained.


The Mill Processing of the Oat

           Quaker Oats Milling process is known to be three hours. According to The Quaker Oats Company, ensuring that all the oats are uniformed, in size, shape, texture and colour is top priority. This is done through quality testing. The main goal of Quaker of the milling process is for human consumption that undergoes procedures known as the drying process. Firstly, special machinery is used to separate the hull of the oats is removed as a form of cleaning. After this cleaning takes place, the oats are heated or steamed as a form of stabilization so the oat is neither darkened of goes rancid. The next step entails cutting the oats so that they are easier to flake or if further production is needed, the entire oat is grinded into flour for preparing cereals. In addition, the size of the roller determines how thick the oats are. On the contrary, thinner oats are rolled. In comparison, to Canada’s humidity and temperature, Iowa’s location gives presence to the area possessing higher humidity and temperature. 

Source: http://www.madehow.com
             Thus, Quaker prefers 13% moisture or less in the oat. As such, when the oats are being dried low heat and high air flow is needed. Blending heavy oats a light oats are forbidden for farmers. This is because the sieves used at Quaker Oats at the company’s plant are 5/64 inch by ¾ inch sieves. Therefore, Quaker Oats demand no less than 96% of sound cultivated oats on behalf of farmers. This excludes any materially damaged, ground damaged, or heat damaged oats. The varieties of oats usually taken by Quaker Oats are AC Morgan, Leggett and CDC Dancer. Quaker is popularly known for their milling expertise. In production, the company manages to preserve that special tell tale nutty flavour of their oats. No part of the oat is excluded. Quaker Oats are whole grains hence; their bran, endosperm and germ are all used. 


Social and Environmental Conditions in which the Oat is grown and manufactured
            The farmers who are responsible for growing and cultivating oats for Quaker are not allowed to use a lot of fertilizer nor pesticides when spraying for weeds. This is because the company tries to eliminate any potential causes for water and cross contamination of yields. The excess part of the oats, like the husks and shells, are used for animal feed. Both the machinery and materials used in the manufacturing and production processes are reused and recycled. Packaging is also recycled and in the factory, the exhaust from the steam boilers are closely monitored to prevent smoke emissions and remove as much heat from the burnt gas as possible. Waste water is treated till it is clear through filtering and settling. Sustainable practices  have also been a huge part of Quaker Oats business model for the benefit of firstly the consumer, family, communities and the world by large. Quaker finds it necessary to evaluate each stage of the manufacturing process in an effort to achieve optimal environmental sustainability. In fact, Quaker has already met its 2015 water reduction goal by 25%, reduced landfill waste by 50% and electricity by 20% (Quaker USA, 2014).


How the commodity is packaged and sold?
            Quaker Oats as mentioned before is owned by the PepsiCo Company. According to PepsiCo, the firm offers products to over 200 countries and territories, and our Global Brands are our biggest sellers. These are PepsiCo's flagship food and beverages: our 22 iconic, billion-dollar brands (PepsiCo, 2014).


Source: http://www.huffingtonpost.com

For centuries, The Quaker Oats Company has utilized the iconic brand and standard packaging however, the company has revamped this feature of the product with a new up do yet, managing to still include strength and functionality. The tamper brand’s package material is now corn- based in construction. The purpose for redesigning was to reduce the annual usage of plastics and promote environmental compliance to the consumer. Presently, the main packaging of Quaker Oats is mainly paperboard canisters which are 100% recyclable. Whilst this might just be for oats and cereals, generally the new style of packaging has saved the company from using 1200 tons of paper. Quaker has religiously added 100% recycled material to their packaging per year and with this initiative, they have managed to reuse over 9500 tons of recycled paper per year (Quaker USA, 2014).

Source: http://www.blogs.teradata.com

            According to Hayley Stringfellow, Marketing Manager ‘08, Quaker, the company realized that in order to maximize sales, it would be an asset to the company if they knew how weather will impact demand for the forthcoming season (Planalytics, 2008). To Quaker, dreadful warmer winters/ colder winters should not be used as a reason for decreasing sales. Therefore, it would have been best to fully understand how weather issues could best be used to increase sales in a low productive season like never before. Thus, Pepsico’s board decided to take the risk of working collaboratively with Planalytics to see how Business Weather Intelligence data works with Quaker’s supply chain.

Source: http://www.graphicdesign.com

Consumer purchasing patterns were also analysed as persons were purchasing more oats and cereals during colder periods. Based on the predictions done in 2008-2009 for Quaker, colder winters were expected to approach in full force. As a result, Quaker ensured that they stocked oats, tweaked their advertisements and work with store managers to gain feedback on whether or not weather was a factor determining sales. This was proven to be the case and Quaker was able to stay true to the strategy as a means of boosting sales. Quaker’s commodities are sold at worldwide grocery stores, online shopping websites and also the company’s main website.


Analysis of Quaker Oats

 Having established themselves as the most prominent producers and exporters of high quality oats, Quaker is also strong advocates for healthy living and what a better way than to sell that message through representing their consumers and by large, American women. Quaker has partnered with the American Heart Association since in the USA; ninety percent of women are becoming more victims to heart disease. Hence, through Quaker Oat’s “Nourish What Counts” campaign, the company has successfully represented mostly women and empowered them to eat healthy and be more active. Eight million women in the US are living with heart disease, yet only one in six women believe that heart disease is her greatest health threat, signalling a significant disconnect between women’s beliefs about heart status- reality (PepsiCo, 2014).

Source: http://www.fandbnews

            Quaker has found it necessary to inspire women to adapt to healthier practices. The company’s “Go Red for Women” has been a part of the company’s logo packaging and representation of the struggles faced by real women. In my opinion, this is a great strategy because women are also mothers and through Quaker’s loyalty and support, more women would take initial steps to invest in the nutrition of their children and family. Quaker like any other company has seen a health issue that can be detrimental to the sustainability of their economy that is, the human resource and turned it into something positive.  By creating such a good partnership, this business venture and partnership with the consumer, this health choice has already filtered into islands like Trinidad and Tobago. Through globalization and strong media influences, I believe the representation of women has impacted on the culture and eating habits of Trinidadians. 

                      
Source: http://www.vemcott.com
            The main fact that VEMCO is the main distributor of Quaker Oats to local grocery stores shows that citizens are already consumers at great extents. The older generation of consumers are more health conscious and are eating healthier foods which provide nutrients to the body. From my personal experiences, I have always watched my dad cook Quaker Oats for dinner and recently I asked him why is he still a religious consumer of the good.  His response to me was that it was good for his heart as well as mine. Despite being located miles away, Quaker has managed to shape the ideas of the older generations about eating healthier. The product is meaningful to our society in that consumer purchasing patterns are changing. Based on the aforementioned statistics about heart disease in America, one can assume that life expectancy rates can be affected. As a result, the commodity can be easily consumed at any time of the day but the Quaker oats are known to be a breakfast kind of thing. 

Source: http://www.thequakerkitchen.com
Distribution and Transport Network of the Oat
           
After the commodity is packaged at the Cedar Rapids plant, the canisters of oats are then packed on Quaker’s double- decker trucks and transported to their distributors who are then responsible for the various stops made to international grocery stores. The reason why Quaker has not taken on this responsibility is because minimizing fuel consumption is an integral part of the company’s strife for environmental compliance.  Likewise, in Trinidad, VEMCO takes on the responsibility of distributing Quaker oats to local grocery stores like Hi-Lo, True Value just to name a few. Generally according to Trade Map database that provides statistics for international business development, Trinidad imports oats mainly from the US and Canada. In the year 2012, a total of US$ 93,000 worth of oats was imported to Trinidad and Tobago. From Canada US$ 49,000 dollars worth of oats were imported to Trinidad meanwhile, the figure from the US was US$ 44,000 dollars; 77 tonnes from Canada and 162 tonnes from the US. See Figures below:-


Source: http:// www.trademap.org

In closing,
"The Global Commodity Chain approach can inform the World City Network approach through the approach of commodity- specific lenses. By moving beyond selecting  TNC's  based  on  size criteria, industry - specific analyses will give more 'flesh' to the global city network by providing insights into the real life connections  and material links between specific cities. The second is the provision of qualitative  information on the practices and strategies of firms including the role and significance for TNC's in other industries (Vind and Fold 2010: 58). There is an incomplete knowledge in market economies and its especially acute consequences in a global economy. This is present in commodity chains and intercity networks.

Whilst I enjoyed researching for this Commodity Chain Assignment, recruiting information was not the easiest task. In addition, being located in the Global South most of our consumption palettes has been fine tuned to easily receive cuisines from the Global North. But my dear readers, please feel free to share with me:
QUESTION:
"Being called global consumers, are we really as interconnected through our trading and consumption of foreign foods if basic information about what we consume is hidden?"


References
Gereffi, Gary. “A Commodity Chains Framework for Analyzing Global Industries” last modified August 12, 1999. http://eco.ieu.edu.tr/wp-content/Gereffi_CommodityChains99.pdf

PepsiCo. “Quaker Oats Supports the American Heart Associations Go Red For Women Movement by Encouraging Women to Nourish their Hearts” last modified 2008. http://www.pepsico.com/PressRelease/Quaker-Oats-Supports-the-American-Heart-Associations-Go-Red-For-Women-Movement-b02082012.html

Planalytics Case Study. “Quaker Uses Weather Intelligence to Maximise Sales of Porridge Oats” last modified 2008. http://www.planalytics.com/media/brochure_downloads/quaker_oats.pdf

Quaker. “Our Oats Story” last modified 2014. http://www.quakeroats.com/oats-do-more/why-oats/our-oat-story.aspx

Trade Map. “Trade statistics for international development monthly, quarterly, yearly, trade data. Import and Export values, volumes, growth rates, market shares etc” last modified 2008. http://www.trademap.org/


Sassen Saskia. “Global inter- city networks and commodity chain: any intersections?” last modified 2010. http://www.saskiasassen.com/PDFs/publications/Global-inter-city-networks-and-commodity-chains.pdf

Strautman Bill. “ Growing Top Quality Oats for Quaker” last modified June 1 1999. http://www.theagadvance.com/issues/jun-jul-2009/growing-top-quality-oats-for-quaker.aspx