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| 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
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| 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.
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| Henry Parsons Crowell Source: http://www.quakeroats.com |
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| 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.
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| 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
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
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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
