McCain Foods – Exceptional Organizations & Economic Development

Introduction:

McCain is a global leader in the food processing of potato and French fries headquartered in Florenceville, NB – Canada. It is one of the world’s largest manufacturer of frozen French fries and other potato specialties.

McDonald’s, often called as McD does not need any introduction. It is a popular fast food chain headquartered in Oak Brooks, Illinois. McDonald’s were launched in India in 1996. The traditional Indian potato varieties were not meeting the standards that required for the fries since Indian trends in potatoes are low in solid components and high in water components. This makes fries dry and hard.

The best potatoes to make fries are Canadian Shepody, but that can be grown in the cold atmosphere like Canada.

The Shepody potatoes were introduced in 60’s and it has higher solid content and lower water content than other Indian varieties. These potatoes are oblong in shape and size sometimes a foot in length which makes them ideal for fries.

The Challange: The impossible: 

It was the huge challenge for McCain to grow the Shepody potatoes in India to supply to the domestic Indian McDonald needs. Richard Tarn, the Canadian creator of the Shepody variety, believed that it could never be grown in India, particularly since it suffers from “heat stress” as India’s temperature super hot.

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McCain achieved this logistic masterpiece by the well-organized process starting from the mountains of Himalayas to the farms of Gujarat.

Stage 1: Plantation of the Master Crop in the Himalayas:

McCain found that the Shepody potatoes can be grown in the high hills of the Himalayas where the temperature is identical to Canada, but that can’t be sufficient since the McDonald has the stores in all across India meeting the demand of a nation of over a billion people.

The growing of the master crop is done in the Lahaul-Spiti valley in Himachal Pradesh, where the weather is a bit conductive. The master crop is harvested in September and rushed before the Rohtang Pass shuts down for the winter. Then the master crop Potatoes travels by highway towards the western state of Gujarat.

 

Stage 2: Re-plantation & Harvesting of Potatoes in Gujarat:

The Master Crop Potatoes are transferred to Gujarat before the winter. In the farms of Gujarat, the tubers are replanted and harvested around March. McCain selected Gujarat because although Gujarat conditions were not perfect but it were good, and the farmers wanted to try something new if they can make the extra money. In Gujarat the water is leveled below 700 feet; therefore, McCain transferred Israeli drip irrigation techniques to save water by setting up their own farm.

Gujarat is a dry state close to the desert. In Gujarat the water is leveled below 700 feet; therefore, McCain transferred Israeli drip irrigation techniques to save water by setting up their own farm.

Political and Government Support:  

With the  farmers of Gujarat, McCain approached Provincial Government of Gujarat to balance the budget for the venture. India’s current Prime Minister Narendra Modi was a newly elected Chief Minister of the state. He was open for new and creative initiatives and supported the project by granting subsidiaries for farmers. Modi also arranged knowledge-transfer of drip irrigation system from Israel to Gujarat.

french-friesMcCain promoted farmers to take the advantage of the subsidiaries on the drip irrigation by the Government of Gujarat which resulted in 50% reduction of water usage and increased the amount of land for the crop.

McCain taught the farmers the things like pre-chitting, cut-seed and other Canadian farming techniques. This drastically increased the production of potatoes. The next step that McCain took was “fixed price contract” with the farmers that provided farmers the security against price fluctuation. (Please note that there was no Corp Insurance like Saskatchewan and incidents of farmer suicide was common. About 15 years later, Modi became the Prime Minister of India and introduced the “Corp – Insurance” to stop farmers from committing suicide for failed crop.) It also secured the availability of the corps for McCain.

It also secured the availability  and supply of the corps for McCain.

Stage 3: Processing at McCain factory in Mahesana – Gujarat:

After harvesting in March in Kheda, the potatoes are transferred to McCain’s Mahesana factory. McCain has invested over 1 billion in the Mahesana district of Gujarat to establish a factory for processing the potatoes. McCain has developed a standard mechanism where the potatoes of various size (even a foot long) enters in the manufacturing chain as processed to fries just in a 100 minutes process.090318053218_btp62n63-4

In this 100 minutes process:

1. Potatoes are stem peeled, cleaned and checked

2. Before being blanched, potatoes are cut and dried.

3. Cut Potatoes are fried before getting frozen.

4. Fries are measured and packed in the bags.

Stage 4: Quality Assurance & Dispatch to the various McDonald outlets:

In the Quality Assurance part, the designated McCain ‘testers’ test the batch of the fries every half hour. After quality assurance, fries are packed with the 15 kg cartoons and stored at -18 degree Celsius. This standard MacFries are dispatched to the various McDonald locations all around India and fried once again before serving.

Success:

The entire process is a standard example of “Job Well Done” by McCain. McCain India is not only processing the potatoes for the domestic McDonald demand but now Gujarati potatoes are traveling to the ends of the world. The McCain Plant has the capacity of processing 40,000 tons of potatoes into 20,000 tons of fries.McCain is known as Potato-Pro in India.

McCain’s ‘transfer of knowledge’ & “Knowledge Harvesting” of new farming techniques to the Gujarati farmers has increased their economic conditions. Previously, farming of potatoes was done traditionally and was not profitable at all. It also involved a high degree of risk with the market price fluctuation.

The Gujarati farmers learned the technology of sowing and reaping with machines and value of fertilizers. Before the implementation and knowledge transfers, Gujarati farmers were able to yield 10 tons of potatoes from 1 acre. Now, they are able to yield 15 tons.

Before, a farmer used to spend Rs 23,000 to grow potatoes in one vigha (a quarter acre) land and get only 28,000 out of it. McCain helped the farmers to reduce the expenditure by 35% and increased the income by 104%. The fixed price contract gave farmers the stability on their investment against the market fluctuations. McCain also benefited from the contract by securing the availability of the Potatoes.

mccain-aloo-tikkiToday more than 100 farmers in India are cultivating the potatoes for McCain in 1,500 acres of land in Gujarat.

In addition to the supply for McDonalds; McCain also started to make  its own fries – “Masala Fries” McCain also introduced “Alloo – tikki” a traditional Indian dish sweeping fast food potato market of India.

Conclusion:

This is a perfect example of a win-win situation, knowledge transfer, and knowledge management.

McCain almost swept the Indian market for potatoes and emerged as a food processing giant in Indian economy. On the other hand, potato farmers of the western state of Gujarat were able to increase their life standard by farming potatoes for McCain.

In December 2015, I visited Gujarat and saw the change in wealth for the farmers. Previously farmers who were using a farming tractor as a mode of transportation, now have sophisticated air conditioning cars!

This was possible because of Globalization, Canadian value of McCain – Sharing (not to be confused with American grabbing) and political will and support of government for economic development of poor people.

Thanks for reading!

~ Sam Solanki

solankis@uregina.ca

References:

1. http://www.mccain.com/company/socialresponsibility/Pages/default.aspx

2. http://web.ebscohost.com.rap.ocls.ca/bsi/search?vid=1&hid=7&sid=918b1cd0-88f6-4746-ad59-b46c3f9ab2e2%40sessionmgr4

3. http://www.lifecycleconstruction.net/mcdonalds-india-supply-chain/

4. http://www.financialexpress.com/printer/news/37760/

6. http://www.financialexpress.com/news/dynamix-forges-overseas-jv-bags-export-order/37760/0

7. http://buzz7.com/world/the-cremica-group-making-waves-in-food-service-industry.html

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