Exclusivity of Private Governance Structures in Agrofood Networks: Bayer and the Food Retailing and Processing Sector in India

Abstract

Since the 1980s power distribution in agrofood networks has changed in many countries in Africa, Latin-America, South Asia, and the postsocialist countries in Europe and Asia. In the course of economic liberalization, retail and wholesale trade as well as the food processing and agroscience sector were opened up to foreign investment. Within the frame of such liberalization many states gradually refrained from directly governing this sector and reregulated the trade in a way that gave private companies the possibility to implement new power structures. We analyze the so-called ‘Food Chain Partnership’ (FCP) program implemented by the transnational company Bayer in India as an example for private governance in agrofood networks. Bayer is advancing and coordinating relations between the food processing and retailing industry and farmers. We explore whether such private activity can substitute for the activities of state institutions in governing agrofood networks. As the case study will show, the FCP model is highly selective in terms of farmers, who can participate (criteria include minimum farm size, irrigation facility, literacy, agricultural practices, and mobile phones), the crops that are covered, and the information passed on to the farmers. This limits the potential of market-driven instruments like the FCP to replace the traditional trade system as they concentrate only on those regions and products which are promising most profit to the companies. The global production network approach builds the analytical framework of this paper.