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PURCHASE, New York (Reuters) - PepsiCo Inc, best known for its cola and Lays potato chips, is now setting its sights on chickpeas.
The company is teaming up with the U.S. Agency for International Development to boost the production of chickpeas in Ethiopia by working with small farmers.
The plan is then to help develop local businesses that use the crop -- and, at the same time, secure a supply of chickpeas for Sabra hummus, which PepsiCo owns together with Israel's Strauss Group Ltd.
And in concert with the World Food Programme, PepsiCo will also develop a chickpea-based food supplement to target malnourished children in Ethiopia. If a pilot involving a few thousand children were successful, the company would spend $1 million to buy the product and distribute it for one year to up to 40,000 children, many of whom are suffering from the effects of famine.
"What's different about this is that the need on the humanitarian side is dovetailing so perfectly with the business plan on the corporate side," said Nancy Roman, the World Food Programme's director for private partnerships.
PepsiCo is unveiling the plan on Wednesday at the Clinton Global Initiative, former U.S. President Bill Clinton's annual philanthropic summit in New York.
PepsiCo also hopes to use the chickpeas to make a food product it can sell in the Ethiopian market, where it currently has a small presence selling locally produced drinks and some snacks imported from Egypt. It also would like to boost the amount of chickpeas it sources from Ethiopia, for use in its hummus spreads or for other potential products in the future.
Derek Yach, senior vice president of global health and agriculture policy for PepsiCo, emphasized the business case for the project along with the humanitarian case.
"You have to have a profit margin if it is going to be sustained," Yach said in an interview at PepsiCo headquarters in a New York suburb. "This is not the Ethiopia one normally thinks of. We are coming in early, when opportunities are at their maximum and government is supportive of real change."
The International Monetary Fund expects Ethiopia -- the No. 6 producer of chickpeas globally in 2008, the latest year for which figures are available -- to show economic growth of about 7.5 percent this year, albeit off a low base.
Its chickpea production, currently around 287,000 tonnes per year, is much lower than it could be, Yach said, as primitive farming methods result in poor yields.
Pepsi said it hopes to more than double farmer yields and predicts a possible doubling of Ethiopian chickpea exports by 2014, based on improved farming practices and seed varieties, which PepsiCo scientists are helping to develop. The first chickpeas planted in a test will be harvested in January 2012.
The company expects to use about 6,500 tonnes of chickpeas in 2012, and sees that growing to almost 12,000 tonnes in 2014. Yach said the need could be bigger if PepsiCo introduced new products that use chickpeas. The company expects to be able to source at least 10 percent of its supply from Ethiopia.
Aside from the Middle Eastern chickpea spreads sold by Sabra, the "berry veggie" and "mango veggie" versions of PepsiCo's Naked juice smoothies are made with chickpeas.
The company said in March 2010 that it would aim to triple the amount of revenue derived from "good-for-you" products such as Tropicana orange juice and Quaker oatmeal to $30 billion by 2020, up from roughly $10 billion at the time.
Reporting by Martinne Geller, editing by Gerald E. McCormick