> Would you recommend any amendment to the law? If not, what would be your strategic business response if you were a member of the private sector?- Please recommend having less taxes on healthy food and higher taxes on unhealthy food.-Have a regulted food program at school level.-Make modification to the advertisement regulations.-Programs to aware people of unhealthy food.
On Friday, May 24, 2013, Peru’s President, Ollanta Humala Tasso, had one week left to decide whether he would finally sign into law a bill that had fueled a heated debate among the nation’s public and private sectors for nearly 18 months. Commonly known as the “Junk Food Act,” the proposal stirred as many passions as the country’s cuisine, which itself had risen to global pro- minence, alongside Peru’s steady economic growth for over a decade. The law’s enactment would force thousands of Peruvian kiosks and school cafeterias to change their offerings, doing away with processed foods, while advertising of these goods to children would require revision. Many feared –while others hoped– that Humala would sign the bill. Producers, retailers, and ad- vertisers had attacked the proposal in the media, and leading members of the press, including the owner of the country’s largest newspaper and TV news channel, sided with opponents and contri- buted editorials criticizing the bill, citing the infringement of civil liberties and even the potential loss of the right to broadcast the 2014 World Cup hosted by Brazil. Opposition politicians also This case was prepared by Professors Alonso Villarán and Matthew Bird, from the Universidad del Pacifico (Perú) – Graduate School. Teaching cases are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, contact
[email protected]. Copyright © 2014 Universidad del Pacífico (Perú) – Graduate School. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means --electronic, mechanical, photocopying, recording, or otherwise-- wi- thout the permission of the copyright holder. Case Food for Thought 27/04/2014 ISSN: 2409 - 5753 AUTHORSHIP CREDITS UP0007Case: Version: The “Junk Food” Act in Peru For the exclusive use of M. SYED, 2020. This document is authorized for use only by MUKHTAR ALI NAQVI SYED in BUOL 537 Legal, Ethical, & Social Environment-1-1 taught by Daniel Kanyam, University of the Cumberlands from Dec 2019 to Jun 2020. p. 2 UP0007Case: joined in the criticism. The bill was construed as yet another blunder or whim from Congress, the most disreputable institution according to public opinion, with a 77% disapproval rate in early 2013.1 Supporters –including some industry representatives as well as members from Humala’s party– defended the bill, claiming they were working for the good of society and were seeking to follow recommendations set out by the World Health Organization (WHO) and already adopted by other countries in the region and around the globe. Multiple stakeholders –producers, retailers, advertisers, trade associations, the press, politicians, and the government– spent the weekend with unanswered questions on their minds (see Exhi- bit 1). On Monday, May 27, they would need to revisit their positions, clarifying their arguments and assessing the bill’s legal and ethical ramifications, in order to prepare a strategic response to Humala’s decision, uncertain as they were of whether he would sign the bill by Friday, May 31. Many would even begin to rethink their positions over the weekend. PerU’S SeTTING After decades of instability, culminating in a bloody guerrilla war and crippling hyperinflation, Peru found stability and became a model of economic growth in Latin America. At the same time, the country’s cuisine seized the spotlight in the international culinary scene, earning praise from Ferrán Adrià and other leading chefs for its richness and ingenuity. Politics Peru’s political history was a paradigmatic example of what some call a “political pendulum.” Since its independence from Spain in 1821, 12 constitutions –or one roughly every 16 years– had seen the light of day. This instability was characterized in the 20th century by oscillations between short periods of democratic rule interrupted by authoritarian regimes. The country’s current constitution continued to suffer from legitimacy issues. In 1992, Alberto Fu- jimori –a democratically-elected, right-wing president– closed Congress in order to reformulate political rules with a new constitution. Despite efforts to legitimize a new constitution via demo- cratic means, the subsequent democratically-elected presidents continued to adhere to the docu- ment, including Ollanta Humala, who had once called for a return to the previous constitution. Meanwhile, Peru’s political left also struggled with its own authoritarian past. In 1968, a leftist military dictatorship led by General Juan Velasco seized power and sought to redistribute re- sources and nationalize industries. Twelve years later, on the day of the first democratic election since the military had taken over, marking the transition from military to civilian rule, an unk- 1 «77,4 % de peruanos desaprueba la gestión del Congreso», LaRepublica.pe, accessed on September 12, 2013, http://www.larepublica.pe/09- 01-2013/774-de-peruanos-desaprueba-la-gestion-del-congreso. For the exclusive use of M. SYED, 2020. This document is authorized for use only by MUKHTAR ALI NAQVI SYED in BUOL 537 Legal, Ethical, & Social Environment-1-1 taught by Daniel Kanyam, University of the Cumberlands from Dec 2019 to Jun 2020. p. 3 UP0007Case: nown terrorist group called the Shining Path bombed a ballot box in the Peruvian Andes, initia- ting nearly 20 years of a guerrilla warfare. The country fell into a dirty war, cornering civilians between the military and terrorist groups, with a death toll of 70,000 between 1980 and 2000. A former military officer, Ollanta Humala came of age against this backdrop. At the beginning of his political career, he was viewed as a leftist who sought to vindicate Velasco’s dictatorship and sympathized with Venezuela’s Hugo Chávez. After an initial attempt to become president in 2006, he was elected in 2011 in a run-off against Keiko Fujimori (Alberto Fujimori’s daughter). Analysts concurred that Humala’s victory came as a result of a strong opposition to Fujimori in certain circles and the moderation of his leftist proposals. Once in office, Humala’s policies shif- ted even further to the right to appease business interests, yet some right-wing analysts conti- nued to fear that he would return to his former politics and install a leftist authoritarian regime. Peru’s Economy Just as Peru had both right- and left-wing dictatorships, the same was true of its associated eco- nomic policies. In the 1970s, Velasco implemented property reforms and nationalized industrial and agricultural sectors. These measures remained largely in place in the 1980s, and some extended well into the late 1980s under Alan García, who deepened the economic crisis when he sought to nationalize the banking business. As his administration came to an end, the nation succumbed to hyperinfla- tion and crippling political violence. Economic recovery began under Fujimori, who implemented a macroeconomic shock program to stabilize prices, with hyperinflation rising higher. The 1993 constitution was liberal in the classic macroeconomic sense and served as a basis for a series of free-market policies that remained with successive governments. With the return of democracy in 2001, Peru’s economy started an unparalleled period of growth that, according to the World Bank, reduced poverty from 58.7% in 2007 to 27.8% in 2011. Over the preceding decade, the country’s cumulative growth rate was the highest in South America, second only to Panama in Latin America. Gastronomy Economic growth and democratization set the stage for another phenomenon: Peru’s gastrono- mic revolution began once the country grew more stable. Peruvian consumers had a rich culinary heritage and liked to snack. The country’s cuisine had risen to international renown, partly as a result of the work of celebrity chef and industry leader, Gaston Acurio, who advocated a development strategy based on the internationalization of Peru- vian food. Flavorful dishes resulted from a unique combination of cooking techniques from the Andes, Spain, Africa, Italy, China, and Japan with local ingredients, including peppers, seafood For the exclusive use of M. SYED, 2020. This document is authorized for use only by MUKHTAR ALI NAQVI SYED in BUOL 537 Legal, Ethical, & Social Environment-1-1 taught by Daniel Kanyam, University of the Cumberlands from Dec 2019 to Jun 2020. p. 4 UP0007Case: from the world’s richest marine ecosystem, and thousands of varieties of potatoes, corns, fruits and vegetables in the Andes and the Amazon. The outcome was a rich culinary heritage and a demanding national palate. If the rest of the globe learned about the potential of Peruvian food, Acurio reasoned, then demand would grow for products found only in Peru. To materialize this vision, Acurio sought to recreate the value chain from field to kitchen to table. He hosted popular television shows, started cooking schools, opened top-rated restaurants in South America, Eu- rope and the United States, and founded one of the world’s largest culinary festivals –Mistura. An important initiative Acurio supported was the launch of “Marca Perú” or Peru brand. Acurio served as an ambassador for the brand, which was intended to re-introduce the country to global audiences, thus spurring tourism as well as Peruvian exports. Peru’s cuisine would drive both: the country was a culinary destination, and its food was exportable. Acurio even helped turn Pe- ruvian food into a metaphor for a new national identity: a mix of diverse ingredients that come together to create unique Peruvian flavors –hence the title of the annual food festival, “Mistura” (meaning “mixture”). Finally, Acurio also championed the defense of the country’s biodiversity, including leading an opposition against an attempt during Alan García’s second administration to allow for the introduction of genetically-modified seeds. It was against this political, economic, and gastronomic backdrop that the debate over Peru’s Junk Food Act unfolded. A ShorT hISTory of PerU’S JUNk food ACT In 2010, the World Health Organization (WHO) published global recommendations for the mar- keting of foods and non-alcoholic beverages to children (see exhibit 2). A handful of countries had already taken measures prior to the release, while others, such as Peru, followed suit. The public debate over processed foods in Peru and their possible regulation started in January 2012, when a column by journalist Augusto Álvarez Rodrich was published in the center-left daily La República, criticizing the Congress’s new bill as a “junk food” tax: First, there is the invasion of privacy on something as sensitive as the food people eat (…) Second, making a decision on where to draw the line that separates healthy food from junk food is very difficult and arbitrary (…) Also, in