Food Prices
June 27, 2013
President Obama failed to push climate change legislation in his first term, though there were a lot of expectations that some sort of carbon tax or […]
March 12, 2013
International Business After globalization becoming the buzzword in today’s world, international business has given a new shape and has also created a new dimension in the […]
March 4, 2013
About Wrigleys The William Wrigley Jr. Company needs no introduction of its own. Every day we come across several of the products manufactured and marketed by […]
July 16, 2012
Energy Efficiency Rankings In an unsurprising ranking by International Energy Efficiency Scorecard developed by ACEEE, US and Canada have bottom ranks in Energy Efficiency along with […]
May 14, 2012
Globalization refers to the increase in international trade & commerce amongst the different countries, through the reduction of geographic barriers. With the rapid innovation of smart […]
February 1, 2012
In these days of economic crises it has become unsexy to talk about Global Warming and Climate Change which pose a much greater threat to mankind. The Western countries have turned apathetic towards climate change with most like Canada, USA and UK showing shocking attitude towards Global Warming . The reason is that rich countries can throw resources at ameliorating the affects of climate change . The poor countries have little in terms of resources to either slowdown climate change or change the attitude of the richer countries. South Asia and Africa two of the poorest regions in the world will face the worst of the global warming affects. A new study has indicated that India's wheat yield could be halved to 40 million tons a year from the current 80 million tons due to rising temperature. The reason is that wheat yields will come down as temperature goes up by 2 degrees centigrade or more.
January 11, 2012
The rising income inequality throughout the world is sowing seeds of dystopia according to a report released by World Economic Forum. The biggest risk amongst the 50 risks listed is the increasing wealth gap between individuals in all countries. Gini's coefficient has risen in most countries developing as well as developed and this has a strong correlation to globalization. The global artitrage of labor has tilted the scales towards capital and increasingly made wages become stagnant. Developing countries with weak institutions are showing income inequality in horrific forms with $2 billion homes existing in the middle of millions surviving on less than $2 day. US has already seen the OWS movement as a result of this increasing income gap between the have and have nots. Middle Eastern countries have also seen revolutions brought upon by the massive riches of the elite compared to the rising poverty of the poor and even the middle classes.
January 3, 2012
Income Inequality is a Theme that is getting played across the world in developing as well as developed nations.Most of the turmoil in 2011 in the Middle East and the Occupy Wall Street Movement can be attributed to the growing Income Gap between the Have and Have -Nots.The Great Recession in 2008 can also be looked upon as a fallout of this.Gini's Coefficient which measures the income distribution gap has shown continued deterioration all over the world.The Middle Class is shrinking and growing poor by the day and it is not only the Poor Class that is getting affected.
January 2, 2012
2011 has been a bad year for emerging markets with high inflation,slowing growth and rising interest rates.Most of the problems are a consequence of the 2008 Financial Crisis when emerging countries increasing fiscal spending and reduced interest rates to reduce the affect of the Lehman crisis.Now the Bill is coming due with slowing growth and higher inflation.Most of the BRIC countries have heavily increased interest rates in 2011 to slow inflation as their poor population can ill afford the damaging effect of inflation.
Brazil has reduced its 2012 Budget by $32 billion to control inflation drawing howls of protest from politicians who always want to spend more as if money grows on trees.The country has reined in spending in both 2011 and 2012 to reduce the fiscal deficit and spend more money on productive sectors like infra.
October 11, 2011
Sugar is produced by pressing out the juice from sugarcane & then boiling it into crystals. This process was developed in India around 500 BC. The sugarcane cultivation is believed to have originated in New Guinea, and was spread along routes to Southeast Asia and India. Brazil and India are the largest producer and producer-consumer of sugar respectively. India is the second largest producer of sugarcane next to Brazil. In 2008, the production in Brazil was 645,300,182 tonnes & India was 348,187,900 tonnes. India contributes about 12% of world sugar production and has annual sugar production capacity of 23 million tonnes with a total investment of $11000 million. Presently, about 4 million hectares of land is under sugarcane production. The average yield is around 70 tonnes per hectare. India now has 453 working sugar factories with an average capacity of 3500 TCD (tonnes crushed per day). There has been an increase in the volume of free international trade in sugar, which provides an excellent means of increasing exports. In India over 45 million tonnes of sugar is being traded each year. Sugar production is not the only business of the Indian industry, but it also has a diversified business of power generation and ethanol production. The country has been producing about 1.7 billion liters of alcohol utilizing 75-80% molasses, which is a by-product of sugar production in the country. In 1993, Molasses and alcohol-based industries were decontrolled, but currently are being controlled by state governments.
July 6, 2011
The Indian food processing industry can be broadly divided into segments like dairy products, meat, poultry & fishes, processed fruits & vegetables, cereals, beverages & confectionery. The demand of processed food is rapidly increasing in the Indian scenario. India is one of the fastest growing economies in the world, this growth is driving income levels to unprecedented levels across all strata’s of society, which has led to high demand of food & a change in the eating habits of people. Also processed food is convenient food, that one can easily have in today's busy life. The increase in the number of retail food outlets & shopping malls are also a major reason why there has been a gradual shift from the traditionally cooked food to packaged food. The Indian food processing industry was the seventh largest sector attracting foreign direct investment. The beverage industry is a major driver of economic growth. A National Council of Applied Economic Research (NCAER) study on the carbonated soft-drink industry indicates that this industry has an output multiplier effect of 2.1. This means that if one unit of output of beverage is increased, the direct and indirect effect on the economy will be twice of that.Note most of the FMCG Companies in India are involved in Food Processing as well or are expanding into that area given the massive growth in the future.
June 30, 2011
China has increased the tax exemption limits for urban workers by 80% to $540 a month as soaring inflation and rising income inequalities has reached dangerous levels.Note increasing corruption and vast income inequalities have led to increasing incidences of violence and riots in the country.The prices of essential commodities like food and fuel have been increasing rapidly like in the rest of the developing world.Despite the central bank increasing interest rates,the prices have hardly moderated.Pork prices have touched new records making the life of the poorest quite unbearable.Note Gini's coefficient in China has reached 0.47 which is very high.While economic prosperity has increased,a vast section of the population remains poor.This is apparent in the fact that only 24 million workers out of 300 million urban workers earn more than $6500 per year .
June 1, 2011
The Government on India is proposing to introduce mandatory blending of ethanol in transport fuels to the extend of 5%.This means that the major transport fuel providers like IOC,BPCL and other will have to ensure that 5% of the petrol they sell will be mixed with 5% ethanol.The US is the biggest user of mandatory blending which has recently come under harsh criticism.The reasons given for supporting blending is that it reduces the requirements of fossil fuels which leads to lower carbon emissions,improves energy security and reduces pollution.However none of these advantages are seen in real life.In fact it has the massively negative consequence of increasing food prices which leads to the starvation of the poor globally.The Corn Industry in the USA has become a major lobbying force which makes the US government persist with the policy resulting in sharp increase in corn prices to the detriment of consumers.
May 3, 2011
Grantham has made a famous call that the rise in commodities is not a cyclical phenomenon but a secular long term one.He says that the rise in commodity prices is different from the past.Note Grantham has done an extensive study of bubbles and is one of the leading minds in the investment community.While every time in the past,the statement "this time is different" has led to a crash,Grantham's call cannot be taken lightly.He says that the rise in population,shortage of resources,the growing consumption power of massive chunks of prosperous citizens in India and China will lead to a continued surge.Note commodity prices have declined secularly in the last century and since 2000 have managed to erase all their losses to form new peaks.Grantham also says there is a possibility of a massive short term decline which will give a historic opportunity to load on commodities.Jim Rogers is the most famous commodity bull and now Grantham has joined him.Note famous hedge fund managers have already made huge bets on gold and are winning currently.Note CIA and German Military are already on the record for calling Peak Oil which would lead to a drastic fall in living conditions worldwide as the global growth fueled by cheap fossil fuels sees an end
May 3, 2011
India's Central Bank has been steadily raising interest rates in 25 bps increments as inflation has raged at more the double digits for more than a year.However it has not stopped the inflation from coming down as high commodity prices keep the inflation at 9% which is much more than the target of 3-5% inflation rates.With Bernake money printing fueling oil and food prices globally,it looked unlikely that RBI's timid measure would bring the inflation down anytime soon.So this time the Central Bank has thrown the kitchen sink at the problem raising the interest rates by 50 bps to 7.25% which is much more than what the market was expecting.The Central Bank also raised the interest rate on savings rate from 3.25% to 4% which was not expected by anyone.Note the low interest rate on savings bank had been a huge money spinner to top Indian banks which have large deposits of this low interest rate savings deposits.
April 10, 2011
India's Income Disparity is not growing among the rich and the very poor but also widening between its super rich and middle classes.Note India's Middle Class is not as big as a percentage of the population in the developed countries and its per capita income is also much lower.However India's Middle Class is growing as the economy grows by 8-9% and despite the lopsided economic growth some of the massive wealth that is being generated does trickle to the middle class.However those gains are being eroded by a Persistent Double Digit inflation which has entrenched itself.Despite periodic interest rate increases,India's Central Bank has miserably failed on the Inflation Front in the last couple of years.First it was having too loose a policy to overcome the effects of the global eco crisis in the aftermath of the Lehman collapse.Now it was too slow to raise rates as commodity price increased dramatically.
April 8, 2011
USA has been one of the worst countries in the world in regards to climate change and global warming issues.While countries have pledged to cut down […]
March 10, 2011
Income Inequality in India has been rising at an unprecedented rate in the last couple of decades.The opening of the Indian economy has led to even starker levels of income disparity among the very rich and majority of the Indian citizens.The Crushing Income Disparity is seen in the world's most expensive $2 Billion House set amongst 42% of the world's hungry children.The latest Forbes report lists 50 Indian Dollar Billionaires with 2 in the Top 10.A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees (approximately US$0.50 nominal; US$2 PPP) per day.The living conditions of the majority have already fallen further with food price inflation between 10-20%.
January 25, 2011
Inflation in India is raging at double digit levels as it is in most of the other countries in Asia.While Food Inflation has been hogging the headlines as Onion Prices become costlier than the daily earnings of the majority of Indians,other commodities are becoming expensive as well.Tyre Companies in India have seen their margins and profits collapse on the back of higher natural rubber prices.This is despite the explosive growth being seen in the automobile sector in India.JK Tyres and Ceat reported their quarter results and both were equally bad with stock prices taking a major hit.Consumer giant HLL which is a subsidiary of the Unilever Group and the largest consumer company in India also saw its stock price tumble.HLL too has been hurt by higher input commodity costs.While volume growth was excellent,the margins got compressed as input prices increased faster than output prices.Note the Indian stock market has fallen more than 10% of its peak even as developed markets are seeing higher peaks.Other Asian markets like Indonesia,Thailand and others too have fallen as high inflation hurts the prospects of companies here.The Central Bank in India RBI raised the intrest rates by 25 bps which some consider as too low.Like other central banks in Asia,India too seems helpless to fight the inflationary pressures brought upon by the higher commodity prices fueled by Bernake money printing.
December 21, 2010
India's Agriculture Sector account for only a miniscule percentage of GDP and growth,however most of India's population continues to depend on it.Despite rapid growth of the services and industries sector as globalization leads to assimilation of foreign technology and practises,agriculture continues to live in medieval times. India's Food Supply Chain leads to massive waster and inefficiency with 30% of India's vegetable and fruit produce being wasted.This is criminal in a country where most of the children go hungry.However corporatization has been repelled by vested interests leading to a the sorry situation.Food inflation has seen double digits since last year and despite a better harvest year,some food prices are touching the stratosphere.The inadequate supply chain leads to periodic shortages of key food items used by Indian as part of the daily diet.
November 13, 2010
Solar PV Technology have made a huge advance in the last 2-3 years leading to a demand explosion with more than 100% growth forecast this year.Crystalline PV Technology as well as Thin Film Technology like CIGs and CdTe have reduced their costs drastically.While Solar PV still requires generous government subsidies for their growth,grid parity has come very close.Solar PV Technology has become economically competitive in parts of Italy where a unique combination of high electricity rates and sunshine have made Solar PV Technology very attractive.Costs are being reduced at more than 10% per year which would make Solar PV competitive in 2-3 years in most parts of the world.However mainstream and reputed forecasters and companies like Boston Consulting Group remain blind and ignorant to this.BCG in a recent report has said that biofuels and Concentrated Solar Thermal (CSP) Technology will become competitive.I have issues with both of these technologies.
October 21, 2010
Food Prices are rising at an incredible pace around the world due to a combination of money printing by the USA and Bad Weather in Russia and Asia.The major cause of the Food Price Increase has been the global rush towards investing in commodities as currencies get devalued by countries eager to increase exports in a zero sum game.Wheat Prices were the first to rise after Russia stopped exports leading to the sharpest gain in the last 2 years.Corn prices have increased with increased demand from ethanol,bad harvests and relentless QE.Rice and Soybean prices were bound to rise in empathy with other grain prices.Note these two food varieties are substitutes of corn and wheat.So it makes sense for speculators and consumers to increase the demand for these 2 commodities as well.
Rice Price Increase after Flooding in Biggest Exporters
Rice Prices have shown a record increase after floods sharply reduced output in the 2 main exporter Vietnam and Thailand.With inventories being sharply cut and harvests going down it is not much of a surprise.Rice importing countries like Philippines will be badly hit as their per capita income is quite low and they have a large poor population highly sensitive to increasing food prices.Expect 2011 to be a Hunger Year for a large chunk of the world's population thanks to Ben Bernake and print his way to prosperity team.
October 13, 2010
42% of World's Hungry Children Live in India
In contrast to the exponential growth of wealth of India's upper classes,the poor continue to eke out a miserable existence mired in hunger and constantly facing starvation.Globalization of Agriculture has further increased Food Price Inflation making their positive even more precarious.According to International Food Policy Research Institute (IFPRI),India slipped 2 places to be ranked in the 67th place amongst 88 nations in the Hunger Index.Despite a stellar economic performance over the last 20 years or so and sharp rise in per capita GDP,India remains one of the poorest nations on earth.It ranks below even Nepal,Pakistan,Sudan with 48% of India's children stunted due to lack of food.The report is a strong indictment of growth policies which has made its children mostly hungry and stunted.Other strongly growing economies like Brazil and China have performed much better than India.Time for India's government to radically change the structure of India's economic growth.Despite promotion of policies like NREGA and midday meals for poor,rank corruption and leakage has led to India being the hungriest nation on earth.
October 12, 2010
The US Federal Reserve is hell bent on preventing deflation through whatever means possible.It has raised the prospect of 2008 when Commodities all over the world raced to new highs due to cuts in Interest Rates.2010 has already seen its first food riots in Africa and 2011 should more of the same.Every Commodity be it Gold,Silver,Coffee,Sugar,Rice,Wheat is jumping higher as the common denominator Dollar gets Debased by US Policies.While the stupidness of the Monetary Easing is a big exhaustive issue in itself,the prospect of higher commodity prices is a huge danger.It is already fueling dangerous equity bubbles in the emerging markets of Asia.Currency Wars are already starting to happen on a small scale as Crazy Monetary Policies take hold in the US.Food Prices are a very major problem in poor countries unlike developed countries where food forms only a small part of the daily expenditure.With Food forming 50-80% of the expenditure of poor citizens,a 50% increase in Prices immediately leads to hunger and starvation.However don't think the US Fed concerns itself with such trivial issues.
September 10, 2010
Inflation continues to rule in the double digits as price of essential food commodities touches new highs.The Federal Government has stopped doing anything promising lower inflation figures in the next months thanks to lower base effect.However absolute prices as compared to 2 years are up almost 30-50%.The High Inflation has not affected the elite Indian classes as Stock Market make new highs and Industry maintains high growth rates.Naxalism is the direct outcome of this huge income inequality which is increasing every day.With no corrective measures being taken except some photo-ops by India's oppurtunistic politicians except internal strife to Increase in India.
September 7, 2010
India has recently seen 2 Nationwide Strikes in the past month on the issue of Inflation and Food Insecurity.These Strikes have been called by Opposition Parties […]
September 5, 2010
The recent weather catastrophe in different parts of the world has pushed up the food prices.The Russian Wheat Export Ban imposed earlier had exacerbated the situation […]
August 10, 2010
Extreme Weather Conditions has increased in frequency this decade.In fact this decade is the hottest decade in records with temperatures making new records every year.While nothing can be said with a 100% possibility that it is due to Global Warming,the evidence is certainly pointing in that direction.
August 3, 2010
A Record Drought in Russia and Worst Floods in China since 1998 are driving up wheat and rice prices up more steeply than in the commodity […]