The plot to cripple the Bharatiya kamadhenu

To focus your attention on the terrible fate that threatens our indigenous breeds of cow and buffalo, here are the connections, which are now more than 45 years old, between the period that led to Operation Flood (or ‘white revolution’ as it was also called) and with it the campaign to increase the supply of milk in India by steadily weakening the desi gou, and the situation we have today of a National Dairy Support Project, which continues to do the same.

A little history. At the end of the 1960s, surplus dairy products from what was then the European Community were sent to India through the World Food Programme (WFP). This dairy produce was sold to cooperative and state dairies in Mumbai, Kolkata, Delhi and Chennai, ‘reconstituted’ with local milk and sold to city consumers. This project was known as Flood I and was to end in 1975. It continued until 1981.

From the Chapter on Agriculture and Food Management (page 181), the Economic Survey 2016-17, Volume 2, uses language like “terminal value of assets, in this case the no-longer-productive livestock” and warns about social (that is, the Hindu cultural view) policies which “drive this terminal value precipitously down” affecting “private returns… in a manner that could make livestock farming less proftable”. The Finance Ministry and India’s macro-economic planners see our gou and buffalo only as milk producers or sources of meat, and calculate only what it costs to keep them producing or profitable.

Three years earlier in 1978 Flood II had begun. This extended Flood I to the whole country, and was financed by a loan from the World Bank’s International Development Association (IDA) and direct aid from the European Community. Flood II was to conclude in 1985 but was extended until 1987.
In the late 1980s this nearly twenty-year long programme was considered to have:
* improved the living conditions of 10 million families of milk producers by adding 13 million litres of milk per day to the cooperative dairy industry’s processing capacity
* created a milk distribution network covering 142 cities with more than 100,000 inhabitants
* created the infrastructure needed to carry out programmes to promote dairy production, such as artificial insemination, vaccine production, the manufacture of compound foodstuffs
* raised daily milk consumption to 180 grams per inhabitant “to obtain a nutritionally balanced diet”

Now to our recent past. On 15 March 2012 the World Bank approved a National Dairy Support Project (project number P107648) for India. The project began on 22 June 2012, was reviewed in April 2015, had an original closing date of 31 December 2017 which has been revised now to 29 November 2019. It has three components which are: ‘Productivity Enhancement’ (US$193.80 million), ‘Milk Collection and Bulking’ (US$77.30 million) and ‘Project Management and Learning’ (US$22.00 million).

The World Bank’s description of project number P107648 is:
“The National Dairy Support Project (NDSP) which supports India’s National Dairy Plan, Phase I (NDP-I), aims to cover about 40,000 villages across 18 participating dairying states with investments in Productivity Enhancement (e.g., high genetic merit bulls, disease-free semen production, doorstep artificial insemination services, ration balancing program, fodder development) and Milk Collection and Bulking (e.g., village-level infrastructure such as bulk milk cooling units).

Brazenly ‘free market’-oriented in its advice and advocacy, Niti Aayog has mentioned only breeding in its section on livestock, in the policy paper on ‘Doubling Farmers’ Income: Rationale, Strategy, Prospects and Action Plan’, March 2017. The usual complaint of low milk productivity, growth in milk output needed, better feed and nutrition for animals are found in this think-tank’s MNC-directed view.

The description continues: “At its inception, this eight-year project was expected to directly benefit about 1.7 million rural milk producing households through its interventions, a large majority of whom are small holder producers with six animals or less.
“Cumulatively till date, 158 End Implementing Agencies – EIAs (e.g., milk unions, milk federations, dairy producer companies and livestock development boards) are implementing 364 sub-projects across 18 states with a total outlay of Rs. 1904 Crores (USD 292 million), out of which Rs. 318 Crores (USD 48.9 million) are contributed by the EIAs. These participating states account for nearly 95 per cent of India’s milk production, over 87 per cent of the breedable cattle and buffalo population and 98 per cent of the country’s fodder resources. To date, over 2.7 million milk producers have benefited from overall NDP interventions in breed improvement, animal nutrition and bulk milk collection.”

For each of the years 2013 to 2016, the National Dairy Support Project has required the import of “frozen in-vivo produced” and “pure bred” Holstein, Friesian and Jersey bulls. This is to continue for 2017 to 2019 so that the 100 million doses “target” of the artificial insemination programme is reached.

This is the brief outline and background of the government-managed, World Bank-directed programme to weaken generation after generation of our desi gou through a machiavellian plan of cross-breeding them with foreign cattle (Holstein, Friesian and Jersey), so that the gou-based economy of Bharat will be destroyed and replaced by a dairy products industry designed and controlled by multinationals that include Nestlé, Danone, Lactalis, FrieslandCampina, Fonterra, Dean Foods, Unilever, Kraft Heinz, Schreiber Foods and 11 others. It will also be partly controlled by Amul, Mother Dairy, Kwality, Hatsun Agro, Heritage Foods, VRS Foods, Anik Industries, Parag Milk Foods, Creamline Dairy Products and others who greedily want their share of what is calculated to be a market sector worth more than Rs 80,000 crore. There is no desi gou, nor the reverence to kamadhenu. There are only products, consumers and an arsenal of sickening technology and breeding programmes that if not stopped now will result in the remaining 39 desi gou breeds losing their desi qualities.

It is this that lies behind the Rashtriya Gokul Mission that was launched in December 2014, the National Programme for Bovine Breeding, the National Mission on Bovine Productivity that was launched in November 2016 (which includes the Pashu Sanjivni for identification of animals in milk using UID, embryo transfer technology labs with IVF facilities, the e-pashu haat portal, the National Bovine Genomic Centre for Indigenous Breeds), the National Kamdhenu Breeding Centres (one in Andhra Pradesh and another in Madhya Pradesh), and the three subordinate organisations: Central Cattle Breeding Farms, Central Herd Registration Scheme, Central Frozen Semen Production and Training Institute.

This is the horrifying extent of what has been done since 2012, the methods for which were introduced over 45 years ago, and which are now frighteningly augmented by the unchecked and unregulated animal genomics.

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Eating out, or India’s exorbitant world food bill

(This article was published by Vijayvaani in June 2017.)

In the Konkan, small electrically operated oil presses that ingest limited amounts of dried copra to expel oil for households to cook with are common. These can press enough in a day (electricity supply permitting) to fill several dozen glass bottles with coconut oil. As such a filled bottle of freshly pressed coconut oil usually sells for Rs 130 to Rs 160, the price per litre may be estimated at about Rs 180. This price compares quite well with the price range of Rs 190 to Rs 220 that is paid by the household buyer for a litre of branded coconut oil.

But it compares not at all with the trade price of an imported shipment of sunflower-seed or safflower oil which in 2016 was imported into India at an average price of just under Rs 60 per kilogram. India imported 1.53 million tons of sunflower-seed or safflower oil last year, and the Rs 9,080 crore spent on it pushed the total amount spent on imported ‘edible’ oils to beyond the Rs 70,000 crore mark. [The cultivation of oilseeds, like the cultivation of all ‘commercial’ crops that are not food staples, is a matter of crop choice, for which see ‘Why our kisans must make sustainable crop choices’.]

Palm oil

Both by weight and by the total amount paid for it, palm oil is the most visible imported food commodity in India today, and has been for the last five years. In 2016 India imported 8.25 million tons of palm oil (the supplying countries being Malaysia and Indonesia) for which the importing agencies paid Rs 38,900 crore. This immense annual flood of a sort of oil that ought never to have touched our shores let alone ooze into our home kitchens and canteens came at less than Rs 48 per kilogram last year. For this reason – the absurdly low price per landed ton of Malaysian and Indonesian palm oil, a low price that hides from the Indian consumer the deforestation devastation and species extinction in those countries, new cooking oil blends are being shoved into the foods market every other month by the edible oils industry.

Biomedical research which is independent and not either funded by or influenced by the oil palm industry and edible oil traders (which means the world’s largest commodity trading firms) indicates that palm oil, which is high in saturated fat and low in polyunsaturated fat, leads to heart disease. It is considered less harmful than partially hydrogenated vegetable oil, but that is no redemption, for palm oil can under no circumstance be compared to our traditional cooking oils, coconut included.

The colonisation of the Indian kitchen and of the processed foods industry by palm oil has taken place only on the basis of landed price per ton, and that is why this oleaginous menace is now found in many everyday products such as biscuits and crackers and cookies (which school children develop addictions for), snack chips, shampoos, skin care and beauty products, and even pet food. [For a longer discussion on this problem see ‘Let them eat biscuits’ and ‘Cornflakes and oats invasion, 10 rupees at a time’.]

Soya oil

The next largest oily invasion is that of soyabean oil, of which 3.89 million tons (mt) was imported by India in 2016 (3.5 mt in 2015, 2.1 mt in 2014). Most of this was of Argentinian origin, just over 3 mt, and because more than 98% of the soya that is grown in Argentina is genetically modified (GM) the millions of tons of soyabean oil India has imported from that country has been used, blended, fractionated, caked and consumed by humans and animals with no indication about its GM origin and with no tests whatsoever for its effects on human and animal health. In terms of rupees per landed kilogram of soyabean oil, at about Rs 53 it is between palm oil and sunflower-seed or safflower oil. These landed prices show dramatically the effect exporting countries’ subsidies for a commodity category have on the related industry (edible oils) in an importing country.

Just as the vast palm oil plantations in Malaysia and Indonesia have waxed luxuriant in place of the old growth tropical rainforests that were cut down, turning the wildlife of these forests into hapless refugees, swelling the lucrative and thoroughly illegal forest timber trade, so too have the vast soya plantations in Argentina immiserated that country’s rural population and caused hunger because of the soya monocrop that has replaced their food biodiversity and whose need for fertiliser grew (as it did with Bt cotton in India) instead of shrinking. Both these long-drawn out eco-social catastrophes have been prolonged because of the inability or unwillingness of Indian consumers and regulatory agencies to acknowledge the faraway effects of our considerable ‘demand’ for palm oil and soyabean oil.

Pulses

Second to palm oil by weight amongst food commodities imported by India is pulses, of which 6.18 mt were imported in 2016 for a price of Rs 27,700 crore. The annual import pattern of a decade of 4 mt to more than 6 mt of imported pulses last year are a large fraction again of the average 18.7 mt of pulses a year grown in India for the last five years (until 2016-17).

Between 2003-04 and 2009-10 the quantity of pulses (tur or arhar, gram, moong, urad, other kharif and rabi pulses) harvested scarcely changed, averaging 14.2 mt over this period. There was a jump in 2010-11 to 18.2 mt and then another plateau followed until 2015-16, with the average for those six years being 17.7 mt. With the 22.7 mt estimated total pulses harvest in 2016-17, we can hope that another plateau is being scaled, and indeed this pattern of a plateau of several years followed by a modest increase does tend to indicate the following of a more agro-ecological cultivation of pulses (these being in rainfed farms) than intensive cultivation dependent on fertiliser, pesticide and commercial seed. [This does have much to do with cultivation practices in different regions, for which read ‘Seeing the growers of our food and where they are’.]

Sugar

What is a new concern is an item that by weight is fourth on the list of food commodity items imported, and that is sucrose: India imported 2.11 mt in 2016, in 2015 it was 1.6 mt, in 2014 it was 1.37 mt. The country with the greatest consumption of sugar, estimated by the Ministry of Agriculture and the Department of Food and Public Distribution to be around 25 mt per year and growing disproportionately above the natural growth in the number of households, the processed and packaged food sector is the destination for the 2.11 mt of sucrose imported in 2016. A ready consumer for the sucrose is the commercial fruit juice sector, which bases its produce on a small amount of fruit pulp (vegetable extract is often added for bulk), water, chemical preservatives, food-like colours, artificial flavours and sweeteners.

The giant bulk of our sugarcane harvests distract from the ratios calculated – that a ton of raw sugar is obtained from 13 or 14 tons of cane. (This is usually net of jaggery / gur / khandsari and also net of molasses, which is used by distilleries and animal feed.) The mountains of bagasse – the crushed residue from which the sugar has been extracted – which remain are used in the paper and pulp industry, are an ingredient in cattle feed, and are used as biofuel. [Commercial crop or food crop is the question every cultivating household faces. See one district’s example in ‘Masses of cotton but mere scraps of vegetables’.]

Nuts

At 730,000 tons imported in 2016 and under the international trade category of ‘edible fruit and nuts’ is cashew nuts and Brazil nuts, on which Rs 8,345 crore was spent. A second important sub-category is ‘dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried’ and 350,000 tons were imported in 2016 (for Rs 6,204 crore), while 280,000 tons of apples, pears and quinces, 182,000 tons of ‘other nuts, fresh or dried’ were also imported.

Under 23 main categories food commodities, which include 167 sub-categories and more than 400 subsidiary categories, the bill for imported foods (including dairy and beverages) and food products that we purchased from all over the world in 2016 was USD 22,041 million (USD 22.04 billion), or at the average rupee-dollar exchange rate for 2016, Rs 152,088 crore! In 2015 this bill was USD 20,877 million which at the average annual rupee-dollar exchange rate for 2015 was Rs 137,794 crore. In 2014 this bill was USD 19,372 million which at the average annual rupee-dollar exchange rate for 2014 was Rs 123,015 crore.

Globalisation

These amounts are astronomical and underline the strength of globalisation’s thrall by which we are gripped, exerted upon us not only by the World Trade Organisation but also by the agreements that India has signed (or intends to, and demonstrates intent by importing) with regional trade blocs of the European Union, the OECD and ASEAN. The financial allocations to some of the largest central government programmes, and the budgetary sums of some of the biggest successes in the last three years shrink in comparison to the size of these purchases: the spectrum auction in 2015 brought in Rs 110,000 crore, the 2016-17 central government pensions budget of Rs 128,166 crore, the Rs 47,410 crore transferred so far as subsidy directly into accounts under the Direct Benefit Transfer for LPG consumer scheme, the expenditure of Rs 51,902 crore in 2016-17 on MGNREGA (the highest since its inception).

Bringing about stability in farmers’ incomes (let alone an increase), encouraging rural and peri-urban entrepreneurship based on traditional foods cultivated by agro-ecological methods, ensuring that consumers can find [read about the link with inflation in ‘The relative speeds of urban inflation’] and are assured by the quality of food staples which are free of GM ingredients, chemicals and additives, and the saving of enormous sums of money can all be had if we but reduce and then cut out entirely the wanton import of food and beverages, and processed and packaged food products.

Visiting our total household food budget

Twice as much over the 11 years until 2009-10, and three times as much over the 10 years until 2012-13. That has been the increase in rupee expenditure for this basket of foods.

The data is from the private final consumption series, calculated by the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation (MoSPI). The totals (left scale of the chart) is in thousand crore rupees.

In this chart I have shown the expenditure (in current rupees) for: Cereals and Bread, Pulses, Sugar and Gur, Oils and Oilseeds, Fruits and Vegetables, Milk and Milk Products, and Meat Egg and Fish. These totals also indicate the size in rupees of the food industry – but do not include the processed and packaged food industry.

The rise in consumption expenditure expressed in rupees is a money measure alone, and not a quantity or volume measure. We can see that the portion of milk and milk products in this group has gone up from just over 18% to 25% over 14 years, and the portion of meat, eggs and fish has gone up from just under 9% to 12.5% over the same period.

From 2006 the rising trend of expenditure on fruits and vegetables became steeper than the rising trend of cereals and bread. In 2005-06 the portion spent on fruit and vegetables in this group was just over 26% and that has risen slightly to 28% in 2012-13. In contrast for cereals and bread, the portion of 27.5% in 2005-06 has dropped to just over 21% in 2012-13.

Why the FAO food index is also an oil gauge

The revealing relationship between the FAO cereals price sub-index, the OPEC Reference Basket price of a barrel of crude oil, and the Baltic Dry Index (right scale).

The Food and Agriculture Organisation (FAO) of the UN has released its food price index data and commentary for 2014 October. This would be of considerable interest if only the index described the tendencies of food prices as experienced by consumers. Alas FAO’s food price index, as we have remarked upon several times in the past, pays no attention to the true cost of food staples.

Of what use is the FAO index, which is used as a reference by any government (and UN member state) to judge the value of its food exports (or to judge whether when importing grain it is paying what seems to be a fair price)? In the first place, the index (which itself is composed of separately calculated cereal, vegetable oil, dairy, meat and sugar indices) is not a consumer food price index.

The FAO food price index and its component sub-indices for the period 2012 January to 2014 October. A general downward trend, says the FAO, but this is the picture for international food trade and not consumer food retail price.

The FAO has not claimed it is, but neither has the agency clearly and plainly said it is not. It should, because financial and general interest media all over the world report the ups and downs of this index as if it portrays how local food prices move, and of course it does not.

The FAO index is used by international traders whose business it is to buy and sell food staples (including cereal, vegetable oil, pulses, dairy, meat and sugar). Perhaps some of them use it as a benchmark while others forecast trends from its sub-indices. It may be used to validate the accuracy of a particular kind of agricultural commodity futures index, and help judge whether an investment in the production of food, its movement, its stocking or its trade is going to be a good investment or not. As you can gather, it is not an index that consumers can use, because consumers are local and this is assuredly not.

What pulls the FAO food price index up, down or sideways? There are two important factors at work on the main index. One is the price of petroleum products, the other is the cost of moving grain (or any other food staple). You may assess the short or long-term trend of the food index against the current or projected price of Brent crude (preferred in Europe), West Texas Intermediate (preferred in the USA) or the OPEC reference price (preferred almost everywhere else).

The FAO food price index and its component sub-indices for 2014 till October. The downward trend of the last six months, which the FAO commentary is faintly praising, mirrors the trend of crude oil prices over the same period.

And then you will assess what the food price index describes against the cost of moving a large quantity of the agricultural commodity to be traded across an ocean, for which the Baltic Dry Index will be consulted.

[If you are a trader and want the FAO food price data and movements, go here. The usual commentary can be found: “The FAO Food Price Index averaged 192.3 points in October 2014, marginally (0.2 percent) below the revised September figure but 14.3 points (6.9 percent) short of its corresponding level one year ago” and so on.]

To help determine what the FAO food price index is depicting, I have made charts for the index (and sub-indices) for the period 2012 January to 2014 October; for the index (and sub-indices) for 2014 till October; a chart that shows the FAO cereals sub-index together with the OPEC Reference Basket Price for a barrel of crude oil and the Baltic Dry Index (this is the shipping index most commonly referred to for the movement of dry goods by sea) for the period 2012 January to 2014 October; and a chart that plots the changes (from month to month) in the three indexes taken together (FAO Cereals, OPEC Reference and Baltic Dry).

The FAO food price index and the OPEC Reference Basket price of oil have much more in common than the Baltic Dry Index, which has swung with volatility since 2012 January.

What they describe can be found in the captions, but it becomes clear from a glance at the FAO-OPEC-Baltic charts that the food price as calculated by FAO has very much more to do with how energy is used to produce food staples (that is, the use of petroleum products directly, and the use of fossil fuels-derived energy) and how energy is used to transport, store, process, transport it again and retail it.

I see it as an index that describes the energy quotient of industrially produced food staples, and so it has little if anything to do with any other form of agriculture, in particular the smallholder, family-oriented and organic agriculture that the FAO advertises its concern about.

Indexing food prices the FAO way

The FAO food price index for 2013 October which includes the calculation and measurement changes. Spot the differences? I can’t.

Why has the Food and Agriculture Organisation (FAO) changed the way it calculates the monthly FAO Food Price Index? But hold on, let us scrutinise first what the FAO Food Price Index is for 2013 October.

The FAO has said: “The FAO Food Price Index rose slightly in October, averaging 205.8 points. This was 2.7 points, or 1.3% above September, but still 11 points, or 5.3% below its October 2012 value. The slight increase was largely driven by a surge in sugar prices, although prices of the other commodity groups were also up.”

The usual blue pair.

In substance, this sort of commentary for the FAO monthly food price index barely differs from the standard tedious template, in tone and tenor, that FAO has applied throughout 2013. The tone has been, as we begin to close 2013, that food prices have not moved very much through the year, and the tenor has been that food price volatility is being reined in.

Based on the evidence provided by real prices I experience in India – real markets (or bazaars or mandis) in which real vendors sell actual produce to real household buyers – I have no idea what the FAO Food Price Index is talking about. Nor do tens of millions of urban and rural households all over the world when they try and correlate the numbers of the FAO index to what they must confront every time they make a food purchase.

This is because of what the FAO Food Price Index measures which, I wearily point out, is a criticism levelled time and again. Why call it a food price index when it is in fact a food exporters’ and importers’ price indication?

Impressive equations, but where’s the connection with the local markets you and me buy our veggies from?

Now, with a change in its calculations, the FAO index includes the following 23 commodities: wheat (10 price quotations monitored and reported by the International Grains Council), maize (1 quotation) and rice (16 quotations) for cereals; butter, whole milk powder, skimmed milk powder (2 quotations for each) and cheese (1 quotation) for the dairy group; poultry (13 quotations), pig (6 quotations), bovine (7 quotations) and ovine (1 quotation) for the meat dairy group; sugar (1 quotation); the oils group consists of one oil price quotation for soybean, sunflower, rapeseed, groundnut, cotton seed, copra, palm kernel, palm, linseed and castor. This construction, thus, includes the use of 73 price series.

The FAO has said: “The Index, which is a measure of the monthly change in international prices of five major food commodity groups (including 73 price quotations), has undergone some changes in the way it is calculated, although the new approach did not significantly alter the values in the series.” (See the Food Outlook released in 2013 November.)

Perhaps. We will not know for another few months. If a change was needed that made sense to consuming households, then FAO should have ensured the index reflected what households pay for the food the buy in the markets near their homes. If the FAO must serve multiple audiences, then it must devise food price indexes for these audiences separately (but the IGC already serves the food traders, and FAO’s own Agricultural Market Information System already serves the policymakers and the major international blocs).

The planetary case for a meat-free society

There is no case at all for humans to continue eating the amount of meat they do. In what are commonly called ‘industrialised’ countries (a category that includes most of the OECD countries) the share of meat in total food consumption is around 48% and has been so for several decades (has in fact been so once the overhang of the food shortages of the Second World War wore off, and particularly after the emergence of Europe’s common agricultural policy, which ushered in a change in that part of the world which was as far-reaching in its consequences as was the Green Revolution in South Asia).

Per capita consumption of major food items in developing countries, 1961-2005. Source: FAO

Now we see more clearly that as per capita food consumption has increased it has been accompanied by (those ‘market forces’ at work, the industrialisation of agriculture and the disinheritance from local choices for the average consumer, both by connected design) a change in dietary patterns that can only be described as catastrophic. Those who look at this change from an economic standpoint call it ‘structural’, for we have seen the diets of people in ‘developing’ (forgive the use of this term, so misleading it is, especially when the ‘developed’ world’s ravenous greed for resources turns these very concepts grotesquely on their heads) being altered.

In the South, for these peoples (some of them newly urbanised and whose activities contribute to the growing inequality of incomes – one has only to look at oddly swelling Gini curves to see this), there has been a rapid increases of livestock products (meat, milk, eggs), vegetable oils and, to a smaller extent, sugar, as sources of food energy. These three food groups together now provide 29% of total food consumption (also often called “dietary energy supply”) and this proportion has risen from 20% only three decades ago. Mind, these are not small increases over more than a generation – as a first look at this change will seem to imply. A single percentage point increase over a generation for a country’s population places a very large burden on land, water, crop growing patterns and of course health.

It is the prognosis that I find chilling. The FAO has rather unemotionally remarked that this share is projected to rise further to 35% in 2030 and to 37% in 2050. Can civilisation (let’s assume we can call this human imprint on the planet a single civilisation of a homogenous species although we all know it isn’t, not by any stretch of the fertile imaginations of our tens of thousands of indigenous peoples) tolerate such a shift in how people feed themselves. No, certainly not, the impact is catastrophic already.

Per capita GDP and meat consumption by country, 2005. Source: FAO

There are libraries of evidence to show that demand for livestock products has considerably increased since the early 1960s in the ‘developing’ countries. India, for example, so staunchly vegetarian through its struggle for freedom and through the leisurely years till economic ‘liberalisation’ strengthened its grip on minds and alimentary canals alike, is home to a very large and rapidly growing poultry industry (how quickly the vocabulary turns upon the rational, when did harmonious domestication and the organic circling of the nutrient cycle turn into an ‘industry’, banishing animals from their roles in our ecosystems?) and a fisheries ‘industry’ that has depleted the Arabian Sea (it is the Mer d’Oman from the other side) and the Bay of Bengal of their creatures both demersal and pelagic.

Thus we are confronted by the spectres of consumption of food which is attached, like a motor-car engine is to its crankshaft, to growth-by-magnitude. In the ‘developing’ South, the consumption of milk per capita has almost doubled (recall Operation Flood in India), meat consumption more than tripled and egg consumption increased by a factor of five (recall the National Egg Coordination Committee and its catchy jingle: “Meri jaan, meri jaan, murgi ke ande khana“). And yet, it is not yet South Asia – for the most substantial growth in per capita consumption of livestock products has occurred in East and Southeast Asia. China, in particular, has seen per capita consumption of meat quadruple, consumption of milk increase tenfold, and egg consumption increase eightfold between 1980 and 2005. And yet again, among the developing-country regions, only sub-Saharan Africa has seen a modest decline in per capita consumption of both meat and milk (according to FAO).

Where will this lead to? Into what zone of rolling disaster will the pursuit of the animal protein take our land-water-crop-habitat balance, already so precarious and already on a knife’s edge? The estimates (all bland, all unemotional, as if unable or unwilling to emote the reality to come) are that such demand is set to increase significantly towards 2050 because of population growth and continuing change of dietary patterns. The forecasts ought to be seen as terrifying: according to FAO’s estimates, an increase in the consumption of livestock products will cause a 553 million tons increase in the demand for feed, which represents half of the total demand increase for coarse grain between 2000 and 2050.

The FAO’s regiments of agro-economists and trend watchers have said that income growth in low-income countries and emerging economies will drive demand even higher (the Foresight 2011 report has said so too). They concur that there will be a shift to “high-status and non-seasonal foods, including more meat consumption, particularly in countries with rising income” (ah yes, the rising income, the fata morgana of a tide that lifts all boats, as the development banks have long wanted us to believe). No, comrades, it is not so – Nature does not recognise your balance-sheet.

Modding the FAO food price index to get closer to bazaar reality

The FAO has released its latest food price index data, and the central message for this month is: little change from the last month. The question for us, as we read about and hear about steadily rising food price inflation in the countries of the South, is: why is the FAO food price index not capturing real inflation for these populations?

This chart is a way to rectify that lack. In this, I have used the index data as the composite (food) plus the components (meat, dairy, cereals, oils, sugar) directly from the data, but have re-based them.

The familiar old blue panel.

I have used the monthly data from 2008 January to 2012 March, and re-based them (six series) on each of their minima for the period. Thus, the minima are: Food, 141.3 in 2009 Feb; Meat, 120.4 in 2009 Feb; Dairy, 114.3 in 2009 Feb; Cereals, 151.2 in 2010 June; Oils, 127.3 in 2008 December; and Sugar, 166.7 in 2008 December.

The current readings for all six series (2012 March) are: Food 215.9; Meat 178.2; Dairy 197.0; Cereals 227.0; Oils 244.9; Sugar 341.9.

What this chart does is show the variation by month from the minimum for each series for the period. It is another way of looking at how the indices have moved from a point of low reference in the recent past, and to my mind is more evocative of the real situation in rural and urban food markets in the South.

The April release can be found here. And this is what FAO’s usually bland commentary on the latest month’s movements is: “The FAO Food Price Index (FFPI) averaged 216 points in March 2012, virtually unchanged from 215 points in February. Among the various commodity groups, only oils prices showed strength, compensating for falling dairy quotations, while the indices of cereals, sugar and meat prices were largely unchanged from last month’s level.”

How ‘sticky’ is food inflation? What the FAO food index really says

Using the just released FAO food index update for 2011 August, I have compared the two periods of high food prices, the earlier one in 2007-08 and the continuing period of 2010-11.

Between 2007 Dec and 2008 Sep: for 8 months the Food Index was above 200, and for 10 months the Cereals Index was above 200.

Between 2010 Sep and 2011 Aug: for 11 months the Food Index has been above 200, and for 12 months the Cereals Index has been above 200.

This is the longest period in the last ten years that the FAO food index has been at such a level. This is the backstory of the FAO Food Price Index.

Let’s turn to what the FAO has said about the 2011 August update.

World food prices remained virtually unchanged between July and August 2011. The Index averaged 231 points last month compared to 232 points in July. It was 26% higher than in August 2010 but seven points below its all-time high of 238 points in February 2011. Within the index, cereals prices rose, reflecting the fact that although cereal production is expected to increase, it will not do so by enough to offset the additional demand, so that stocks continue to be low and prices continue to be high and volatile.

The FAO Cereal Price Index averaged 253 points in August, up 2.2%, or 5 points, from July and 36% higher than in August 2010. However, the firmer cereal prices were largely offset by declines in international prices of most other commodities included in the Food Price Index, oils and dairy products in particular.

Cereal price rises stem from a supply and demand balance that remains tight despite the anticipated increase in production. World cereal production in 2011 is now forecast to reach 2,307 million tonnes, 3% higher than in 2010. But this latest forecast is nearly 6 million tonnes lower than the previous forecast published in July.

Among the major cereals, the maize supply situation is a cause for concern following downward revisions to maize crop prospects in the United States, the world’s largest maize producer, because of continued hot weather in July and August. Average wheat prices were also up 9% in August given the strong demand for feed wheat and shrinking supplies of high quality wheat. Nonetheless, world wheat production is forecast to increase by 4.3% (or 28 million tonnes), only 4 million tonnes below the 2009 record.

World coarse grain production is still heading for a record level of 1,147.5 million tonnes, up 2.4% (or 27 million tonnes) from 2010, in spite of lowered maize production prospects in the United States, the world’s largest maize producer. Rice prices also gained with the benchmark Thai rice price up 5% from July, driven by a policy change in Thailand, the world’s largest rice exporter, where paddy rice will be purchased from farmers at above market prices. Global rice production prospects remain favourable, however, with output set to reach a new high of 479 million tonnes, up 2.5% from 2010.

Total cereal utilization in 2011-12 is forecast to increase by 1.4%, almost matching anticipated 2011 production. As a result, global cereal inventories by the close of seasons in 2012 are likely to remain close to their already low opening levels. Only rice stocks are expected to increase significantly, supported by record production. Wheat inventories are likely to decline to their lowest level since 2009 and world stocks of coarse grains are also forecast to plunge, with maize inventories falling to 124 million tonnes, their lowest level since 2007. Given the tight global supply and demand balance for coarse grains, its stocks-to-use ratio is forecast to fall to a historical low of 13.4%.

The FAO Oils/Fats Price Index averaged 244 points in August, following a declining trend since March but still remaining high in historical terms. The FAO Dairy Price Index averaged 221 points in August, significantly down from 228 points in July and 232 points in June, but still 14% higher than the same period last year. The FAO Meat Price Index averaged 181 points in August, up 1% from July. The FAO Sugar Price Index averaged 394 points in August, down 2% from July, but still 50% higher than in August 2010.

Six months of peak for the FAO food index

Since 2011 January, the FAO food price index components have recorded some of their highest monthly readings. Sugar touched a peak in January (420.2) and February (418.2), oils reached highs in February (279.3) and January (277.7), cereals reached highs in April (265.4) and May (261.3), meat touched a peak in June (180.4) and in April (180.4).

The consolidated food price index has been within 6 points (2.5%) of the February peak (237.7) for all the months of 2011. In June 2011 the index is less than 4 points off the February peak.

FAO’s Food Price Index rose one percent to 234 points in June 2011 – 39 percent higher than in June 2010 and four percent below its all-time high of 238 points in February of this year. The FAO Cereal Price index averaged 259 points in June, down one percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the Russian Federation’s export ban contributed to the price drop.

However the maize market remained tight because of low 2010 supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world’s largest rice exporter. The FAO Sugar Price Index rose 14 percent from May to June, reaching 359 points, 15 percent below its January record. Production in Brazil, the world’s biggest sugar producer, is forecast to fall below last year’s level. The FAO Dairy price Index averaged 232 points in June, virtually unchanged from 231 points in May. The FAO Meat Price Index averaged 180, marginally up from May with poultry meat rising three percent and climbing to a new record, while pig meat prices declined somewhat.

Following two consecutive revisions to the US crops and planting prospects for 2011, FAO’s latest forecast for world cereal production in 2011/2012 stands at nearly 2 313 million tonnes, 3.3 percent higher than last year and 11 million tonnes above FAO’s last forecast on 22 June. World cereal utilization in 2011/2012 is forecast to grow 1.4 percent from 2010/2011, reaching 2 307 million tonnes, just five million tonnes under forecast production. World cereal stocks at the close of the crop season in 2012 are now expected to stand  six million tonnes above their opening levels.  While wheat and rice inventories are expected to become more comfortable, coarse grains stocks, especially maize, would remain tight.

The FAO Food Price Index (FFPI) averaged 234 points in June 2011, 1 percent higher than in May and 39 percent higher than in June 2010. The FFPI hit its all time high of 238 points in February. A strong rise in international sugar prices was behind much of the increase in the June value of the index. International dairy prices rose slightly in June, while meat prices were stable. Of all the major cereals, prices of wheat fell most and rice increased. Among the oils and fats, prices of soybean oil were steady but palm oil weakened.

[Detailed data available from FAO here.]

The FAO Cereal Price Index averaged 259 points in June, down 1 percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the export ban by the Russian Federation (from July) depressed wheat prices. However, maize markets were supported by tight old crop (2010) supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world largest rice exporter.

The FAO Oils/Fats Price Index averaged 257 points in June, down marginally from May. Continued production uncertainties and expectation of stronger world import demand sustained soybean oil prices. By contrast, palm oil prices eased further, reflecting improved supply prospects and ample export availabilities in Southeast Asia. The FAO Dairy Price Index averaged 232 points in June, virtually unchanged from 231 points in May. This was the result of diverging price movements, with prices of skim milk powder and casein up by 5 percent, whole milk powder down by 3 percent, while prices of butter and cheese remained stable.

The FAO Meat Price Index averaged 180 points, marginally up from May. Poultry meat prices experienced a 3 percent rise, breaking a new record, while pig meat prices declined somewhat. Prices of bovine and ovine meat were subject to modest increases, from already high levels. The FAO Sugar Price Index averaged 359 points in June, up 14 percent from May and only 15 percent below its January record. The price strength reflects  dynamic short-term demand against tight exportable availabilities, notably in Brazil, the world’s largest sugar producer where production is forecast to fall below last year’s level.

FAO’s March 2011 food price index, anomaly or turnaround?

FAO food price index for 2011 March

Global food prices decline, is the assessment of the Food and Agriculture Organisation (FAO) for 2011 March. The FAO Food Price Index has shown its first decrease in eight months. “The food price index dropped some this month but only time will tell if this is the start of a reversal of the upward trend,” said FAO.

The Index averaged 230 points in March 2011, down 2.9 percent from its peak in February, but still 37 percent above March of last year. “The decrease in the overall index this month brings some welcome respite from the steady increases seen over the last eight months,” said David Hallam, Director of FAO’s Trade and Market Division. “But it would be premature to conclude that this is a reversal of the upward trend,” he added.

“We need to see the information on new plantings over the next few weeks to get an idea of future production levels. But low stock levels, the implications for oil prices of events in the Middle East and North Africa and the effects of the destruction in Japan all make for continuing uncertainty and price volatility over the coming months,” said Hallam.

FAO food commodity price index for 2011 March

International prices of oils and sugar dropped the most, followed by cereals. By contrast, dairy and meat prices were up, although only marginally in the case of meat. The Cereal Price Index averaged 252 points in March, down 2.6 percent from February, but still 60 percent higher than in March 2010. March was extremely volatile for grains, with international quotations first plunging sharply, driven largely by outside market developments such as the increased economic uncertainties accompanying the turmoil in North Africa and parts of the Near East as well as the Japanese earthquake and tsunami, before regaining most of their losses. Rice prices also fell as a result of abundant supply in exporting countries and sluggish import demand.

A positive outlook but food stocks diminish, said the FAO. World production of cereals fell in 2010, resulting in falling stocks, while total cereal utilization is expected to reach a record level in 2010/11. While most indications point to increased cereal production in 2011, the projected growth may not be sufficient to replenish inventories, in which case prices could remain firm throughout 2011/12 as well.

Index details: The FAO Food Price Index (FFPI) averaged 230 points in March  2011, down  2.9 percent from its peak in February, but still 37 percent above March last year. International prices of oils and sugar contracted the most, followed by cereals. By contrast, dairy and meat prices were up.

FAO food price index real/deflated for 2011 March

The FAO Cereal Price Index averaged 252 points, down 2.6 percent from February, but still 60% higher than in March 2010. The past month was extremely volatile for grains, with international quotations first plunging sharply, driven largely by recent events in Japan and North Africa, before regaining most of their losses towards the end of the month, as markets reacted to a continuing tight world supply and demand condition. Rice prices also fell amid large availability in exporting countries and sluggish import demand.

The FAO Oils/Fats Price Index fell 7 percent, to 260, interrupting nine months of consecutive rise. Last month’s slide in prices reflects primarily a recovery in global supply prospects for palm oil. The FAO Sugar Price Index averaged 372 points, down as much as 10 percent from the highs of January and February. The recent decline in international sugar prices was partly prompted by prospects of increased market availability, notably from India.

The FAO Dairy Price Index averaged 234 points, up 1.9 percent from February and 37 percent above its level in March 2010. Firm import demand together with lower than expected production in Southern hemisphere supplying countries, where the milking season is coming to a close, continue to underpin world prices. The FAO Meat Price Index  was little changed at 169 points in March. The upward trend in  meat prices since 2010 has flattened in the past few months, reflecting trade disruptions in several key markets, particularly North Africa and Japan.