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Asia worries about food stocks and prices

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Protesters scramble for food and drink being distributed during mass demonstrations at Cairo's Tahrir Square in early February. Photo: Reuters/RFERL

Protesters scramble for food and drink being distributed during mass demonstrations at Cairo's Tahrir Square in early February. Photo: Reuters/RFERL

Bangladesh, South Asia’s biggest rice buyer, is in talks with India to buy grains on a regular basis to bolster food security as governments seek to avoid a repeat of the unrest that broke out when prices last soared, reported Bloomberg.

A long-term agreement will protect Bangladesh from possible defaults by private traders, who sometimes fail to meet their commitments if prices gain, Muhammad Abdur Razzaque, the nation’s food minister, said in an interview yesterday. “Rice prices rose this year in our country; people are suffering as they have limited income,” Razzaque said by phone from Dhaka.

Bangladesh’s plan underscores a drive by governments to strengthen their reserves to help manage the impact of food prices that advanced to a record last month, beating the jump in 2008 that spawned riots from Haiti to Egypt. This year’s surge has driven millions into extreme poverty, according to the World Bank, and contributed to unrest in the Middle East and Africa. “When we go for international tenders and prices suddenly rise, private suppliers sometimes fail to fulfill their commitments,” Razzaque said. “They don’t supply us and put us in trouble. It has happened.”

In the Philippines, Sen. Francis Pangilinan, chairman of the Senate committee on agriculture, has called on the country’s Department of Agriculture (DA) and the Department of Trade and Industry (DTI) to start preparing for the worst-case scenario as far as the prices of oil and other basic commodities are concerned in response to the volatile situation in the Middle East.

The Philippine Star quoted Pangilinan as having said that other nations have started preparing for an expected food and oil shortage, not only because of the turmoil in the Middle East but also because of the erratic weather patterns that the world has been experiencing. “Some Asian governments have already started to come up with measures to mitigate rising prices. Erratic weather patterns have started wreaking havoc on our agricultural lands. China and India are stockpiling on grains, which means we need to rely less on importation to secure our buffer. The price of oil continues to soar, it is a matter that requires our serious attention,” he said.

In today’s world of interlinked markets, a problem in one place quickly ripples out to others. Croplands in Russia, one of the world’s leading wheat producers, were devastated by fires during last summer’s record-breaking heat wave. Wheat harvests in Ukraine, also plagued by torrid weather, dropped 15 percent last year, a comment in Radio Free Europe/Radio Liberty reminded readers.

Both countries responded by introducing export bans that have exacerbated global shortages of the commodity. Partly as a result, world wheat prices doubled between June 2010 and January 2011. According to the World Bank, wheat prices have risen in the past six months by 54 percent in Kyrgyzstan, 45 percent in Bangladesh, and 33 percent in Mongolia.

In the oil-rich Caucasus republic of Azerbaijan, high prices have been sending citizens across the border into neighboring Georgia, where they are buying up meat, potatoes, onions, and apples. Nadeem Ilahi, head of an International Monetary Fund (IMF) delegation visiting Baku this week, warned that Azerbaijanis should expect overall prices to rise 10 percent in the course of this year — most of it due to the worldwide rise in the cost of food.

Written by makanaka

February 26, 2011 at 22:40

Unctad’s Global Commodities Forum is here

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The United Nations Conference on Trade and Development (UNCTAD), will hold the second Global Commodities Forum in Geneva on 2011 January 31-February 01.

The rationale for the first Unctad Global Commodities Forum 2010 was described last year as centred on developing countries and their dependence on on commodities for their economic well-being. “As demand for commodities in the long term is going to increase, thus posing major challenges for their sustainable and efficient production, there is a very real need to consider how to make the commodities markets more stable and policies better designed, so that the benefits would be more equitably distributed between commodity producers and consumers.” Unctad’s GCF 2010 said then that it was important that an appropriate economic return could be delivered to commodities producers, many of whom are in developing countries.

Policy actions to consider were said to include, inter alia, the development of policies to ensure that countries producing commodities do not face the so-called ‘resource curse’ and, of equal importance, measures that could be taken to mitigate or reduce the adverse effects of price and commodities market volatility, “which cause so much uncertainty and hardship to many of the most vulnerable people in developing countries”.

Moreover, said the Unctad GCF 2010 rationale statement, “there is a clear need to ensure that commodities markets are more effective in serving the interests of the real economy, and that financial market speculators do not, through excessive influx or unwinding of liquidity in commodity futures markets, disturb the performance of commodity producers, consumers and intermediaries”. (We will have to pay close attention to the proceedings of GCF 2011, and not only the statements or resolutions, to judge how far they have progressed from last year’s positions.)

Unctad said then that markets should serve the interests of these stakeholders whose livelihoods are involved in commodities production, shipment, consumption, rather than being subject to manipulation directed at the single-minded purpose of providing a short-term financial return. “Solutions must be found to ensure that the prevailing terms of trade between countries are balanced and that regulatory interventions are optimized, with a view to protect the most vulnerable stakeholders without providing an impediment to trade.”

Now, Unctad has described GCF2011 as focusing on the instability of mineral and agricultural markets and their interconnectedness, the effectiveness of commodity policies and the sustainability of the production and use of commodities, long-term energy and food security, and the role of innovation and early warning systems. “The second meeting of the GCF, organized by UNCTAD with the support of its partners, including the Governments of China, France and Switzerland, as well as Global Fund for Commodities, is a major multi-stakeholder meeting to discuss and find better solutions to perennial problems of the commodity economy,” stated Unctad. “The GCF will also address such key issues as the performance of commodity supply chains and the state of business practices and innovation.”

From the GCF 2011 programme material – themes of the second meeting of this Forum will include the following plenary and parallel sessions:

Plenary A: The State of energy markets: lower volatility and a new price zone for hydrocarbons (A1), The state of agricultural markets: the drivers of increased volatility (A2) The state of selected metals market: fundamentals, non-fundamental factors and terms of trade (A3) Commodity markets’ volatility and interconnectedness (A4), Overcoming market volatility through better regulation, data and transparency (A5); Commodity policy challenges for oil and gas-exporting countries (A6) Commodity policy challenges for minerals and metal exporting countries (A7) Trade and other policy options for modernizing agriculture in developing countries (A8).

Parallels B: Long-term sustainable supply & demand and technological innovation: hydrocarbons and other energy (B1), Long-term sustainable supply & demand in the energy sector: developing early warning systems (B2), New technologies and commodities: agriculture (B3) Long-term sustainable supply and demand and technological innovation and early warning systems for food security (B4), New technologies and commodities: energy (B5); Forecasting trends and strengthening early warning systems for producers, innovators and other supply chain participants (B6).

Parallels C: Current trends and next frontiers for commodity finance (C1), The emerging regulatory environment and trade finance: new challenges and opportunities for banks and other financiers (C2), Support institutions for commodity finance (C3), Shipping and international trade in commodities (C4) Commodity futures markets: do they obscure underlying market realities, or provide long-term signals and management tools? (C5) Risk management in commodity markets: paper and physical markets and the realities of commodity exporters (C6).

FAO food price index tops the 2008 peak

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The UN Food and Agriculture Organization’s food price index has risen to 214.7 for December 2010, which is above its peak of 213.5 in June 2008.

This new peak, at a time when the price of crude oil is above USD 90 a barrel, is the strongest signal yet that global foodgrain supply has entered a critical phase. The FAO index has been rising steadily through the second half of 2010 – we discussed it here.

The cereal price index stands at 237.6 which is almost 40 points below the peak of 274.3 (in April 2008). The oils price index stands at 263 which is just under 20 points less than the peak of 282.6 (in June 2008). The dairy price index stands at 208.4 which is 60 points under the peak of 268.6 (in November 2007).

But the sugar and meat price indices are at all-time highs. The meat price index is now at 142.2 (in September 2008 it was 137.4 and its previous all-time high was 139.3 in September 1990). The sugar price index is now at 398.4 which is an extraordinary 180 points above its all-time high of 218 (in March 1990 – it was 207 at the maximum during 2008). The sugar price index crossed 300 in August 2008 and remained above 300 until March 2010, and again crossed 300 in September 2010.

Comparing three-month averages for the FAO food index and its main index components helps us understand how the 2010-11 food price crisis compares with its predecessor in 2007-08:

Food     Meat       Dairy     Cereals    Oils       Sugar
3-month avg
at 2008 Jun    210.4    129.5    240.8    271.7    273.9    173.9
3-month avg
at 2010 Dec    206.4    141.2    206.3    227.0    242.1    373.7

A Bloomberg report quotes FAO senior economist Abdolreza Abbassian: “One might expect prices to come down in spring, and this may be in fact the worst. But given how unexpected the weather events have been, I for one would not want to bet on anything along those lines.” The report said that concern about drought doing harm to Argentine harvests helped corn jump 52% in Chicago last year and soybeans to rise 34%. Prices also gained as China, the world’s largest soybean buyer, became a net corn importer. Wheat added 47% in 2010 as Russia, hit by its worst drought in a half-century, banned all cereal exports.

“Eyes will be on the Argentina corn crop,” Abbassian said. “There is still, unfortunately, a potential for grain prices to strengthen on the back of a lot of uncertainty. If anything goes wrong with the South American crop, there is plenty of room for them to increase further.” Potential damage to South American soybean and corn crops is of greater concern for world grain prices than harm to wheat in Australia caused by floods, according to the economist. Argentina and Brazil are the world’s second- and third-biggest corn and soybean exporters after the US. “The watch is definitely on South America for the next two weeks,” Abbassian said. “Given the very tight corn market, and demand from China for soybeans and the tight soybean market, if those commodities start to rise more, that will also lift wheat.”

Agrimoney has a report polling commodities fund managers in several financial centres worldwide for their views. What they say about the impact major forecasts, such as the World Agricultural Supply and Demand Estimates, have is worth paying close attention to. The WASDE report provides the US Department of Agriculture’s comprehensive forecasts of supply and demand for major US and global crops.

Reuters has reported that India’s food inflation rose for the fifth straight week to the highest in more than a year, reinforcing fears it has spilt over to broader prices and cementing expectations of a January interest rate hike. “But the spurt in prices of many basic foodstuffs has also raised questions over the government’s ability to control price rises through monetary policy, with poor infrastructure, hoarding and supply bottlenecks contributing to stubbornly-high food inflation.”

Unseasonal rains are officially blamed for pushing up prices of vegetables such as onions and tomatoes, but some commentators point instead to poor agricultural productivity and transport after years of few reforms and weak government investment. Onion prices, a key food staple for Indian families, rose over 23% percent over the week to December 25. The food price index rose 18.3% in the year to December 25 and the fuel price index climbed 11.6%. This compared with 14.4% and 11.6% annual rises the previous week.

The Wall Street Journal has said that food prices in India are continuing their sharp rise, increasing concerns among economists about a prolonged spell of high prices and adding pressure to the central bank to raise interest rates later this month. “The Reserve Bank of India next meets on Jan. 25 to consider an interest rate rise after pushing up rates six times in 2010 – one of the most aggressive tightenings of any central bank. But calls for a further move keep coming, most recently with the International Monetary Fund saying in a report released Thursday that rates need to be higher to curb inflation.

“The central bank will need to walk a fine line, however, since liquidity within the bank system is tight and further rate hikes could exacerbate that problem, economists said. Data from the Ministry of Commerce and Industry Thursday showed that the wholesale price index for food articles rose 2.5% in the week ended December 25 from the previous week. The year-on-year inflation rate for food surged to 18.32% from 14.44% the week before. It was the fifth straight week of rising food prices, which have been hovering at elevated levels in recent months.”

Oil’s up, oil’s down, it’s France, it’s China

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It’s up. Crude oil rose on speculation that growing French demand for imported fuel because of a strike will reduce stockpiles elsewhere, reported Bloomberg. France is importing “massive” amounts of fuel and tapping reserves to alleviate service-station shortages, Environment and Energy Minister Jean-Louis Borloo said today. The French government last week authorized the use of fuel reserves after Total SA announced it would halt its five active refineries in France and other refiners took measures to reduce output. Workers at the country’s 12 crude-processing plants have extended their labor action since Oct. 12 to protest a plan to raise the minimum retirement age.

It’s up. Crude oil is poised to reach $90 a barrel by the middle of December, according to technical analysis by Lind-Waldock in Chicago. The December contract, which became the front-month contract yesterday, has been trading in an uptrend, a pattern of higher peaks and higher valleys, since touching a low of $75.10 on Sept. 23, Blake Robben, a strategist at Lind-Waldock, a division of MF Global Ltd., said in an interview.

It’s down. Crude oil may decline next week after China’s oil processing grew the least in 18 months as government measures to cool the economy reduced fuel demand, a Bloomberg News survey showed. Fourteen of 30 analysts, or 47 percent, forecast crude oil will fall through Oct. 29. Eleven respondents, or 37 percent, predicted prices will be little changed and five estimated an increase. Last week analysts were split over whether futures would drop or climb. Data from the China Mainland Marketing Research Co. yesterday showed that refineries in the world’s biggest energy- consuming country processed about 8.5 million barrels a day in September. That’s a 6.6 percent gain from a year earlier, the smallest increase since March 2009.

It’s down. Saudi Arabia has rejected claims that the era of cheaply produced oil is over, saying the world’s largest field in the kingdom’s eastern province still holds more than many countries. Many of the largest oilfields in Texas and the North Sea have passed their prime, forcing companies to target more costly prospects such as bitumen deposits in Venezuela, Canadian tar sands and ethanol. But Ali al Naimi, the Saudi Arabian oil minister, pointed to the Ghawar field’s 88 billion barrels of remaining reserves and the kingdom’s large cushion of spare pumping capacity as signs that oil was still abundant. “”I am sorry to disappoint people but the era of easy oil is not over,”” al Naimi said at a conference held in the Saudi capital to celebrate the 50th birthday of OPEC. “”How can you say the era of easy oil is over when we still have 88 billion barrels in the Ghawar field? That is more than many countries in the world. You can dismiss the notion that easy oil in Saudi Arabia is gone.”” The Ghawar field, measuring 280km by 30km, is by far the largest conventional oilfield in the world. Although details of the field’s performance are not made public, it is believed to have produced more than 65 billion barrels already since production began in 1951.

It’s up. Any oil price fall should be seen as an opportunity to buy the contract as the next move in the market is likely to be a rally, JPMorgan Chase & Co. said.“The signal that the next leg higher is imminent will be tighter Dubai forward spreads and a narrower Brent-Dubai spread,” Lawrence Eagles, head of commodity strategy in New York, said in a monthly oil market report. JPMorgan said it expects the dollar to weaken by four to five percent over the next six months, giving oil a boost. A declining dollar increases the appeal of energy as an inflation hedge. The strength in crude is also bolstered by rising demand in several regions, the bank said. A narrowing spread, when Dubai oil rises closer to North Sea Brent, typically shows increasing Asian demand. The Brent-Dubai exchange for swaps, or EFS, for December narrowed 12 cents to $2.40 a barrel today, according to data from PVM Oil Associates. The EFS is the price difference between Brent futures and Dubai swaps contracts and signifies Brent’s premium relative to the Middle East grade. The December-January Dubai spread shrank to minus 36 cents from minus 80 cents on Sept. 27, according to data compiled by Bloomberg. “The key risk is that we are being too cautious and that the threat of $100 a barrel oil that is implicit in our fourth- quarter 2011 oil forecast arrives much sooner than we expect, driven by not only a weak dollar, but also by rampant Chinese and emerging market demand, the rebuilding of French strategic stocks, and an upward bias to food prices,” Eagles said in the report.

Written by makanaka

October 25, 2010 at 19:28

India fuel price rise provokes Left

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The rise in fuel prices in India has led the four Left parties – Communist Party of India (Marxist), Communist Party of India, All India Forward Bloc and Revolutionary Socialist Party – to issue the following statement:

The decision of the UPA government to inflict a steep rise in the prices of petrol, diesel, kerosene oil and cooking gas is a cruel blow against the people who are already suffering due to the runaway increase in the prices of food and essential commodities. The price of petrol has gone up by Rs. 3.50 per litre, diesel by Rs. 2 per litre, kerosene oil by Rs. 3 per litre and cooking gas by Rs. 35 per cylinder.
This callous decision of the government has come at a time when the food inflation rate is around 17 per cent and the general inflation rate has reached double digits. India has the dubious distinction of having the highest rate of consumer price inflation in the world.
The UPA government has decided to deregulate the price of petrol and leave it to the market to determine. Going by the Kirit Parikh Report, the government is going to decontrol prices of all petroleum products, including diesel. This is going to prove disastrous for the economy and the country.
The government is giving false arguments to justify these measures. The prices of petrol and diesel were increased by Rs. 3 per litre only three months ago at the time of the Union Budget. International oil prices have not risen substantially in this period. Neither is the government prepared to rationalize the taxation structure on petroleum products which is adding to a price of petrol and diesel in a large measure.
It is a myth that such a step is being taken to protect the public sector companies from under-recoveries. The so-called under-recoveries are entirely based on notional prices calculated without any reference to the actual cost of production. In fact, the deregulation is only to help private companies who withdrew from the market because of the government price controls. Now they will be free to enter the market to make profits.
By deregulating petrol prices, the government has opened the way for continuous increases in the prices of petrol. By increasing the price of diesel and kerosene oil, the farmers and the poorer sections are going to be badly hit. The LPG increase will further burden the middle classes.
The Congress-led government has shown its callous and anti-people character by these measures. The Left parties demand the immediate scrapping of the price increases. They call upon all their units to jointly launch protests against these hikes.

The statement is signed by Prakash Karat, General Secretary, CPI(M); A B Bardhan, General Secretary, CPI; Debabrata Biswas, General Secretary, AIFB; T J Chandrachoodan, General Secretary, RSP

India’s fertiliser addiction fiddle

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The Economic Survey 2009-10 has attempted to conceal the true impact of chemical fertiliser abuse in India. Chapter 2 of the Survey deals with agriculture, and the Survey states: “The per hectare consumption of fertilisers in nutrients terms increased from 105.5 kg in 2005-06 to 128.6 kg in 2008-09.” This is false. Here is why.

India per hectare chemical fertiliser use, 1950 to 2009

India per hectare chemical fertiliser use, 1950 to 2009

In 1950-51 the average fertiliser use in India was only 0.58 kg per hectare. The net sown area was 118.75 million hectares upon which 69,000 tons of fertiliser were used. Of course this is a notional average use only, as 60 years ago fertiliser was an agricultural input in only a few districts which were being primed for what was to become the Green Revolution. Still, that was the ‘national average’. It took 16 years before that average crossed 10 kg of fertiliser per hectare, and that happened in 1967-68 when the net sown area was 139.88 million hectares and the total fertiliser use was 1.53 million tons.

Thereafter it took only 5 years to reach 20kg/ha. The period 1971-72 to 1975-76 saw little change – the only such period in the last 60 years – in intensity of fertiliser use. Those were the years of the global oil crisis, the so-called first oil shock of the seventies. For that time, the ‘national average’ remained between 18 and 20 kg/ha while the total net sown area varied but little from 140 million hectares and total fertiliser use stayed between 2.65 and 2.89 million tons.

Per hectare application of fertiliser continued its upward trend from 1975-76 and it took less than 8 years to cross 50kg/ha and another 6 years to cross 80kg/ha – in 1989-90 India’s total fertiliser use was 11.56 million tons. In the decade of the 1990s, total fertiliser use in India rose by 44% (from 12.54 mt to 18.06mt) and per hectare application went up by 46% as the available agricultural land plateaued at around 140 million hectares.

India annual chemical fertiliser use, 1950 to 2009

India annual chemical fertiliser use, 1950 to 2009

Both total use and per hectare application remained at those levels until 2004-05. In the last four years there has been an astonishingly steep increase in the total consumption and per hectare use. For 2008-09 the total fertiliser use at 24.9 mt is more than 6.5 mt more than the figure for 2004-05, and per hectare use has shot up to over 174 kg/ha from 130 kg/ha in 2004-05, a jump of 33% in just four years.

The Economic Survey 2009-10 states: “Chemical fertilisers have played a significant role in the development of the agricultural sector. The per hectare consumption of fertilisers in nutrients terms increased from 105.5 kg in 2005-06 to 128.6 kg in 2008-09. However, improving the marginal productivity of soil still remains a challenge. This requires increased NPK application and application of proper nutrients, based on soil analysis.”

The Survey is wrong. The per hectare use crossed 105 kg in 1997 – nine years before the Survey says it did – and crossed 130 kg in 2004-05. In 2008-09 the rude equation is: 143 million hectares of net sown area; 24.9 mt of total fertiliser consumption. The Survey has concealed true per hectare consumption of fertiliser by swapping net sown area with gross sown area. Net sown area is the land surface on which crops are grown. To assess output and productivity, when cultivated land is used to grow more than one crop per year, that area on which the second crop is grown is counted again, which gives us gross sown area.

Counting cultivated land more than once raises the sown area from 143 million hectares (net) to 190 million hectares (gross). And that is how the per hectare consumption of fertiliser is portrayed as much lower than it truly is. Chemical fertiliser however affects the parcel of land, and is not divisible by the number of crops the land is employed for. The resulting difference is enormous: 45.4 kg/hectare!

The data I have used comes from the Reserve Bank of India Handbook of Statistics on Indian Economy 2008-09. For 2007-08 and 2008-09 I used the total NPK consumption figures from the Economic Survey 2009-10.

Asia’s food-oil-inflation roller-coaster

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These people are already hit by the food price rise

In South-East Asia the price of Thai fragrant rice has surged by 26 per cent since 01 Nov 2009, thanks to storms in the Philippines and drought in southern China. At these levels, physical hoarding is seen taking place among Thai rice exporters, which means they probably have expectations that rice prices will go up even higher. And it is not just rice. Soya beans and edible oils like palm oil are also seeing a rise in prices, which in turn may make livestock more expensive since these crops go into animal feed.

Food prices are also rising in China – prices of vegetables shot up by as much as 10 per cent since 01 January 2010 as extreme cold weather damaged crops and transportation problems hampered delivery. Oil prices have been rallying in line with the global recovery, hitting levels above US$83 a barrel earlier this week, near a 15-month high. Food prices are also rebounding from their 2009 lows, potentially increasing price pressures in Asian countries that are already seeing asset bubbles build up.

Vegetable vendor

There’s already evidence from Kerala that the combination of food price rise specifically and inflation generally is hurting:

“The National Agricultural Cooperative Marketing Federation (Nafed) will join hands with the State government to implement an ‘Easy Market’ scheme to provide solace to consumers in the event of spiralling prices of essential commodities. The Union government has approved a subsidy of around Rs.600 crore [Rs 6 billion = US$ 133.34 million, Jan 2010] to provide ‘Easy Market’ kits containing 20 items of daily use to consumers at a discount ranging between 30 and 40 per cent. In Kerala, Nafed will use the Triveni and Neethi chain of stores to implement the scheme.
The scheme had been approved by a Cabinet sub-committee and 60 million kits would be distributed in the first phase. These kits contain rice, wheat, whole wheat flour, pulses, sugar, edible oil, etc, he said. Nafed would procure wheat and rice from the Food Corporation of India and distribute them at reasonable rates. Wheat flour would also be distributed similarly.”
Read more here.

Vegetable vendor

But elsewhere in India’s government mindspace, the ‘spend more’ school of thought is dreaming up still more schemes that have to do with food:

“Speaking at the National Retail Summit 2010 “Modern Retail: Towards Sustainable Growth and Profitability” Subodh Kant Sahai, Minister for Food Processing Industry, said that the Union Government is coming out with a series of initiatives to “increase the share of modern retail”. Sahai stated that the centre has planned to upgrade 70 cities in India by 2012 having all the modern facilities that of metros like Mumbai and Delhi. “With the amendment of the Agriculture Produce Market Act or the APMC act, farmers would become the largest beneficiaries. With 70 percent of our population also dependent on agriculture this would also get in 3rd party investors interested in Retail to patronize the farmers,” he said. According to Mr Sahai growth of the food processing industry is directly linked to the growth in retail industry.” Read more here.

Vegetable vendor

It’s typical that India’s administrators, planners, policymakers and legislators don’t bother to look around at the conditions of our fellow Southasians:

“Burma had been the world’s largest exporter of rice as recently as the 1930s, but rice exports fell by two thirds in the 1940s, with the country never again reclaiming its dominant status in the internatinal rice trade. Thailand and Vietnam now lead the world in rice exports. For fiscal year 1938/39, rice accounted for nearly 47 percent of Burma’s export receipts. However, by 2007/08 the corresponding figure had sunk to less than two percent. Dr. U Myint [an economist] said the reintegration of the rice industry into the world market would provide incentives to increase both the quantity and quality of rice and thereby lead to higher incomes and employment opportunities for the rural population, who constitute 65 percent of the population of 58 million. An estimated 31 million acres of land is cultivated in Burma, of which more than 16 million acres are devoted to rice.” Read more here.

Commodity chains took powerful shape in the steam age to give a large number of local products geographically expansive identities. Opium, jute, and indigo are prime examples of nineteenth century Bengal farm products generated by world markets where the ups and downs of prices impinged sharply on local experience in some locales but not others.

Tippoo's Dominions, 1794

“By 1900, commodity production defined South Asia as a region of the world economy, defined regions in South Asia, and defined localities in regions. Ceylon, Malaysia, Assam, Fiji and Mauritius were for plantations. Ceylon first produced coffee; then tea, rubber, cocoanut, and cinchona. Assam was tea country. Ceylon and Assam replaced China as top suppliers of English tea. Fiji and Mauritius meant sugar plantations. Labour supplies posed the major constraint for plantation capitalists who found the solution in eventually permanent indentured labour migration from labour export specialty areas in Bihar, Bengal, and southern Tamil districts.”

“Sites of commodity production demanded more commodities. Circuits of moving commodities linked commodity producers and consumers to one another in spaces that surpass the spatial imagination of national history. Modern Indian history has circulated in the space/time of capitalism, in the manner of globalization today, for over a century. Far-flung plantations in Malaysia, Fiji, Mauritius and the West Indies, as well as cities and farms in Burma and Africa developed circuits of commodity production and capital accumulation anchored in India. Tamil Chettiyars became local financiers on the rice frontier in Burma’s Irrawaddy River delta, which generated huge exports of rice for world consumers, including Indian cities that needed Burma rice so much that when Japan’s conquest of Burma cut rice exports, it precipitated the 1943-4 Bengal famine. In 1930, Indians composed almost half Rangoon’s population. In East and South Africa, Gujarati merchants and workers arriving from Bombay, Calcutta, and Madras provided labour and capital for railways and import-export dependent urbanism. The Indian diaspora was well underway a century ago: between 1896 and 1928, seventy-five percent of emigrants from Indian ports went to Ceylon and Malaya; ten percent, to Africa; nine percent, to the Caribbean; and the remaining six percent, to Fiji and Mauritius.”

From ‘Agricultural Production, South Asian History, and Development Studies’, edited by David Ludden, Oxford University Press, September 2004