Resources Research

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Posts Tagged ‘trade

A cost perspective about India’s pulses imports

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Import categories sized according to their average monthly values for 24 months over April 2013 to March 2015.

Import categories sized according to their average monthly values for 24 months over April 2013 to March 2015.

For the last three years, India has imported between 3.2 and 4 million tons of pulses a year. These imports supplement our own production of pulses, which alas and despite several ‘missions’ and ‘schemes’ we do not grow enough of.

Apart from why we should import pulses at all instead of growing all that we need, the matter of what we spend (that is, the foreign exchange with which importing agencies pay for the pulses) has I think not been placed in perspective, which is the aim of this short inquiry.

For this I have used the Department of Commerce ‘System on Foreign Trade Performance Analysis’ which provides the monthly imports and exports under major heads as compiled by the Directorate General of Commercial Intelligence and Statistics.

Of the 21 major heads, the import of pulses falls under the group ‘agriculture and allied products’. Considering the 24-month period of April 2013 to March 2015, the value of pulses imported has varied between 10% and 21% of the agriculture group imports.

However, the average monthly value of pulses imported over this period Rs 1,171 crore and this average lies between the monthly amount spent on ‘internal combustion engines and parts’ (Rs 1,130 crore) and ‘paper, paperboard and products’ (Rs 1,205 crore).

Hence our questions ought also to be: why is India spending Rs 720 crore a month to import fresh fruit, Rs 898 crore a month to import man-made yarn and made-ups, Rs 1,031 crore a month to import rubber other than footwear, Rs 720 crore a month to import fresh fruit, Rs 2,684 crore a month to import electronics instruments, Rs 2,745 crore a month to import electronics components, Rs 2,928 crore a month to import electric machinery and equipment, and Rs 4,539 crore a month to import vegetable oils?


Written by makanaka

November 21, 2015 at 18:51

May Day 2015

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Garment workers take part in a protest calling on the government to raise wages during a march to mark Labour Day in Phnom Penh, Cambodia.

Garment workers take part in a protest calling on the government to raise wages during a march to mark Labour Day in Phnom Penh, Cambodia.

All the substantial issues confronting the working class today — the rapid growth of social inequality, a tattered veneer of ‘democracy’ behind which ever more rapacious forms of neo-liberal economics rule over peoples and the environment, the explosion of police violence within countries (as in the USA) and of armed conflict between countries and regions — all these are bound up with the struggle against new forms of dominance.

The dangers of war loom more menacing today than they did in 1914 and in 1939. But for many workers in many countries on this May Day in 2015, war has never gone away. It persists because of the division of the world into what are called competing economies (as if ‘country’ and ‘economy’ are synonymous: they are nothing of the kind). On May Day, the subordination of the productive forces of households, families, communities and villages to the corporate and financial elite is protested and revoked.

Workers carry banners with messages in support of workers' rights during a march to mark Labour Day in Yangon, Burma (left). Members of the Group of the National Confederation of Trade Unions, raise their fists and shout slogans during their annual May Day rally in Tokyo.

Workers carry banners with messages in support of workers’ rights during a march to mark Labour Day in Yangon, Burma (left). Members of the Group of the National Confederation of Trade Unions, raise their fists and shout slogans during their annual May Day rally in Tokyo.

The world of work has been reshaped by globalisation. Today, much of global trade involves global buyers and suppliers, which has implications for workers’ welfare. Multinational enterprises source from a network of suppliers, who, in turn, compete with one another to obtain business. The task of providing compensation is therefore left to the supplier of the product or service, who is under considerable pressure with regard to the wages and conditions they can offer workers.

There are no mechanisms within the political system (there are scant differences between political systems installed today, for their methods are so similar) through which any of the grievances of the vast majority of the population can find expression. These democratic demands should be linked to programmes that advances the social rights of the working class. Chief amongst these must be a massive redistribution of wealth, which has been snatched away by what is mockingly called the ‘market’, itself a ghastly amalgam of banks, technocrats, commodity speculators, global finance capital, lobbyists and consultants, the multi-lateral lending organisations (like the World Bank and the Asian Development Bank), and all their cronies and cabals fostered by politicians.

Technological advancements and the expansion of the internet have caused temporal and physical distances to vanish. They have accelerated sweeping and damaging changes in the organisation of production and work. There has been a growth in the number of hours that enterprises operate (24 by 7 has become a household term) and therefore in the times when workers at all levels of service and production must be available to work. If they are not they are summarily sacked, fired, dismissed.

Protesters from the trade union PAME hold red flags during the May Day rally in front of the parliament building in Athens, Greece (left). People march in Moscow marking Labour Day.

Protesters from the trade union PAME hold red flags during the May Day rally in front of the parliament building in Athens, Greece (left). People march in Moscow marking Labour Day.

Since the 1980s, but especially in the 2010s, under the pressures of ‘competition’ but in fact as a strategy to create an ever-greater pool of consumers who are otherwise disenfranchised, companies and corporations run by the financial puppeteers have demanded greater flexibility in production and organisation. This has abandoned the traditional employment relationship which, for all its faults, has been one that has survived the Modern Era. It was the basis for labour protection measures. No longer. Non-standard employment arrangements have become common features in what are now cynically called labour markets, no matter where they are – Argentina, Micronesia, Scandinavia, sub-Saharan Africa. Work has become unstable and frighteningly insecure for families. Work has in fact been deliberately caused to become chronically unpredictable.

A concerted assault on the domination of our societies by this putrid but dangerous financial aristocracy is needed. For this enemy is determined to maintain its stranglehold through violence and through the punishment of poverty. This grip over our economic and political lives must be broken, for only when our societies are based on public ownership and democratic control of the forces of production and the means with which to safeguard ecology, natural resources and cultural values can genuine ‘development’ (a grossly abused term) take place.

What the WTO-FAO alliance on food portends

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Campaign material by GRAIN and Via Campesina to stop seed laws that criminalise farmers and to defend local seeds.

Campaign material by GRAIN and Via Campesina to stop seed laws that criminalise farmers and to defend local seeds.

A convergence that the agri-business multinationals have long looked for is now beginning. The UN Food and Agriculture Organisation – whose constitution includes “bettering the condition of rural populations” as one of its four main purposes – has joined forces with the World Trade Organisation, whose concern for rural populations is precisely zero.

Both organisations call it a collaboration, but that term is a smokescreen. The FAO is technically being run under the supervision of its eighth director-general (since 1948; their tenures are far too long and Asian and South American members especially ought to have corrected this error long ago). José Graziano da Silva, the number eight, has since 2013 increased the pace at which the FAO also collaborates with the private sector – which means the international grain traders, the agricultural commodity cartels, the food and beverage multi-nationals, and last but not least the exceedingly powerful agricultural biotechnology corporations.

The WTO has described the new alliance as a “step up” on the issue of “trade and food security, as well as other issues”. The first item of collaboration by the trade body with the FAO will be to participate in the annual State of Agricultural Commodity Markets report, which this year will focus on trade and food security, and which the WTO has mischievously described as “the FAO’s flagship publication”. It isn’t, for the FAO’s State of Food and Agriculture is the flagship report, but that misappellation is a sign of the changes to come.

Grain_defend-local-seeds_201503_2What is being sought, from the WTO point of view, is “evidence and greater clarity on a range of issues related to trade and food security”. This is ingenuous, for the WTO’s ‘greater clarity’ has only meant more trade, justified with make-believe macro-economical models that pretend trade is good for low income consumers and smallholder farm producers alike, and to ignore ground truth. For the FAO on the other hand, ‘greater clarity’ on the question of food and trade has long been available in-house in the form of the food balance sheets maintained for every country in FAOstat, which is the voluminous FAO database.

But the tone is being set by the WTO, which has said: “Considering the important role of open and strengthened food markets in supporting food security objectives, the two directors-general discussed how trade and the multilateral trading system could help in creating a more favourable global environment for food security and sustainable agriculture.” It obviously doesn’t occur to WTO Director-General Roberto Azevêdo and his secretariat that ‘the multilateral trading system’ and ‘sustainable agriculture’ are fundamentally incompatible.

The FAO’s description of its new alliance is couched in milder terms. The organisation has said the collaboration offers “mutual assistance on critical themes such as the functioning of international grain markets” but also invokes “evidence and greater clarity” on “the governance of trade flows and the pursuit of broader food security”. FAO has resorted to using the non sequitur that food security is closely linked to trade and therefore this alliance is important. As with the WTO, internal contradictions don’t matter – if FAO is discussing smallholder family farms, then food security doesn’t include trade; if FAO is discussing organic cultivation, then food security doesn’t include trade. But under an alliance with WTO, unquestionably it does.

Grain_defend-local-seeds_201503_1FAO Director-general José Graziano da Silva has insisted that “food security and trade can together play a very important role to help fulfil FAO’s mandate”. What part of the mandate could be ‘helped’ by this alliance? The FAO member states are committed under its constitution to (1) raising levels of nutrition and standards of living of the peoples under their respective jurisdictions; (2) securing improvements in the efficiency of the production and distribution of all food and agricultural products; (3) bettering the condition of rural populations; and (4) contributing towards an expanding world economy and ensuring humanity’s freedom from hunger.

If called upon to do so by FAO member states – and I wish the G77 would summon up the critical voice to do so – the new alliance will probably be explained by the WTO and FAO as helping to fulfil the second and fourth objectives. Thus ‘improving the distribution’ of food and contributing to ‘expanding the world economy’ is what the alliance will use to show that the FAO’s mandated objectives (problematic as hey are already) are being followed.

What could the immediate implications be of the WTO now having a hand in setting the FAO’s ‘development’ agenda concerning the production of food staples and their use? Here is a short list:

1. The FAO overtly supporting the push, through the WTO, by the USA and other major grain exporting countries, for developing countries to increase their ‘trade facilitation’ measures – which means their physical and policy readiness to receive grain and manufactured food, no matter what the cost is locally.

2. This push will become stronger and energetic very quickly. So far, the Bali decision on public stockholding for food security purposes is to remain in place until a permanent solution is agreed and adopted. The WTO, the USA and the European Union want negotiations (which in their parlance means that all other countries accept their proposal) to be agreed to and adopted by 31 December 2015.

3. The new WTO-FAO alliance will immediately start exerting pressure on India, countries of the South and the G77 on Bali decisions concerning agriculture: tariff-rate quota administration, export competition and phasing out of cotton subsidies.

4. The FAO using trade-related arguments to defend the unacceptable biases in the existing WTO Agreement on Agriculture, and to beat down the developing countries stand (taken at the Bali ministerial meeting of the WTO in 2013) on the issue of public food reserves for food security.

5. The WTO using the FAO’s long experience in the field to sharpen its attack on the public food reserves systems of developing countries – which the US Trade Representative and its allies in the OECD calls ‘trade distorting’ – so that the socio-ecological institution of the smallholder farmer, and family farms, are done away with.

India’s 268,000 crore agri sales to a hungry world

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In 2013-14 India exported agricultural products worth Rs 268,469 crore, according to data from the  Department of Agriculture and Cooperation (Ministry of Agriculture, Government of India). Marine products, basmati rice and meat were the major export earners. This amount is equivalent to around 44.67 billion US dollars.

In 2013-14 India exported agricultural products worth Rs 268,469 crore, according to data from the Department of Agriculture and Cooperation (Ministry of Agriculture, Government of India). Marine products, basmati rice and meat were the major export earners. This amount is equivalent to around 44.67 billion US dollars.

There are, as usual, problems with the data. The ‘meat and preparations’ category, the third biggest earner with Rs 27,247 crore, has no quantity figure. Nor does ‘paper/wood products’, the eighth biggest earner (Rs 12,529 crore). Nor do ‘miscellaneous processed items’ (Rs 6,882 crore) or ‘fresh vegetables’ (Rs 5,117 crore).

Here are the top earners by value for 2013-14: Marine Products (Rs 30,617 crore),  Rice Basmati (Rs 29,300 crore), Meat and Preparations (Rs 27,247 crore), Cotton Raw Incld. Waste (Rs 22,248 crore), Rice (Other Than Basmati) (Rs 17,493 crore), Oil Meals (Rs 17,034 crore), Spices (Rs 15,981 crore), Paper/Wood Products (Rs 12,529 crore), Guargam Meal (Rs 11,734 crore). These are the earners above Rs 10,000 crore.

Here are the major quantities exported in 2013-14, in thousands of tons: Rice (Other Than Basmati), 7,019; Oil Meals, 6,564; Wheat, 5,560; Other Cereals, 4,609; Rice Basmati, 3,757; Sugar, 2,460; Cotton Raw Incld. Waste, 1,941; Spices, 1,029; Marine Products, 999; Guargam Meal, 602; Castor Oil, 545; Groundnut, 512; Pulses, 343; Sesame Seeds, 257; Coffee, 254; Tea, 248; Tobacco Unmanufactured, 237; Mollases, 212; Cashew, 121.

What India is to the world, what Indians will struggle with

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Children in a village in the district of Krishnagiri, Tamil Nadu

From within India (Bharat, we call it) there are ever more worrying signs that the club of rich and inter-connected global corporations, financial entities and their political patrons are working in concert to fulfil their programme of rapid and sweeping change in the country. Inside India, the government of the day, a technical coalition led by the Congress Party (the Indian National Congress it its full name) has for the past two years ignored widespread public movements against corruption, against the rise in food prices, against the blatant manner in which the country’s political and industrial elite has thrived in conditions that have led to the continuing impoverishment of the rural and urban poor.

In a joint call to G20 country governments, the WTO and the OECD said: “The difficulties generated by the global economic crisis, with its many facets, are fuelling the political and economic pressures put on governments to raise trade barriers. This is not the time to succumb to these pressures.” What will that call, if acted upon, do to the lives of these two Indians, one very young, the other unconcerned by the machinations of the capitalists but nonetheless affected by them?

This group includes politicians and their families and cronies (regardless, mostly, of party and political affiliation (the parties of the Left excepted)), what is commonly referred to as ‘India Inc.’ by which is meant the country’s large and medium businesses, led by all those who have found inclusion in the list of the top 100 most wealthy Indians (see the latest odious ranking by Forbes magazine’s India edition), and it also includes the senior corporate and industrial associations in India and abroad (several based in the USA, which bring together the most exploitative elements of the American capitalist class who find common cause with their Indian counterparts, and who can count on the strengthening of Indo-American ties whether economic, financial, defence, agricultural or scientific to pursue their agenda) which are regularly and well represented in the World Economic Forum for example. Also ranged against the Indian (the Bharatiya) proletariat are the OECD, the IMF, the World Bank, the ADB, the several dozen thinktanks funded through government back channels and innocuous-sounding foundations apparently dedicated to ‘low carbon’ growth or ‘sustainable development’ or even water and sanitation – their cover stories all sound alike.

And it is this group that sets the agenda for India between now and say 2020. The signs of how the concert is directed become plainer to see with each passing month. Let us look at a few of the many signals that have come to public attention recently. The most recent is the ‘Second Quarter Review of Monetary Policy 2012-13’, by the Reserve Bank of India (the country’s central bank), which was released at the end of October 2012. This report bemoaned the “global slowdown and uncertainty” amidst which “the Indian economy remains sluggish, held down by stalled investment, weakening consumption and declining exports”. In this report however the governor of the RBI said that “recent policy initiatives undertaken by the Government have begun to dispel pervasive negative sentiments… As the measures already announced are implemented and further reforms are initiated, they should help improve the investment climate further”.

The Reserve Bank of India’s projections about the turns India’s wholesale price index can take. Yes, and what about the real price of ‘dal’ and ‘roti’?

Now consider a report released by the OECD (the Organisation for Economic Co-operation and Development) entitled ‘India – Sustaining High And Inclusive Growth’ (pdf). This is part of the OCED’s ‘Better Policies’ Series, a sinister name for strong-arm pressure which the OECD describes as promoting “the OECD’s policy advice to the specific and timely priorities of member and partner countries, focusing on how governments can make reform happen“.

Reform according to the OECD and the agents of primitive accumulation means turning the rural and urban poor into households dependent upon hand-outs, destroying the public sector, turning over public goods to corporations, shutting down social sector services like healthcare and education and turning them into profit centres for corporations using methods like public-private partnership. ‘Reform’ also hastens the creation of that class so beloved of the global marketers and their comrades in our government whose effort it is to purloin resources, engender urbanisation, monetise an apology for tertiary education in the name of ‘faster and more inclusive growth’ – it has done so in China (under a quite different guise) and is doing so in India. Consult this product, ‘The $10 Trillion Prize: Captivating the Newly Affluent in China and India’ (Harvard Business Press Books) which breathlessly advises: “Meet your new global consumer. You’ve heard of the burgeoning consumer markets in China and India that are driving the world economy. But do you know enough about these new consumers to convert them into customers? Do you know that there will be nearly one billion middle-class consumers in China and India within the next ten years? More than 135 million Chinese and Indians will graduate from college in this timeframe, compared to just 30 million in the United States?”

This is what the OECD report has said about India: “The potential for sustained strong growth is high. The Indian population is young by international comparison and this together with declining fertility has led to a falling youth dependency rate. The national savings rate is also high and, given favourable demographics, could well rise further in the medium term, providing the capital needed to fund investment in infrastructure as well as strong expansion in private enterprise. Furthermore, despite employment rising in the industrial and service sectors, around half of all workers remain in low value-added agriculture. The scope is therefore enormous for economy-wide productivity gains from the further migration of workers into modern sectors.” Indeed, who will then produce the food India needs for her modest and still mostly vegetarian diet?

The image used by the OECD for its India report. Throw out the public sector and turn over health, transport, energy and education to the corporations, the OECD has told its India collaborators.

What stands out here is the sort of language used, so common now in these inter-governmental circles of avarice and resource-grab, so worryingly mirrored in the pronouncements by India’s ruling coalition politicians and its central planners and their hired guns in compromised ‘research’ thinktanks and ‘policy advice’ units. Thus they have talked about fully reaping the “benefits of the demographic dividend” and of supporting “a return to high and more inclusive growth” (India’s Eleventh and Twelfth Five Year Plan documents reek of this statement). Thus they have repeated as a chant that “India needs to renew its commitment to sound macroeconomic policy and implementation of reforms”. The imperative given is clear and will be enforced by all arms of the executive and those opposing are threatened by punitive action, for they insist that “public finances on a sound footing and improving the fiscal framework so that persistent large deficits do not undermine macroeconomic stability and investor confidence“.

You see the importance given to ‘investor confidence’ by the governor of the RBI, by the OECD overlords and recently, by the prime minister of India Manmohan Singh. First, on 15 September 2012 he told a meeting of India’s Planning Commission that “the most important area for immediate action is to speed up the pace of implementation of infrastructure projects. This is critical for removing supply bottlenecks which constrain growth in other sectors, and also for boosting investor sentiment to raise the overall rate of investment“. Singh added that where “macro-economic balance” is concerned, the [Twelfth Five-Year) Plan (2012-17) “envisages a substantial acceleration of growth. This is critically dependent on raising the rate of investment in the economy. The investment environment is therefore critical.” Second, on 20 September 2012 in a statement he made clarifying this government’s decision to permit foreign investment in the retail sector he said: “We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose.”

Members of a self-help group in the district of Krishnagiri, Tamil Nadu, at their weekly meeting.

Where is the common Indian, the resident of Bharat, in all this? The government of India and the Reserve Bank of India say they are worried that what they call “headline WPI (wholesale price index) inflation” remained at above 7.5% (calculated only over a year) through the first half of 2012-13 (that means April to September 2012). The truth is far more severe. Retail prices per kilogram of cereals and pulses have in every single city and town in India have increased, from early 2006, by between 180% and 220%. This when the daily wages for those who spend 55% to 65% of their income on food have increased over the same period by no more than 50%. And instead, the prime minister and his advisers say foreign direct investment will provide more jobs and better wages. Did 25 years of structural adjustment as rammed down the throats of millions of citizens in the countries of the South, by the International Monetary Fund and the World Bank in collusion with an earlier generation of elite accumulators, sound any different?

Written by makanaka

November 1, 2012 at 16:29

Why the West wants to wreck UNCTAD

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How much damage do the financial and ruling elites of the western power blocs think they can get away with? A great deal, it is clear, judging from the stoutness of the defences raised to protect the UNCTAD (United Nations Conference on Trade and Development) and its analytical mandate.

One of the less conspicuous UN agencies, UNCTAD was set up in 1964 to support developing countries to strengthen their weak position in international economic structures, and to design national development strategies. As Martin Khor, Executive Director of the South Centre, explained, it became a kind of secretariat on behalf of developing countries, providing a small pro-development balance to the huge organisations dominated by the developed countries, such as the OECD, the IMF and World Bank.

In the past 20 years, the developed countries (OECD) have tried to curb the pro-South orientation of the UNCTAD secretariat and its many reports. The inter-governmental discussions became less significant, while UNCTAD’s pro-development mission was increasingly challenged by the developed countries.

What is this mission? UNCTAD says it promotes the development-friendly integration of developing countries into the world economy, that it has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development.

Note the stress on development, and not market, not trade and not finance. This is the problem for those who would seek to scuttle UNCTAD. It is a trend that seemed to have subsided in the past decade, but in the past two months, the meetings in Geneva to prepare for UNCTAD XIII, some developed countries have reportedly attempted to dilute the areas of future work of UNCTAD, to the frustration of the G77 and China.

Hence the statement, which is now widely available on the internet, by civil society organisations which have gathered in Doha, Qatar, for UNCTAD XIII meeting (21-26 April), which has said:

“The importance of UNCTAD’s work has been highlighted by the global financial and economic crisis and its continuing catastrophic effects on peoples and economies. Over the years while the Bretton Woods twins led the cheerleading for unbridled liberalisation and deregulation of markets and finances which produced the crisis, UNCTAD’s analysis consistently pointed out the dangers of these policies. The economic turmoil provoked by the crisis makes UNCTAD’s mandate and work even more relevant.”

“CSOs in Doha demand that UNCTAD’s crucial research and analytical work especially on 1) the global financial crisis, and 2) other development challenges including those arising from globalisation be maintained. UNCTAD serves as an important countervailing forum where the interests of developing countries can be paramount when trade, development and interrelated issues are being discussed. This value and its proven track record is why the attack on UNCTAD’s mandate has to be resisted.”

The CSOs in Doha are concerned that group of countries which includes Japan, USA, Switzerland, Canada, South Korea, Australia, New Zealand and which also includes the European Union (EU) are so opposed to UNCTAD’s vital analytical and advisory work on finance and responses to the crisis that they are refusing to even reaffirm UNCTAD’s mandate as agreed in Accra.

What is clear is that this group now sees UNCTAD’s work as a global defence against the effects of new economic policies, which in their many mutations have since the early 1980s heaped unspeakable misery on hundreds of millions around the world, in the South. These policies, as UNCTAD has also helped show, have led directly and indirectly to pervasive and chronic economic inequality, insecurity, unemployment and under-employment, casualisation, informalisation, a heightened level of labour exploitation, the emasculation of protective factory acts and labour laws.

That is why the civil society organisations present in Doha for UNCTAD XIII contrasted the interest the major powers have shown in strengthening the IMF and World Bank (and in using bodies of questionable accountability such as the G20 to block truly multilateral responses to the crisis of neoliberalism) with their negative attitude to UNCTAD. They noted that the IMF and World Bank continue to peddle policies which caused and have been discredited by the crisis. And they have demanded that the OECD-oriented group of would-be UNCTAD wreckers keep their hands off the organisation.

Written by makanaka

April 20, 2012 at 17:49

The very odd macro-economics of food prices and food inflation in India

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Food inflation has hurt, but we have just the prescription for it. So says the Economic Advisory Council to the Prime Minister of India. This group of the country’s seniormost macroeconomic planners is considered to be as heavyweight as they come, and have considerable influence on policy in India. The major ministries listen to the pronouncements of the EAC very attentively – finance, commerce and industry, power, steel, agriculture, infrastructure. India’s industry associations and business interest groups do the same – they are the Confederation of Indian Industry (CII), the Associated Chambers of Commerce and Industry of India (Assocham) and the Federation of Indian Chambers of Commerce and Industry (Ficci).

But amongst the five members of the EAC (all ‘Drs’, naturally) there are no women. There is no trade union member, there is neither nurse nor teacher, there is no housewife and there is no bus driver, there is no municipal sweeper and no roadside food vendor, there is no-one from a ‘scheduled caste’ or a ‘scheduled tribe’, in fact there is no tribal at all, there is neither artist nor essayist, there is no-one to speak for the old folk of India and none to explain the dreams of India’s youth. Still they call it a council to which the country’s prime minister listens. What he and his ministerial colleagues learn from these five cosseted greybeards in their ivory tower I can hardly imagine.

The price of a kilo of rice, from 2006 to 2011, in 49 urban centres in India.

Let us see why it is so difficult to find utility (the word classical economists make much of) in the pronouncements of this cabal.

They said: “Very high rates of inflation have characterized the last two years. Much of the inflationary pressure came from primary foods, including cereals in the initial months.”


They said: “While, open market intervention and large releases under the public distribution system (PDS) helped to stabilize the price of cereals, pressure continued to come from rising prices from other primary food items – especially pulses, milk, eggs, meat & fish.”

What does “open market intervention” mean? If it means the central government buying foodgrain to funnel into the public distribution system, this is a method riddled with corruption and crippled by speculation. There are no “large releases” different from the normal schedule of releases which in a country like India are large anyway. Cereal prices have not stabilised – not in 2011 and 2010 and not at any time in the last five years.

They said: “Greatly improved output of kharif pulses in 2010 combined with marketing of imported pulses at controlled prices, helped to curtail the inflation in pulses by July 2010. However, prices continued to rise for fruit, milk, eggs and meat & fish.”

Inflation in the prices of pulses has by no means been curtailed, controlled or even understood. Many kinds of pulses in India are consumed in many different ways, and there is demand not only from final household consumers but also from the dispersed and very varied small foods and snacks manufacturers for whom pulses are a necessary ingredient. Fruit, milk, eggs, meat and fish – all scarce items in the food basket of the poor but high-margin items for the food retail stores in urban India. The EAC has made no mention of why prices for these foods rose – homework not done.

They said: “The prices of vegetables took an unexpected turn in December 2010 and January 2011, resulting in an increase in the wholesale price index of vegetables by 34 and 67 per cent respectively in these two months. In consequence, primary food price inflation stayed in the double digits.”

Not only in December 2010 and January 2011. Several staple vegetables have been the actors in price volatility operas in all the 49 urban centres for which  India’s Food and Consumer Affairs Ministry monitors retail prices. To blame, in my view, is the steady ingress of the food logistics sector (itself part of the corporatisation of food and agriculture in India) into urban centres beyond the major metropolises. The “cold chain” and “value chain” evangelists work for the retail food and processed foods industry, and can exercise degrees of arbitrage which are wholly ignored by the EAC. Inside the market, there was no hint of the “unexpected”.

The price of a kilo of wheat, from 2006 to 2011, in 49 urban centres in India.

They said: “Such a lengthy period of sustained high food price inflation had its expected impact on money wage rates and other cash expenses, which in turn began to get passed into the price behaviour of manufactured goods. Year-on-year inflation for manufactured goods rose from around 5 per cent to 8 per cent in September and October 2011.”

Shouldn’t fossil fuel products and the prices we pay for them share the blame? I think a cursory study of the prices for OPEC and non-OPEC crude products will explain a lot. And besides, “wages” are wages to people who – being mostly in the informal sector and unorganised labour – cannot bargain collectively nor are represented in policy-making bodies (like the EAC), so their money wage rates have not risen in tandem with inflation. Quite the contrary, for rural labour (agricultural and non-farm both) the average household spends 65% of its income on food.

[You can get the EAC Review of the Indian Economy 2011-12 document (pdf) here] [You can get a plain text file of the paragraphs on food and agriculture, prices and inflation (txt) here]

They said: “The net effect was that the headline rate of inflation stayed close to 10 per cent for an extended period of twenty two months.”

True, even for whatever is meant by “headline rate”.

They said: “It should not be forgotten that throughout this period there has also been a suppression of the headline rate insofar as the prices of several refined petroleum products, especially diesel, continued to be restrained by policy – which has had an adverse impact on the subsidy bill and therefore on government finances and also on the finances of the public sector oil companies.”

Oh we are so distressed by the hurt caused to government finances, especially coming on top of the enormous tax write-offs (called “forgone tax revenue” in India’s quaint public accounts jargon) given to the esteemed members of CII, Assocham and Ficci, many of whom are direct beneficiaries of the measures that led to a high “headline rate” of inflation in the first place. Money for jam, I would call it.

They said: “The effort of public policy, especially monetary policy, seems to have had its desired effect. The headline rate dropped to 9.1 per cent in November and further to 7.5 per cent in December and has dropped further in January 2012.”

Now I know that the spreadsheet program supplied to the EAC for such calculations is provided by Messers Alice in Wonderland GmBH.

They said: “The welcome developments in the easing of inflationary pressures will enable the RBI to adjust its monetary stance over the next several months. However, the continued pressure from the fiscal side will continue to impose some limitations. Hopefully the extent of the fiscal burden may ease in 2012-13 and create conditions that are more conducive to investment and economic growth.”

Ah yes, in case we were momentarily misled, this is to remind us that the purpose of high-level panels of greybeards is to prove circuitously to the proletariat that conditions conducive to investment and economic growth matter (so very much) more than our shrinking wages and the spiralling prices we pay for our daily bowl of rice and scraps of vegetables. We stand educated.

For its 50th year bash, Europe’s CAP readies another dose of ‘reforms’

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The CAP at 50 website

2012 marks the 50th anniversary of the implementation of the EU’s Common Agriculture Policy (CAP), described rather pompously by the European Commission as “a cornerstone of European integration” – well, it is true that farming has done a lot more for the idea of Europa than the euro has.

CAP “has provided European citizens with 50 years of food security and a living countryside”, the celebratory website has explained. The CAP remains the only EU policy where there is a common EU framework and the majority of public spending in all Member States comes from the EU budget, rather than from national or regional budgets, we are told. I should have expected the EU to ignore entirely the trifling matter of the steady impoverishment of European societies, especially the second and third tier Euro societies – which is particularly those countries beyond the EU-15. What has the CAP done for them, for the relative late-comers to the European idea?

But, the Eurocrats have said that “figures show that the CAP has helped see a steady increase in economic value, in productivity, and in trade, while also allowing the share of household spending on food to be halved”. Oh, that’s all right then – we were just looking at the wrong figures. Silly us.

“The CAP is a policy that has always evolved to address necessary challenges,” the pomposity continues. For example, we are told that the reform process since 1992 “has seen a move towards much greater market orientation and away from trade-distorting support” – um, did we notice a few years ago that the average EU cow (or ox) receives more by way of subventions than quite a few of the poorer humans in ‘developing’ Asia, Africa, South-East Asia and South America? Oh, sorry, wrong figures again. Bother such troublesome data.

Being the dynamic and forward-looking CAP that it is, it has also taken “into account consumer concerns about issues such as animal welfare, and the doubling of the number of farmers within the EU (following enlargement from 15 to 27 Member States)”. There we are – that’s the first tier nod to the third tier EU lot, and said ruffians should be pleased.

In October 2011, the European Commission presented its latest proposals for further reforms – haven’t we been through all this before? more reform? are you chaps quite blind to what’s happening to your favourite currency while you’ve been reforming? or is it the very latest blend from the new ultra-snob coffee bistro in Brussels that’s to blame? – to the CAP.

What, pray, are these 50th anniversary, limited edition reforms all about? At “addressing the challenges of today and tomorrow: food security; climate change; the sustainable use of natural resources; balanced regional development; helping the farming sector cope with the effects of the economic crisis and with the increased volatility of agricultural prices; and contributing to smart, sustainable and inclusive growth in line with the Europe 2020 strategy”.

Alea jacta est, and especially those so for farmers and their families who live somewhere between EU15 and EU27, for this is a signal to tighten their already painfully tight belts, and salt what remains of the day’s spud.

Milestones of History of CAP (provided by the EU)

Back in 1962, several key dates marked the beginning of the CAP:
• On 14 January 1962, after 140 hours of negotiations (the first European agricultural marathon), the Council of Ministers of the Six took the decision to proceed to the second stage of the transition period, to establish common agricultural market organisations for each product, to apply specific competition rules and to create a European Agricultural Guidance and Guarantee Fund (EAGGF).
• 4 April 1962:  Following a second agricultural marathon, the texts of the regulations were adopted by the Council.
• 20 April 1962: The texts were published. The date that they came into effect depended on the start of the market season: for instance, for the common market organisation for cereals, eggs, poultry, meat and pork the date of entry into effect was 1 July 1962.
• Among the key dates since then:
• 1962: The Common Agricultural Policy (CAP) is born! The essence of the policy is to provide affordable food for EU citizens and a fair standard of living for farmers.
• 1984: Milk quotas – Specific measures are put in place to align milk production with market needs.
• 1992: “Mac Sharry” reform – The CAP shifts from market support to producer support. Price support is replaced with direct aid payments. There is increased emphasis on food quality, protecting traditional and regional foods and caring for the environment.
• 2000: The scope of the CAP is widened to include rural development. The CAP focuses on the economic, social and cultural development of Europe with targeted multi-annual programmes, designed at national, regional or local level.
• 2003: “Fischler/Mid-term Review” reform – CAP reform cuts the link between subsidies and production. Farmers are more market oriented and, in view of the specific constraints on European agriculture, they receive an income aid. They have to respect specific environmental, animal welfare and food safety standards.
• 2004 & 2007: EU farming population doubles, following recent enlargements with 12 New Member States. EU’s agricultural and rural landscape changes as well.
• 2012: New CAP reform negotiations to strengthen the economic and ecological competitiveness of the agricultural sector, to promote innovation, to combat climate change and to support employment and growth in rural areas.

Global Commodities Forum 2012

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UNCTAD’s Global Commodities Forum is back. The theme of this third meeting (23-24 January, 2012) is “Harnessing development gains from commodities production and trade”. Participants are to discuss the debt crisis and analyse the trade-related innovations developed in response to it.

This year, the Forum will focus on ways to spur development through commodity production and trade, and on practical approaches to developing supply markets in commodity-dependent developing countries. Participants are also expected to discuss the sovereign debt crisis and analyse the trade-related innovations developed in response to the credit crunch. A special session is going to be dedicated to identifying opportunities for applying existing private-sector solutions to the challenges faced by developing countries.

The third GCF is divided into two parallel streams: the Plenary A stream treats the Forum’s overall theme of harnessing development gains from commodities production and trade; the Parallel B  stream examines the development of supply markets in commodity-dependent countries.

Plenary A: Recent developments in international commodities trade, their impacts and implications (Joint A1/B1); The sovereign debt crisis and its impacts on commodities production and trade (A2); Trade-related financial innovations developed in response to the post-2008 credit crunch (A3); Key challenges facing commodity-dependent developing countries (A4/5); Identifying emerging opportunities in the changing global energy mix (A6); Practical examples of supply chain development in developing countries (A7).

Parallel B: Recent developments in international commodities trade, their impacts and implications (Joint A1/B1); In practice: Financing commodity-based development in developing countries (B2/3); Expanding access to markets and trade-enabling tools (B4/5); Identifying potential opportunities for collaboration (B6/7).

From the concept note: Many developing countries are heavily dependent on exports of commodities. Throughout most of the 1980s and 1990s, prices for these goods remained low, but since 2002 they have risen considerably. Despite the resulting increase in the value of their chief exports, most commodity-dependent developing countries (CDDCs) have been unable to convert the additional revenue into a diversification of their export industries. Since 2002, the number of countries whose commodity exports represent more than 60% of merchandise exports has risen from 85 to 91.

Their persistent dependence on commodities exports has been particularly poignant for CDDCs as the fallout from the 2008 global economic crisis continues.  Many of these nations are dependent on imports of food, oil, and manufactured goods. Poverty and food security are often pressing concerns. As the global crisis has squeezed government and household budgets, CDDCs find themselves less able to confront these major challenges. It is vital for them to realize greater lasting value from their commodities exports.

Over the past year, the pressure on CDDCs has increased with the worsening of the sovereign debt crisis, which threatens to reduce the amount of credit available to commodities producers and to increase the amount of speculative capital that flows from financial markets into commodities in search of profitable investments. Continued price volatility in commodities markets has prompted high-level collaborative international action, including most recently by the UN High Level Task Force (UN HLTF) and the G-20 grouping of major economies. This year’s UNCTAD Global Commodities Forum (GCF) will focus on what CDDCs can do to reverse the pattern. The event’s theme is ‘Harnessing development gains from commodities production and trade.’

World crop estimates 2011 November – more wheat, China corn, less rice

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The November data and major crop summaries from the World Agricultural Supply and Demand Estimates (WASDE, US Department of Agriculture, Economic Research Service) are out today. Here are the highlights:

Wheat – Global wheat supplies for 2011-12 are projected 2.6 million tons higher mostly reflecting higher production in Kazakhstan and EU-27. Kazakhstan production is raised 2.0 million tons as an extended harvest period capped off a nearly ideal growing season, confirmed by the latest government reports. EU-27 production is raised 1.2 million tons with further upward revisions for France and Spain and higher reported production in the United Kingdom and Czech Republic. Partly offsetting these increases is a 0.5-million-ton reduction for Argentina and 0.3-million-ton reductions for both Algeria and Ethiopia.

World wheat trade is raised for 2011-12 with higher expected imports for China, a number of African countries, including Morocco and Algeria, as well as for Brazil and several FSU-12 countries neighboring Kazakhstan. Partly offsetting is a reduction in projected imports for South Korea where more corn feeding is expected. Exports are raised 1.0 million tons each for EU-27 and Russia reflecting larger supplies in EU-27 and the continued heavy pace of shipments from Russia.

Global wheat consumption for 2011-12 is raised 2.4 million tons with increased feeding expected for Kazakhstan, Brazil, and Serbia. Larger crops in Kazakhstan and Serbia support more wheat feeding. Recent rains in southern Brazil have reduced wheat quality in some areas raising the potential for more feeding. Higher consumption is also expected for EU-27, Ethiopia, Kenya, and several smaller FSU-12 countries. Global ending stocks are projected 0.2 million tons higher. Rising stocks in Kazakhstan, China, and Morocco are partly offset by reductions in major exporting countries including Russia, Argentina, and EU-27.

You can get the WASDE 2011 November outlook here [pdf] and the 2011 November Excel file is here [xls]. Current and historical WASDE data are here.

Coarse grain – Global coarse grain supplies for 2011-12 are projected slightly lower with reduced U.S. corn production and lower EU-27 rye production more than offsetting higher Argentina sorghum production, higher EU-27 corn, barley, oats production, and higher Kazakhstan barley production. Corn production is lowered for a number of countries with the biggest reduction for Mexico where production is lowered 3.5 million tons. A late start to the summer rainy season and an early September freeze in parts of the southern plateau corn belt reduced yields for Mexico’s summer crop. Lower expected area for the winter crop, which will be planted in November and December, also reduces 2011-12 corn production prospects. Reservoir levels are well below those necessary to sustain a normal seasonal draw down in the northwestern corn areas which normally account for 70 to 80 percent of Mexico’s winter corn crop.

Increases in 2011-12 corn production for a number of countries partly offset reductions in Mexico, the United States, and Serbia. Corn production is raised 2.5 million tons for China with increases in both area and yields in line with the latest indications from the China National Grain and Oils Information Center. EU-27 corn production is raised 1.9 million tons mostly reflecting higher reported output in France, Romania, and Austria. Argentina production is raised 1.5 million tons with higher expected area. FSU-12 production is raised 0.7 million tons with higher reported yields in Belarus and Russia. There are also a number of production changes this month to corn and sorghum production in Sub-Saharan Africa which reduce coarse grain production for the region.

World coarse grain trade for 2011-12 is raised with increased global imports and exports of barley and corn. Barley imports are raised for Algeria, Saudi Arabia, and Jordan with exports increased for EU-27 and Russia. Corn imports are increased for China, Mexico, and South Korea. Higher expected corn exports from Argentina and EU-27 support these increases. Higher sorghum exports from Argentina offset the reduction in expected U.S. sorghum shipments. Global corn consumption is mostly unchanged with higher industrial use and feeding in China and higher corn feeding in EU-27 and South Korea offsetting reductions in Mexico and the United States. Global corn ending stocks are projected 1.6 million tons lower with reductions in EU-27, Mexico, Brazil, and the United States outweighing increases for China and Argentina.

RiceGlobal 2011-12 rice supply and use are lowered from a month ago. World 2011-12 production is forecast at a record 461.0 million tons, down 0.4 million from last month due mainly to decreases for Burma, Cambodia, Laos, and Thailand, which are partially offset by an increase for China. Thailand’s 2011-12 rice crop is lowered nearly a million tons as losses in the main-season crop from recent flooding are partially offset by an expected re-planting of some of the main season crop in the Northern Region along with an expected record dry-season crop. Flooding also lowered crop prospects in Burma, Cambodia, and Laos. China’s 2011-12 crop is raised 2.0 million tons to a record 141.0 million, due to an increase in harvested area. Harvested area is increased based on recent indications from the government of China. The increase in global consumption is due mostly to an increase for China. Global exports are lowered slightly due to reductions for Burma and Cambodia, which are partially offset by increases for Argentina and Brazil. Global ending stocks for 2011-12 are projected at 100.6 million tons, down 0.8 million from last month, but an increase of 2.6 million from the previous year.


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