Another current and thought provoking article from Dr.B. V. Krishnamurthy on global food crisis.The author has logically proved that it is difficult to accept the notion that increased prosperity and consumption in India have an impact on global food prices.
The fact that the price of rice has spiked 120% in 2008 alone is alarming and reflects the lop sided measures of many countries.

The plight of one billion people who live on $1 a day indicates the Malthusian alarm of population increasing in geometrical ratio while food production increases in arithmetic ratio.
As the learned author has suggested the starting and strengething of cooperative farms can consolidate the small farmers.The author is apt in suggesting a ever green revolution and not an occasional green revolution to solve the food crisis.
The humanistic conclusion that people should work together is thekey for this and many other related problems

The economist Jeffrey Sachs has made suggestions to avert the crisis. These include providing high-yielding seeds to small farmers at affordable prices, reducing the craze for bio fuels, and some form of protection from natural calamities. The author's suggestions complement those of the economist. Implemented, they can indeed avert a crisis. Is anyone listening?

Sir,

As important as the amount of food consumed in developed and developing countries is the nature of food.

For example, a Big Mac reportedly has 1439 calories. A 12"
pizza with appropriate toppings would probably give the Mac
a run for its money in calories.

Therefore, developed countries would do well to look at the eating habits of their people before blaming others for the present crisis. The so-called junk food culture has resulted in a generation of obese people with all attendant problems - hypertension, heart disease, diabetes - the list can go on and on.

Thus, it is not food that we are talking about. Has anyone calculated the enormous costs of health care associated with bad eating habits? If this is corrected and the money saved is used to improve health and nutrition in the poorest countries, we may not have to talk of a food crisis after all.

As stated by the author, the solution is within our capability.

food is very important for sustainability spcecially in the developing countries, one has to eat proper nutrition in order to acquire good health and good minds, it seems that the government in India lacks support to the small scale farmers which resulting to low production of staple food such as rice, the government should pass a guidelines relative to how farmers can increase their production to meet the demands nationally or even globally. Like for instance by creating an eduactional program to farmers for modern methods and technology.

Its a wake-up call for the world...The author has rightly pointed out the desperate need for "improving productivity" that has long been stagnant as investments in innovations in agriculture are declining last 2/3 decades.

And the second & most critical one is "subsidizing agriculture" by few developed countries. It is inconceivable that they spend billions of dollars (or pound sterlings) subsidizing their agri industry, distorting the world market, causing rippling effects in the developing (and few underdeveloped) countries who cannot compete in price. This ultimately forces the latter out of the market and drives them to poverty and hunger. Then, the same developed countries jump in as "saviours" and claim to eradicate hunger and poverty by again spending billions of dollars in aids... to me it seems double paradox.... How can this "double spending" be justified? What the big brothers really wanted to show the world their "magnanimity"?

Any comments? Its my personal opinion, please correct if wrong...
Raghavan

It’s quite puzzling for us common folks as to why we are suddenly faced with “ an unprecedented food crisis” this year.
Has food production gone off a cliff in the last one year? Has population growth soared past the projections in 2007-2008 ? Surely the maternity wards would have buckled under the pressure? There were adequate food supplies last year – what happened in 2008 to alarm the professors?

Here are the facts on the oil front :
a) Oil consumption in the US has reduced 1.3% in the last year.
b) Oil consumption in China, Russia, India and the Middle East (combined) has increased 4% , so taking up the slack and is now more than the consumption of the U.S.
c) Internal demand in the oil producing countries – Saudi Arabia, Russia, Iran , Norway and UAE has grown 6% and their exports have reduced 3%.
d) Mexico’s oil production has dropped 9%.

Here are the facts on the money supply front :
a) The U.S. Fed is printing notes like there is no tomorrow , and moving them into the financial system at an estimated 2% below the official inflation rate ( about 6% below the shadow unofficial inflation rate) , and so is heading towards another bubble where the whole system will be awash with money , money which will either lose its intrinsic value or madly chase something to buy.
b) Those countries which have not followed as recklessly find their currencies strengthening at a rapid pace.Those countries which have followed the US lead find their currencies devaluing along with the US dollar – some like India are even devaluing against the US dollar, which must need real doing.

Here are the facts that we observe in the real world :
a) Though the price of oil has trebled over the last 2-3 years, the cost of sea and air transportation has not shot up in the same proportion. Actually, it has not gone up more than 20 or 25% , and this too is a recent phenomenon in the second quarter of 2008. These price increases have been kept under separate heads , the “bunker adjustment” for shipping and the “fuel surcharges” for airlines . Apparently they fear losing their competitive positions in the event a recession takes hold, and this makes one feel that they want to cover the increased costs but are highly tentative about the permanence of the increase .
b) The demand for food could not have suddenly changed dramatically over the last one year , irrespective of the improving per capita income in the developing world. Neither have prices of transportation, fertilizers, and other oil based inputs gone up so much – they have gone up , but nowhere in the same proportion as the price of crude oil.

This makes one guess that the market considers the price of crude oil to be speculative, in a kind of bubble based on the inflationary expectations , the huge amount of money coming into the financial markets and the rapid drop in the intrinsic value of that money ie. the $. All commodity prices have shot up , including the price of food items.
Traders are taking advantage of the inflationary expectations which have taken hold, finding an opportunity for windfall profits unconnected to the real rise in the costs . A similar situation arose in Europe immediately after the introduction of the euro – everyone took advantage of the general unfamiliarity with the new currency to mark up huge amounts in the guise of rounding off and rationalization. Anyone who visited Europe just before and also just after the introduction of the euro would remember the sticker shock that ordinary people experienced everywhere they went.

The general panic is well fed by the media, which publicizes the various droughts and crop failures as part of one common global climate change . Actually , many of these could be local cycles of nature , no one can tell for sure either way as yet . No one bothers to talk about the reports of better performance on the agriculture front.Today’s Indian papers reported that the Indian agriculture sector grew 3.5% over the last year , compared to a provisional estimate of 2.7% .This is a huge difference : + 30% over the estimate. In addition , the monsoon has arrived in time and there is every indication of another good monsoon year– but it would be interesting to see how many international main stream agencies report these news items . Goes against the dominant story of the day.

What about those who should know? George Soros thinks that the crude market is driven by speculators. “Speculation is increasingly affecting the price, which has a parabolic shape, which is characteristic of bubbles,” he said the other day. A parabolic shape starts off almost horizontal for a long while and then starts sharply curving towards the vertical , the rate of increase being logarithmic ie. not equal for equal periods of time as our instincts would expect, but actually increasing in each succeeding interval of time .
OPEC chief Chakib Khelil observed a month back that crude oil prices were climbing, “even though supply is adequate, because the market is driven by the dollar’s slide….” Whether supply is adequate is debatable, but look around you . Do you see any pumps going dry ?

Same thing with food. One or two small countries have had food riots – not because the markets ran out of food, but because the prices were unaffordable . In other words, food is available, but the speculators have forced the prices too high. You may argue that the prices going up shows a supply side constraint , but where are the hard facts to support this assumption?

Over to you, sir.

The Global Food Crisis: Facts and Opportunities
Mr. Krishnamurthy.
What we have is not one small problem. We have a globe that has more then 160 countries with very diverse cultures, governments, religions, populations’ expectations from these very governments that promised them rice, wheat, petrol in the car that carries their children to schools and the gas that cooks the food in the houses. I am not seeking sympathy for any. As you, I am trying to put the subject exactly as it should be to enable me to talk exact.
UN will not help. The food programmers have plenty at the time when Myanmar politicians at the last minute allow the food to trickle in, the Chinese earthquakes that is still on and the elections that go on in USA with mudslinging. At the time when the houses prices have seen so little change, we are back to 1970s and we are in looking to the recessions however, we refuse to believe this.
These are the facts we see.
Now let us talk of opportunities.
The agricultural lands are still open for us in African continent. But then like the Arctic all want to go there and slice the lands in pieces for anything that the spoils they grab. Let me illustrate. The Arctic had the first flag of Russia exactly as America planted the flag on the moon. This time there are five countries, Canada, Russia, USA and others.
What happens to those who are far and poor and cannot even have a vacation in the small lake nearby?
The whole issue is a big farce like the Iraq war.
There are crises and there are opportunities but for who?
If you want to give the food dug from the grounds of the poor and give these to the rich then they hide these when the time is right to sell and sell these at a premium.
I am not being pessimists but I do not see the distribution of food hence the food crises is still on like this or not. Rich want to become rich and poor will stay poor like the builders of the Pyramids of the Pharaohs who wanted the solace in the heaven near the god.
I thank you
Firozali A. Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
East Africa