Monday, June 6, 2011

Food, India, and Growing Global Influence

Food: The Price is the Crisis

At the risk of sounding trite, the law of supply and demand still functions. To solve the price crisis in India, supply must be increased. This is a matter of "time place utility"; "form utility"; "economies to scale"; and direct foreign investment. I mention the last consideration because the advice to some can also be considered advice to another. In short, if you know where and how people are being advised to invest, you can position yourself to be the where and the how.

I've included "Having Problems with Foreign Direct Investment?" to give insight into what investors can look for. This can also give insight into those who want to benefit from the investors. I've included The Marketing of India. I've included a metaphor: Starving Nations and Food Equations: A metaphor. This is not to be interpreted as reference to people actually dying. It is to discuss the economics of agriculture.

Having Problems with Foreign Direct Investment?

What are some of the barriers?



It is easy to see that start up costs in some countries are much lower than start up costs in another. If the other country does not have the physical plant for example, it will be cheaper to build that plant in the other country.

Currency considerations are another factor

Incentives from a country with little industry are greater than they are from a country where you will compete with the locals.

Market penetration. Would people in countries in the region be more inclined to buy from countries in the region or from western nations.

Partnering. It is easier to partner with business in some countries where western technology is not readily available by making that technology available.

Just a few thoughts.

Now, for a few more thought.

The Marketing of India

Find a need and fill it.

Who has a need for what you can produce?
Partner with that (nation's) companies.

In addition to the profits, offer a minority interest in the company. (This will give investors an incentive to succeed.)

Offer a profit share to the suppliers. (This will give the farmers(?) an incentive to join in the venture.

In addition to money, offer other incentives. [Prestige]. For example: Build schools in the areas where the people are most enthusiastic.

If one or two small companies cannot find the funding (through govt. funding--a bad idea) go to the marketplace.

Economies to scale.

Create a marketing group for the several smaller companies, so they can pool their resources.

In Vermont there is a joke:

Q: "Do you think the rain will hurt the rhubarb?"
A: "Not if they're in cans."

If produce spoils before it hits the market, set up a joint effort to can the produce at the source.

Roads are a government responsibility.

Just a few ideas. (Call me old-fashioned)

Anyone care to amplify, amend, or correct?

Sincerest regards,


PS. Read The Caste Busters article in the NY Times:


Copyright (c) 2011 Slim Fairview

Starving Nations and Food Equations: A Metaphor

[This metaphor does not refer to people actually dying. This refers to the discordance in the economy of agriculture specifically and in the economy as a whole.]

If one person in the group does not have enough food to eat, he may die.

For a while, that means more food for the rest of the group. However, that also means one less person to work the farm. That means less food to eat. Less food to eat means someone will die.

For a while, that means more food for the rest of the group. However, that also means one less person to work the farm. That means less food to eat. Less food to eat means someone will die.

Soon, there won't be enough people to work the farm. That means there won't be enough food to eat.

Get the idea?



Copyright (c) 2011 Slim Fairview

Food, India, the World

According to the large article in the Sunday New York Times, global food production is on the brink of disaster. This, of course, is not news to people who are starving. This is news to those who are engaged in the pretext of helping starving people to stave off the guilt of being well fed if not over fed. I call it the Ebenezer Effect. (More about that later.)

We learn from the article by Mr. Justin Gillis that the problem is multi-faceted. Increased demand from rising population and affluence coupled with a series of disasters—natural and man made have been used to create a graph whose trajectory is not good, but that there is hope.

The Reverend Thomas Robert Malthus made a similar prognostication. It went like this. Food production increases arithmetically: 1, 2, 3, 4, 5... The Population increases geometrically: 1, 2, 4, 8, 16… The Reverend Malthus went on to point out that, population growth is checked by famine and disease. An austere position but one that must be heeded.

After filtering out the echoes of Al Gore and Global Warming, indeed a problem (Global Warming and Al Gore) the good news spells out good news for the poor, the hungry, emerging nations and struggling economies; and, the good news goes beyond food.

Global warming and flooding have renewed the interest in agro studies. Two advances looming are flood resistant rice and drought resistant wheat.

However, as is often the case with most science, the discussion ignores many questions.

If global warming is encroaching on cooler months, will the growing season at least shift if not lengthen?

If sunlight is an issue, will that influence the type of plant modification that will become necessary?

If flooding and drought are problems, why don’t we use floodwaters to fill underground reservoirs to irrigate drought stricken fields? Hydroelectric power can run the pumps. Solar powered UV systems can disinfect the water. The reservoirs can be located beneath land that frequently suffers from droughts.

The Cost? Perhaps it would be astronomical. Plan B? No Food. People die. As plan B is not an option, let’s consider reservoirs for the floodwaters. (This, too, could ameliorate the damages caused by floods.)

Would this approach offset the negative impact of floods and droughts in Australia converting Australia into a global breadbasket?

The next issue is pricing. Food, too often, is too expensive for those with a modest income. The poor, the working poor, the middle class, all going hungry. In addition, as it is illegal for both a rich man and a poor man to sleep under a bridge, neither a rich man nor a poor man can buy food when there isn’t any.

Farmers respond to higher prices by planting more food. This drives the prices down. This cuts into farm income. This causes a cutback in food production. This causes an increase in food prices. All of this, of course, assumes that the weather has co-operated.

The platitudes of Government officials are not reassuring. Statements about “…days of cheap food being over” or “…our mindset was surpluses.” is analogous to “…the days of cheap gas are over.” Jimmy Carter, 63¢ a gallon—outrage! George W. Bush, $3.00—lament. Barack Obama, $4.00—resignation. The days of cheap gas are over. That does not translate well to food. You don’t have to drive. You don’t have to drive a gas-guzzler. You do have to eat. There are energy alternatives. There are no alternatives to food.

Some positive statistics (Caveat!): The percentage of starving among poor nations 40 years ago was 1/3 of the population of poor countries. By the 1990’s it was 20%. (Fraction to decimal?) The drop from 34% to 20% is a drop of 14%. Next: The population going hungry was 800 million. Now, it is 925 million. 925 – 800 = 125 million people. That is a 15.65% increase.

However, the world population is growing. In addition, hunger is spreading to industrial nations. That includes the U.S. Yes, the US. Yes, US!

Research budgets to find solutions are tight. In the West there is a different mindset” “If we run out of food, we just go to the supermarket to buy more.”

Another problem is contrived science.

Greenhouse gasses will fertilise the crops offsetting the decline in water and rise in temperature. Wrong. They may work as a complement to water and good weather, but as substitute, no. These ideas were propounded by experts. Does that make you feel better?

I called this contrived science. Actually, this is sad science.

Then there is social and economic policy. We converted land to grow food for people into land to grow food for cars. (Ethanol.) The problems with that:

1. There was no major benefit to the environment.

2. It drove up the cost for food.

3. It disrupted the markets.

4. It was made moot by the switch to electric or hybrid automobiles.

Number 4 will have an effect on the oil industry. This will push down the price of oil. Countries that rely on oil money to buy food will have less money to buy food. The result will be food riots, toppled government, instability, and so on.

The best we can do to forestall disaster is to have a global consortium that cannot distinguish between consensus and groupthink. A bigger problem lies in the fact that a fresh look will be taken by the people who got it wrong in the first place.

Bill Gates and his foundation are leading the way into the future. Question? Who is going to follow? While governments bump up the commitment to solving the problem, (spend money), when the problem goes away, so does the commitment.

Another issue seldom addressed is storing food. If America produces twice what we need, we can store half of what we produce. Other countries, those who are blessed to produce enough, cannot afford to store enough to offset the impact of natural disasters in addition to man made disasters--and I am not talking about global warming.

1. Drought

2. Floods

3. Crop Disease

4. Population rise

5. Food Hoarding

6. Food Riots

7. Government Collapse

8. Anarchy


China has a population of 1.35 Billion people. China must deal with a flood here and a drought there. What happens when China has 2.35 Billion people?

India is emerging as a technological superpower. It won’t be long before a clear sighted, market driven, goal oriented approach takes root and flourishes. In addition, India is developing flood resistant rice. Soon, food processing will help get food to markets rather than rot in the field. Farms will evolve into agro-business. There will be improved channels of distribution, cash crops for export, and commodity futures investments. This will have a two-fold effect. Affluence will drive up the demand for food. India may become more vulnerable to disaster.

If you refer to comments I made about oil price declines and natural disasters having a negative impact on the people of oil-export nations, you will see that the Arab Spring could turn into an Arab Winter.

If the population of the US increases by 10%, we add another 30 million people. If India (with a population of one billion people) has a population increase of 10%, India will have to feed an additional 100 Million people. Op. cit. my comments on food storage.

In addition to the food crisis turmoil, we will see population migrations that will redefine the matrix.

Can Australia become a breadbasket nation to the world? Can India? Will China be able to feed itself? Will Africa?

All of this so far has ignored another looming problem. Energy. Germany and Switzerland are ending their love affair with nuclear energy.

CNN reported that China is planning to build 400 nuclear power plants compared (contrasted) to the 400 new plants being built in the rest of the world. Rather than predict a nuclear disaster—that is the easy part—I will predict a depression in oil prices.

True, clean energy initiatives may help to advance the hydroelectric, solar, and wind powered energy industries. In addition, Canada may resurrect the hydroelectric project shelved when Mario Cuomo (New York Governor) decided not to buy Canadian Power.

Then there is the possibility of political backlash in the United States. There may be a power shift in Washington. The Tea Party out! The Lunch Crowd in! What would happen if we elect Food Hoarding Agro-isolationists?

The world can no longer play a zero-sum game.

The Future of the G 20 in Good Times and Bad

Then there is the issue of people simply not understanding economics. If you listen to economists you will know why. With so much disagreement among them, one isn't certain if economists understand economics. Thus:

Then, “When the tide comes in, all boats in the harbour rise.”

Now, “When the boat sinks, everyone on the boat drowns.”



Copyright © 2011 Slim Fairview