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Dubya, Economics & Food

May 3, 2008

I promise. No more sarcasm from my side, anymore, (till the next post I mean). I was just browsing for my daily dose of news when I was stopped dead on my track by this article on Rediff. For the common benefit let me quote Dubya when he sought to justify the growing prices of food crops in an interactive session in Missouri.

It also, however, increases demand. So, for example, just as an interesting thought for you, there are 350 million people in India who are classified as middle class. That’s bigger than America. Their middle class is larger than our entire population.
And when you start getting wealth, you start demanding better nutrition and better food, and so demand is high, and that causes the price to go up.

Its an interesting thing surely.The logic seems to be holding its ground pretty well. “Look! India is growing. China is growing. Both has a huge middle class”. So what do you do?

Blame them, boy. What are you waiting for?

I will not be biased, nor will be irrational.How much ever, the Indian neo patriotic extreme right wingers claim, Dubya seems to have got his cause and effect right perhaps for the first time. But only the cause and effect not its scale or enormity.

Yes, India and China and South East Asia has a huge middle class who have suddenly started demanding better lives and right to basic amenities. Unfortunate, yes it is, that its a bad news. Chinese demand for meat and poultry has trebled and pentupled since 1980’s. It alone demands 8 billion bushels of livestock feed, more than what US spends for its biofuel consumption, around 2.3 billion bushels.

Take 2: The Perspective from another lens:

Bush may have got the cause to a certain extent right, but not its scale.

There is something skewed in this whole pogrom of “Blame Middle Class, Blame Asia”. Let me talk about something like ethanol and biofuel in US alone. Heard about it? Heard about the Hummers and SUVs? I have. Well then sample this: An average person,like me, or you, will eat calories worth 750 pounds of corn per year. An SUV takes that much of ethanol produce, (all produced from the same corn mind you!) in one shot. 25 gallons of pure ethanol. Go figure out the numbers. You know what does it mean?It means :


Go out and complain loudly about your hungry bellies and malnourished children. We will burn the food right in front of you!

And by the way, India is a net food exporter and not an importer!

Screw You!:We love our SUVs more

The irony couldn’t have been timed better. Its hilarious, seemingly delectable bout of self destruction.During 2004 and 2007, the growth in global maize production hovered around 51 million tonnes. Biofuels mostly ethanol rose by 50 million tonnes. Read that? It soaked up almost the entire production hike. And the joke came right when the global leaders were busy holding plenaries and meetings and more meetings and yet more meetings about the food crisis and around the same time, UK and US mandated the use of 2.5pc of biofuel to the motorists. To be risen to 5.75pc by 2010. Whoops! You know, I am wondering though what does that mean. Does that mean, go to hell, we love our SUVs and LandRovers way too much to see them lying idle or does it mean, go to hell we wont give you any food.

The global food market has seen a huge revolution of sorts since the past three decades. Once food was just that, food. Food was used for putting in your mouth. Today it is snatched away from the mouth and put through that pipe onto the fuel tanks. To quote Josette Sheeran, executive director of the UN World Food Programme (WFP),”We are seeing food in many places in the world priced at fuel levels,” with increasing quantities of food “being bought by energy markets” for biofuels. [ Read an excellent article here.] In fact could it have been any worse, when Gordon Brown and his Darling [I mean Alistair Darling, not Mrs Brown] walked up and said, oh yes we do understand, its bad, its sad and its mad. But doing a U turn in the same week, proclaiming in the UK parliament that “All Hail Biofuel”.

The Lesser Culprits: Why should we be left behind?

For that matter, why dress US and UK black and blue, even the lower us, India, China, Thailand are perhaps lesser or maybe even equal accomplices in this crime. In Thailand, a gallon of biofuel costs around, 4 bahts around USD .485/gallon, more than even premium petrol which is around $0.4/gallon. And petro-diesel for USD 0.125/gallon. All these in the light of 1000% surge in biofuel demand in Thailand. The issue is, India and China are yet to catch up on this death race, but its high in the ‘so called’ affluent middle class population. With global wheat futures at an all time high, corn futures rising way too much, it is not moksha for the farmers. No, it is not, trust me! For the oil prices have grown, factor in the price of fertilizers, and the natural gas and the electricity and the inflation and…
The so called upholders of tomorrow, are thinking of a fantastic stuff. You know what? They are talking about using woodchips and agro-by-products like corn stalk to fuel the growth. But to me, it seems to be another disaster in making. And to think, that miles of miles of rainforests being destroyed just to keep a few SUVs running on the road

Some good links to read:

[The author is a passionate global economy observer and an active stocks trader.While he is not blogging with his pragmatic sense of humor on JUMP UP!,he spends his time earning his bread as a hardware engineer with a hi-tech startup based in Chennai.Apart from economics and electronics, he loves hearing from his readers. He can be reached at sohamdas at gmail dot com]

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