Dwarfed
Lately when I turned the pages of the local newspaper or just casually browsing through news websites, 1 topic always sticks out: the sharp increase in the price of important commodities such as rice, oil, etc. There are protests everywhere against the local government in almost every continent (save for Oceania & Europe perhaps), ranging from Egypt in Africa, Argentina in Latin America (albeit for a different reason as farmers protested on the increase of export taxes for commodities as government try to cash in on the commodity boom at the expense of poor farmers). Indonesia, Phillipines, and Cambodia represents Asia in this category, with the government cutting subsidies on oil and rice as it takes much bigger burden than predicted on the state allocated budget due to the spiralling cost.
According to IMF data, the current situation is not even that much of a shock outcome as it is reported nowadays. Indeed, the amount of food production has been at its lowest level for years, considering the world population that has kept on rising over past few decades. Arable land has been diversified into planting for bio-diesel crops, which is the current hot growth topic as energy sources are dwindling and there is an urgent need to find a renewable source. Also, bio-diesel crops typically fetch higher price than food crops, as can be seen from the 4-fold increase in price for corn produced in Mexico as it is increasingly used in the production of ethanol. Tapas, which has been a staple food for mexicans for decades, perhaps centuries, is no longer the cheap local food that is affordable to everyone.
With the local staples of many countries under threat, it is hard enough for the authorities to keep inflation under control, let alone handle the daily mass demonstration. Rice is consumed by around half the world population (estimated at 3 billion people), and its price has increased by almost 3 fold compared to just 2 years ago. With many of its consumers belonging to the low-income end of the population, it is no wonder that these people are protesting for an increase in the basic wages to help make ends meet.
Routine demonstrations organised by students and factory workers lined up the streets of Vietnam capital Ho Chi Minh and also Indonesia capital Jakarta. Already struggling with their livelihood in the past, the latest blow has further cut their real income by another 20%, & it is impossible for them to survive with further inflation set to cut deeper into their thin pockets.
Analysis from commodity expert points out that rice is harvested 3-4 times a year, and when the price is so high, farmers would plant much more in the next season, which will then alleviate the shortage in the coming 2-3 months. The use of higher quality seeds will also boost the total tonnage harvested and the current export ban imposed by the governments of Vietnam & Cambodia will be lifted again once the rice stock is in abundance, creating surplus in the international market. As such, the price will most likely return to its equilibrium level in the short term.
In the long term though, the production of rice will not keep pace relative to the increase in world population size, and as such there will be another crisis waiting to happen in the not so distant future. With the minimum wage at Vietnam at lower than USD 60/worker per month currently, it is hard to see how they would be able to survive the next commodity price jump. Many of its counterparts in the rest of Asia would be facing the same problem, and there is no shortcut method around it, other than to be agriculturally independent.
It is a tough world to survive in, and with all the major happenings around the world, my own problem seems to be too miniscule to be mentioned....
According to IMF data, the current situation is not even that much of a shock outcome as it is reported nowadays. Indeed, the amount of food production has been at its lowest level for years, considering the world population that has kept on rising over past few decades. Arable land has been diversified into planting for bio-diesel crops, which is the current hot growth topic as energy sources are dwindling and there is an urgent need to find a renewable source. Also, bio-diesel crops typically fetch higher price than food crops, as can be seen from the 4-fold increase in price for corn produced in Mexico as it is increasingly used in the production of ethanol. Tapas, which has been a staple food for mexicans for decades, perhaps centuries, is no longer the cheap local food that is affordable to everyone.
With the local staples of many countries under threat, it is hard enough for the authorities to keep inflation under control, let alone handle the daily mass demonstration. Rice is consumed by around half the world population (estimated at 3 billion people), and its price has increased by almost 3 fold compared to just 2 years ago. With many of its consumers belonging to the low-income end of the population, it is no wonder that these people are protesting for an increase in the basic wages to help make ends meet.
Routine demonstrations organised by students and factory workers lined up the streets of Vietnam capital Ho Chi Minh and also Indonesia capital Jakarta. Already struggling with their livelihood in the past, the latest blow has further cut their real income by another 20%, & it is impossible for them to survive with further inflation set to cut deeper into their thin pockets.
Analysis from commodity expert points out that rice is harvested 3-4 times a year, and when the price is so high, farmers would plant much more in the next season, which will then alleviate the shortage in the coming 2-3 months. The use of higher quality seeds will also boost the total tonnage harvested and the current export ban imposed by the governments of Vietnam & Cambodia will be lifted again once the rice stock is in abundance, creating surplus in the international market. As such, the price will most likely return to its equilibrium level in the short term.
In the long term though, the production of rice will not keep pace relative to the increase in world population size, and as such there will be another crisis waiting to happen in the not so distant future. With the minimum wage at Vietnam at lower than USD 60/worker per month currently, it is hard to see how they would be able to survive the next commodity price jump. Many of its counterparts in the rest of Asia would be facing the same problem, and there is no shortcut method around it, other than to be agriculturally independent.
It is a tough world to survive in, and with all the major happenings around the world, my own problem seems to be too miniscule to be mentioned....
posted by leonhart @ 4:43 PM
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