CUTS Centre for International Trade, Economics & Environment

Editorial: Food fight
www.Canadianbusiness.com, May 29, 2008

From the June 16, 2008 issue of Canadian Business magazine

U.S. President George W. Bush recently sparked an international fight over fat, after attributing global inflation in food prices to Indians’ eating more. “There are 350 million people in India who are classified as middle class. When you start getting wealth, you start demanding better nutrition and better food,” Bush said during a question-and-answer session in Missouri on May 2. “Demand is high, and that causes the price to go up.”

On one point, Bush is right. According to a World Bank report released April 9, food prices have risen 83% in the past three years. That has provoked riots in Asia, price controls on tortillas in Mexico, and rationing of rice sales in the U.S.

Pradeep S. Mehta, secretary general of the Consumer Unity & Trust Society International, a think-tank in India, quickly weighed in with his own analysis. The food problem has “clearly” been created by Americans: they consume 50% more calories than Indians do, he told the International Herald Tribune on May 12. If Americans were more the size of an average middle-class Indian, he added, “many hungry people in sub-Saharan Africa would find food on their plates.”

To imply that tubby Americans or ravenous Indians chowing their way up the food chain are somehow responsible for inflation on the scale we now see is absurd. However, the Bush versus Mehta fight illustrates a larger point. Policy-makers need to think more intelligently about food and energy policies, particularly the notion underpinning biofuel policy — that farmland should be used to grow fuel. Both the International Monetary Fund and the World Bank have published reports that single out biofuel policies as culprits in the spike in food prices. In April, an expert panel commissioned by the European Union to study the issue called for the EU to freeze its 10% biofuel quota “immediately.”

In Canada, we’re marching in precisely the opposite direction. The federal Conservatives plan to spend $2.2 billion promoting biofuels over the next nine years. Meanwhile, parliamentarians debate Bill C-33, legislation that would mandate 5% biofuel in gasoline in Canada from 2010. It sailed through a first vote on May 1, with support from the Bloc and the Liberals. It awaits a final vote and Senate approval. Before it gets there, though, policy-makers should stop to consider whether enshrining demand for biofuels in law is any smarter than Bush’s fat fight.

This news item can also be viewed at: http://www.canadianbusiness.com

Food crisis: The blame game
Business Line, May 21, 2008

By Pradeep S Mehta and Siddhartha Mitra

The world food crisis, despite all efforts to shift the blame, has been born out of life-style imbalances in the US and like-minded nations, characterised by an excess of nutrition and locomotion, say PRADEEP S. MEHTA and SIDDHARTHA MITRA.

In a series of ignorant and insensitive comments, the US President, Mr George Bush, has blamed the current food scarcity problem and price spiral on the rapid development of India and China. Insensitive because these countries have not even reached 20 per cent of the level of affluence being enjoyed by the US and other developed countries and ignorant because the increased volume of food consumption by India and China is definitely not the primary cause of the price spiral.

Hidden behind the smugness of these comments, a guilt complex possibly lurks — of having engineered a disaster through opulent, wasteful and often gluttonous lifestyles which have taken consumption of food and fuel to unsustainable levels. It is in fact their effort to “sustain the unsustainable” which has led to the current food crisis. This is clear from the Table.

Some statistics

In 1979, according to the FAO Statistical Yearbook, per capita food consumption in the US stood at 3,180 calories — a level of consumption that maintains the body weight of a sedentary human weighing 96 kg. Even at such levels of excess, the US continued to make a fetish and virtue out of increasing levels of consumption.

As a result, around 2003, the average calorie intake had ballooned to 3,770 calories — an 18.5 per cent jump over the 1979 level — which is adequate to sustain a person weighing 114 kg. Though obvious, it deserves mention that such excesses are bad for the US as well. In 2002, 30.4 per cent of the adult population was considered obese by the American Heart Association.

Recent research suggests that obesity can also shorten the lifespan of both adults and children. Besides, obesity is expensive, with the WHO estimating medical expenses on obesity-related problems at 12 per cent of US’ total healthcare costs. The figures in the Table indicate that the average American consumes 1,629 calories more than what is needed to maintain ideal body weight when following a sedentary lifestyle. This implies that even physically active Americans are consuming way more than what they need. Thus, the way for Americans and other developed nations to come out of obesity is to consume less which, in turn, would facilitate better nourishment for the starving and the hungry in developing countries.

The Table also shows that even in many other developed countries, such as Germany, the UK and Australia, an excess of around 1,000 calories are consumed daily. China too has a reasonably large excess intake of over 900 calories, whereas Japan’s over-consumption is modest by developed country standards.

On the other hand, the per capita consumption of India at 2440 calories corresponds to an excess of 462 calories over sedentary consumption needed to maintain ideal body weight. In rural India, where life basically is still non-mechanised, the physical rigour of a bucolic life eats away such tiny surpluses.

The problem of obesity does exist in India but it has not yet reached epidemic proportions as seen in the US; there is still a 20 per cent incidence of under-nourishment.

To top it all, India’s relatively modest level of per capita calorific intake rose only 17.5 per cent in 1979-2002 — slower than that of the US. Therefore, if anything, purely from a consumption point of view Americans are more to blame for stoking inflationary fires in the food sector. Note that African countries bring up the rear as far as calorific consumption is concerned.

Under-nourished Africa

Countries such as Gambia and Ghana, for which data on average height and therefore ideal weight exist, show surpluses of 275 calories and 10 calories over sedentary consumption. With a lifestyle still based on physical movement, at least in the rural areas, even this average calorific intake might denote a state of under-nourishment.

Countries such as Ethiopia and Somalia, for which there are no estimates of average height and ideal body weight, are seemingly worse off with an average calorie consumption of around 1,800. It is this part of the world that scrimps and scrounges while the US and other developed countries splurge.

Declining US exports

The US is also guilty on another account — they have pulled the rug out from under a growing developing world’s feet through a decrease in food exports when the rapid rise of affluence in the latter actually warrants the opposite. Over the 1970s and 1980s wheat exports from the US to the rest of the world almost doubled. In the seventeen years that followed there has been a dip of 24 per cent in wheat exports, much of it being used to produce oil rather than food to maintain an unsustainable fuel guzzling lifestyle.

Such massive decreases in food exports make the US’ claim that bio-fuels explain less than 2/100th of the recent massive rise in food prices seem ridiculous. It is, therefore, interesting and relevant to note that the world food crisis, despite all efforts to shift the blame, has been born out of life style imbalances in the US and like-minded nations — an excess of nutrition and locomotion.

The authors are Secretary-General and Director (Research), CUTS International and can be reached at psm@cuts.org and sm2@cuts.org respectively.

This article can also be viewed at: http://www.thehindubusinessline.com/

He started it! Did not!
www.agweb.com, May 16, 2008

Anyone else see the world food crisis diminishing to a sand box fight? The latest handful of sand was launched from India, where apparently they feel the world blames them for food shortages because of their growing prosperity.

I don't know that anyone is blaming anybody for anything. Rather, the prosperity there should be celebrated, while the world tries to find a way to produce more food to feed a more prosperous world.

A Wednesday afternoon article on the New York Times Web site quoted Pradeep Mehta, secretary general of the center for international trade, economics and the environment for the India-based think tank CUTS International. He threw the proverbial sand in the eyes of Americans, including our own President, who keep trying to explain the reason commodity prices are increasing is due to improved diets and more demand for food around the world. He doesn't like it that we keep saying biofuels are only part of the reason, but a greater reason is the prosperity and subsequent better diets enjoyed by a growing middle class in countries like India. He says that's wrong.

Seemingly, he wiped the sand from his hands, put his hands on his hips, looked at the teacher and said "they started it!"; Mehta says we need to look no further than our own mirrors for the problem to the world's food shortage.

His claim is if the average U.S. citizen will lose a few pounds by simply eating less, we could divert enough food to feed sub-Saharan Africa.

(Pretend here my face is turning red, my hands are on my hips, and I'm about to cry from confusion.) Yeah, well I admit I could lose a few pounds. But...but they eat too, I've always eaten well, and well, they are eating better.

Bruce Scherr, CEO of Informa Economics, estimates1.5 billion people around the world have entered a middle class lifestyle in the last decade. That number is likely to continue increasing as more high-paying jobs originate in developing countries.

Who's blaming them for anything? Shouldn't this be celebrated, albeit there are some hardships we have to work through as a world community?

The rhetoric about the world food crisis is becoming something it never should--a political game of who started it. Maybe the world needs to start looking at the root causes and what needs to happen to fix it.

We are in a situation where worldwide production is on the increase, but because prosperity in countries like Brazil, China, and yes, India, is increasing, people are indeed eating better. That's a fact and it's one of the greatest economic success stories in the history of the world.

We have kinks to work through for sure, but I believe the rhetoric should shift from one of blame to one of problem solving and expansion of world markets to feed the world.

This news item can also be viewed at: http://www.agweb.com/

Beta Beats Alpha
The Daily Reckoning, May 16, 2008

By Bill Bonner

Real investment gains come from being in the right place at the right time.

The most reliable and entertaining trait of humankind is vanity. Despite much evidence to the contrary, men see themselves at the very centre of the universe…the alpha of all creation. Without man, nothing happens…trees fall in the forest, but who cares?

Primitive people imagine that they are to blame for whatever goes wrong – floods…earthquakes…volcanic eruptions; they appease the gods by tossing nubile virgins into volcanoes and building huge monuments of granite in their honour.

Modern people imagine that they are to thank for whatever goes right. Did they not write the Treaty of Versailles…and invent both Long Range Ballistic Missiles as well as Long Term Capital Management? Didn’t they build Las Vegas? And hasn’t Ben Bernanke finally taken the crunch out of the credit cycle?

What follows is basically a lament…a wail…a whining reflection on how we flatter ourselves…and why the most flattered are the best short sale candidates. The short version is that “alpha” is a windy fraud. In broader terms, the moral of the story is simply that whenever you feel proud enough to offer advice to others, you should prepare to get it yourself. Good and hard.

What brought this to mind is a news item from the New York Times. America’s president seems to have an insight. The reason food prices were going up, he guessed, was because people in India had more money in their pockets and now they wanted to eat more. This remark might have gone unnoticed, but for the fact that it was true. The foreigners are getting richer…and uppity. “Asian Age,” of New Delhi, whose name gives you an idea of the way the Indians think things are going, said the US president wouldn’t “get away…with passing the buck on to India.” Others threw biofuels and agricultural subsidies in America’s face. Then, striking low, they said Americans ate too much; if they just slimmed down to the weight of middle-class Indians, said Pradeep S. Mehta, “many hungry people in sub-Saharan Africa would find food on their plates.”

What a revolting development! For four generations, America has been the world’s alpha nation – the country with the money, the power, and the answers. Generations of Americans have offered advice to the rest of the planet, confident that they knew best what was good for everyone. Wilson showed up in Le Havre with his “14 Points” in 1918. Clemenceau remarked sourly that “God only needed 10.” From then until six months ago, the world’s unfortunates had to put up with American know-it-alls. “Tear down this wall,” said Ronald Reagan and the neo-cons. “Dollarise” said Jeffrey Sachs and the Chicago boys. US military “advisors” showed foreign armies and terrorist groups how to kill more efficiently. US businessmen explained how to set up factories and operate them more profitably. (F. W. Taylor introduced ‘scientific management’ …Stalin loved his ideas, which still are known as ‘Taylorism’ in much of the world.)

A long stream of professors handed out trade secrets like chewing gum, confident that the ideas would never stick; foreigners would never really get the hang of it. They urged free-market policies, monetary reforms, and market regulations. Agricultural engineers introduced peasants to pesticides and DDT. And just as 17 th century priests showed the heathen how to copulate correctly, our own world improvers demonstrated to couples all over the world how to copulate without begetting. There was no vanity too absurd…no pretension too embarrassing. By the 1960s, Americans were even sending their children – who hadn’t yet learned a trade or earned a living – in the belief that their callow bodies, in the Peace Corps, might lift the fuzzy wuzzies out of poverty like Pharaoh’s wife plucking Moses up out of the bulrushes.

And then, wouldn’t you know it? The little Moses all over the world took the advice, set up their own shops…and now they’re back-sassing America’s president and stealing its best customers.

And here, for further elaboration, we return to the world of money. While Americans offered advice gratuitously, Wall Street offered its own advice, for a price. The financial industry hotshots said that they, too, had some special magic. Yet, a colleague recently handed us a chart of the London stock market over the last 107 years. What is remarkable about it is that it shows a flattish line beginning over the far left and running right along the bottom for ¾ of the page. Then, after lying in the dirt for ¾ of a century, the chart suddenly springs to life like a locust, in the early ‘80s. In the next 20 years, it shot up more than 1000%.

This same phenomenon is visible in almost any market you choose to look at. There are small gains…and small losses…all the time. But the big gains come all at once. In the gold market, for example, except for occasional war spikes, the price barely budged from the defeat of the Spanish Armada until the 1970s. Then, an investor who bought the stuff in 1972 would have seen his money multiplied 21 times in the next eight years. Following this exertion, gold went back to sleep…and didn’t wake up for another two decades.

The pretence of America is the pretence of Wall Street. It is pretence of alpha itself and the vanity of the species. While Wall Street promised investors elusive, above-market gains - alpha - the real gains came from merely being in the right place at the right time. Beta, in other words. Likewise, it was no special genius that put Americans on top of the world; it was simply being in the right place at the right time. Too bad they can’t stay there.

This news item can also be viewed at: http://www.dailyreckoning.co.uk/

Instead of blaming India and other developing nations for the rise in food prices, Americans should rethink their energy policy and go on a diet, say a growing number of politicians, economists and academics in New Delhi.

Criticism of the United States has ballooned in India recently, particularly after the Bush administration seemed to blame India’s increasing middle class and prosperity for rising food prices. Critics from India seem to be asking one underlying question: “Why do Americans think they deserve to eat more than Indians?”

The food problem has “clearly” been created by Americans, who are eating 50 percent more calories than the average person in India, said Pradeep Mehta, the secretary general of CUTS Center for International Trade, Economics and Environment, a private economic research organization based in India with offices in Kenya, Zambia, Vietnam and Britain.

If Americans were to slim down to even the middle-class weight in India, “many hungry people in sub-Saharan Africa would find food on their plates,” Mehta said. The money Americans spend on liposuction to get rid of their excess fat could be funneled to famine victims instead, he added.

Developing nations like China and India have long been blamed for everything from the rising cost of commodities to global warming, because they are consuming more goods and fuels than ever before. But Indians from the prime minister’s office on down never fail to point out that per capita, India uses far fewer commodities and pollutes far less than the West, and particularly the United States.

Many Indians felt that the remarks of President George W. Bush on May 2 were more of the same, though this time they seemed to breed a widespread sense of “We’re not going to take this anymore.” During a news conference in Missouri, Bush mentioned India’s growing middle class, and said “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.” This came on the heels of a similar statement by Secretary of State Condoleezza Rice that had already upset many in India.

Americans eat an average of 3,770 calories per capita a day, the highest amount in the world, according to data from the UN Food and Agricultural Organization, compared to 2,440 calories in India. They are also the largest per capita consumers in any major economy of beef, the most energy-intensive common food source, according to the U.S. Department of Agriculture. The United States and Canada top the world in oil consumption per person, according to the U.S. Energy Information Administration.

“George Bush has never been known for his knowledge of economics,” Jairam Ramesh, the minister of state for commerce, told The Press Trust of India after Bush’s remarks, which he said proved again how “comprehensively wrong” Bush is.

“To say that demand for food in India is causing increase in global food prices is completely wrong,” Ramesh said.

Politicians and academics in India cite various other reasons: diversion of arable land in the United States and Europe into ethanol production; trade subsidies by the United States and Europe; and the dollar’s decline.

Subsidies to Western farmers have undercut agricultural production in fertile areas of Africa for decades, Kamal Nath, India’s minister for commerce and industry, said by telephone. Meanwhile, he added, Americans waste more food than people in many other countries, in part because they buy in such large quantities.

The United States is responsible “many times more” than India for the world food crisis because of its higher food consumption, said Ramesh Chand, an economist with the Indian Council of Agricultural Research, which advises India’s government on farming policy.

The Bush administration responded to the criticism from India with calls for a truce. Bush is a “great friend and admirer” of India, said David Mulford, the U.S. ambassador to India. He added that he thought “this is a time for increased cooperation among nations to solve this problem and that hostile political commentary is not productive.”

A White House spokesman, Scott Stanzel said, “We think it is a good thing countries are developing, that more and more people have higher standards of living.”

Blaming India’s growth is not only unfair but nonsensical, some economists argue. Food prices have not been continually rising with the growth of the developing world, said Ramgopal Agarwala, a former World Bank economist and senior adviser at RIS, a think tank in New Delhi.

“They were static until 2006, then in 2007 and 2008 there was a sudden spark,” he said. Meanwhile, India’s boom has been happening over the past decade. This is “not last year’s phenomena,” he said.

“I don’t know who advised the president” on his recent comments, Agarwala said, but his analysis is “sub-prime.”

Bush’s “ignorance on most matters is widely known and openly acknowledged by his own countrymen,” The Asian Age argued May 5 in an editorial, but he must not be allowed to “get away” with an attempt to “divert global attention from the truth by passing the buck on to India.”

Mehta said that his remarks on liposuction were meant to be tongue in cheek but that “politically incorrect” attitudes like Bush’s and Rice’s needed to be challenged. Rather than blaming India, Mehta said, the West should be adjusting to the changing world. “If the developing world is going to develop, demand is going to go up and there are going to be new political paradigms,” he said.

TRANSPORT: Major Hurdle for IBSA Initiative
Inter Press Service News Agency, May 14 , 2008

NEW DELHI, May 14 (IPS) - As the foreign ministers of India, Brazil and South Africa (IBSA) met in Cape Town on Monday, to take forward a unique initiative in South-South economic cooperation, a gathering of hard-nosed corporate captains from the three countries discussed the absence of adequate transportation facilities among the ‘IBSA’ members.

Brazil’s foreign minister Celso Amorim, who doubles up as his country’s trade minister, had told IPS in an earlier interview that what makes the IBSA grouping unique is that India, Brazil and South Africa (IBSA) are not merely diverse, multi-cultural developing countries but the three countries are all strategically located and important in their respective geographical regions.

However, what the group of businesspersons pointed out was that although there is considerable scope for economic and technical cooperation among the three countries in areas such as energy, mining and aerospace, logistical drawbacks were hampering expansion of trade.

They urged their respective governments to improve air connectivity, maritime transport facilities and ease visa restrictions before the forthcoming IBSA Business Summit that would be held in New Delhi later in the year.

Speaking at a session on tourism organized by the Confederation of Indian Industry (CII), R. Jaishankar, managing director and chief executive officer, UB Group, South Africa -- a large Bangalore-based Indian multinational with interests in liquor and aviation -- pointed out that of the nine million tourists who visited South Africa in 2007 (of which 4 million flew into the country), barely 50,000 tourists came from India.

Over and above high fares, poor air connectivity between India and South Africa discouraged tourists. There is only one flight by one airline between the two countries because of landing rights. Shortage of aircraft, high fuel costs and intense competition on indirect flights compounded the problem.

The session organised by the CII suggested that representatives of the national airlines in the three countries to discuss the issue of limited landing rights given the likely growth in the demand for air travel among the countries.

Specific destinations in the three countries should be marketed more effectively and promoted by the media since tourism has a huge potential to create jobs in all the countries, participants in the session argued, adding that growth in tourism would lead to growth in trade and investment.

It was also recommend by the session that a special IBSA business travel pass be created along the lines of the APEC (Asia Pacific Economic Cooperation) pass to ease issuance of visas, including transit visas.

Not just businesspersons, representatives of civil society organisations also hold similar views. "Economic cooperation between and among countries cannot be successful unless there is a better people-to-people interaction and this can happen only through increased investment and tourism," says Bipul Chatterjee, deputy executive director of CUTS International, a Jaipur (India) based non-governmental think-tank on economic issues.

"IBSA countries should have a policy to issue long-term business visas to investors and to encourage tourism," Chatterjee told IPS in an interview. CUTS (acronym for Consumer Unity and Trust Society) was recently associated with research organisations in South Africa and Brazil to prepare an advocacy document on the IBSA initiative.

Leven Moodley, a representative of Reatile Resources PTY Limited, a South African energy company, said huge opportunities existed among the three countries for cooperation in energy development. Brazil had considerable expertise in production of bio-fuels while India and South Africa had knowledge in generating electricity using coal, wind and water, he said.

All three countries are currently working on technologies for generation and transmission of renewable energy (using the rays of the run, wind and water) and should be exchanging information that would be of great mutual benefit to all, given the sharp increase in world oil prices in recent months.

Sreenivas Kondepudi, vice president, Maytas Infra, part of the India’s Satyam group, said that despite possessing substantial mineral resources, India needs more minerals to cope with the growth in internal demand. While India can invest in iron ore mines in Brazil, it can import coal from South Africa for thermal power projects. He said logistics was the biggest hurdle to be crossed. India could assist Brazil in linking its iron ore mines to ports through railways.

The business delegation presented a memorandum to the Foreign Ministers of the three countries -- Nkosazana Dlamini Zuma of South Africa, Pranab Mukherjee of India and Celso Amorim of Brazil -– recommending government intervention to improve maritime connectivity by having a fresh look at regulatory restrictions. Detailed studies on shipping routes and freight rates should be conducted, it was argued.

Consignments from India and Brazil to South Africa first travel to Europe before reaching their destination because of low volumes of trade, thereby increasing freight costs. Because of similar considerations, that is, low traffic, it is less expensive to fly from India to the United States than to Brazil -- although Brazil is closer in terms of distance.

The other area of cooperation identified by the group of businesspersons was skill development by providing incentives and subsidies to educational institutions in each country. More training programmes could be organized, it was stated.

On the trade and investment front, automobiles and pharmaceuticals were identified as two industries with considerable scope for trilateral cooperation. Despite differing consumer preferences for automobiles in the three countries, there was a case for reduction of tariffs and removal of non-tariff barriers. The corporate executives requested their respective governments to continue to negotiate and ratify trade agreements that would strengthen the economic relationships between the three countries.

This is a complex multilateral process since the agreements would not just relate to the three IBSA countries but many others in regional groupings, such as SACU or the South African Customs Union comprising South Africa, Botswana, Lesotho, Swaziland and Namibia and MERCOSUR or Mercado Común del Sur comprising Brazil, Argentina, Uruguay and Paraguay.

(Bolivia, Chile, Colombia, Ecuador and Peru currently have associate member status of MERCOSUR while Venezuela signed a membership agreement on June 17, 2006 -– however, before becoming a full member its entry has to be ratified by the Paraguayan and the Brazilian parliaments.)

It was in June 2003 that the Foreign Ministers of India, Brazil and South Africa first met in Brasilia to set up the IBSA ‘dialogue forum’. This forum became a formal initiative with a high level summit meeting in New Delhi in March 2004, followed up by meetings in Cape Town (March 2005), Brasilia (March 2006), New Delhi (July 2007) and most recently, Cape Town (May 2008). The three heads of state met in September 2006.

Intra-IBSA trade is currently barely 2-3 per cent of the total volume of trade among the IBSA countries. No single IBSA country is among the top ten trading partners of the other two countries. Yet trade among the three countries and regional groupings has gone up considerably in recent years and is expected to continue to expand rapidly.

Despite the fact that the three countries have been acting closely with one another during trade negotiations at the World Trade Organisation, the IBSA nations also compete in international markets to export leather, garments and agricultural commodities like cotton and sugar to developed countries.

Investment relations among the three countries have been ad hoc and erratic: Indian pharmaceuticals producer Ranbaxy has a presence in both South Africa and Brazil and vehicle manufacturers Tata Motors and the Mahindra group have invested in South Africa. India, in turn, has received investments from South Africa’s diamonds major De Beers and SAB Miller in alcoholic beverages.

However, there have not been any major investments by Brazilian firms in either India or South Africa. While Brazil is the second largest recipient of foreign direct investment after China, India and South Africa are both conspicuous by their absence in that country. Language and cultural barriers have also to be overcome to enhance economic relations.

Brazil’s President Luiz Inacio Lula da Silva has said the IBSA initiative has the potential to alter the world’s commercial geography. But much needs to be done to remove transportation and logistical bottlenecks before such an ambitious goal is realised.

India to US: stop blaming us for your rising food costs!
www.walletpop.com, May 14, 2008

Americans -- the majority of whom are overweight -- are crying their 42-inch waists off over the soaring price of food. Some U.S. officials have suggested that India's rising prosperity and the resulting increase in demand for food are to blame.

India's response? The New York Times has all the details but if you're in a rush, I'll summarize it for you: Sit on it.

Pradeep S. Mehta, secretary general of the center for international trade, economics and the environment of CUTS International said that if Americans ate less, "many hungry people in sub-Saharan Africa would find food on their plates." He also added that the savings resulting from a decreased need for liposuction could be used to feed famine victims.

Burn sauce! Apparently this whole mess started when our commander in chief opined that "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."

Indian commerce ministry Jairam Ramesh's rebuttal? "George Bush has never been known for his knowledge of economics." More burn sauce!

I'm inclined to agree with the commentators critical of Bush on this one. The idea of America's president blaming increased consumption in India for rising food prices is laughable. It's like Ralphie May telling Amy Winehouse to get off the couch because she's taking up too much room.

Instead of blaming India and other developing nations for the rise in food prices, Americans should rethink their energy policy — and go on a diet.

That has been the response, basically, of a growing number of politicians, economists and academics in this country, who are angry at statements by top United States officials that India’s rising prosperity is to blame for food inflation.

The debate has sometimes devolved into what sounded like petty playground taunts over who are the real gluttons devouring the world’s resources.

For instance, Pradeep S. Mehta, secretary general of the center for international trade, economics and the environment of CUTS International, an independent research institute based here, said that if Americans slimmed down to the weight of middle-class Indians, “many hungry people in sub-Saharan Africa would find food on their plates.”

He added, archly, that the money spent in the United States on liposuction to get rid of fat from excess consumption could be funneled to feed famine victims.

Mr. Mehta’s comments may sound like the macroeconomic equivalent of “so’s your old man,” but they reflect genuine outrage — and ballooning criticism — toward the United States in particular, over recent remarks by President Bush.

After a news conference in Missouri on May 2, he was quoted as saying of India’s burgeoning middle class, “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.”

The comments, widely reported in the developing world, followed a statement on the subject by Secretary of State Condoleezza Rice that had upset many Indians.

In response to the president’s remarks, a ranking official in the commerce ministry, Jairam Ramesh, told the Press Trust of India, “George Bush has never been known for his knowledge of economics,” and the remarks proved again how “comprehensively wrong” he is.

The Asian Age, a newspaper based here, argued in an editorial last week that Mr. Bush’s “ignorance on most matters is widely known and openly acknowledged by his own countrymen,” and that he must not be allowed to “get away” with an effort to “divert global attention from the truth by passing the buck on to India.”

The developing nations, and in particular China and India, are being blamed for global problems, including the rising cost of commodities and the increase in greenhouse gas emissions, because they are consuming more goods and fuel than ever before. But Indians from the prime minister’s office on down frequently point out that per capita, India uses far lower quantities of commodities and pollutes far less than nations in the West, particularly the United States.

Explaining the food price increases, Indian politicians and academics cite consumption in the United States; the West’s diversion of arable land into the production of ethanol and other biofuels; agricultural subsidies and trade barriers from Washington and the European Union; and finally the decline in the exchange rate of the dollar.

There may be some foundation to Indians’ accusations of hypocrisy by the West. The United States uses — or throws away — 3,770 calories a person each day, according to data from the United Nations Food and Agriculture Organization collected in 2001-3, compared with 2,440 calories per person in India. Americans are also the largest per capita consumers in any major economy of the most energy-intensive common food source, beef, the Agriculture Department says.

And the United States and Canada lead the world in oil consumption per person, according to the Energy Information Administration, an Energy Department agency.

When it comes to trade, Western farming subsidies undercut agricultural production in fertile areas of Africa, India’s commerce minister, Kamal Nath, said in a telephone interview, repeating the point that Americans waste more food than people in many other countries.

The United States is responsible “many times more” than India for the world food crisis, said Ramesh Chand, an economist with the Indian Council of Agricultural Research, which advises the government on farm policy.

The Bush administration has called for a truce. President Bush is a “great friend and admirer” of India, the United States ambassador here, David C. Mulford, said last week. He added that “this is a time for increased cooperation among nations to solve this problem and that hostile political commentary is not productive.”

A White House spokesman, Scott Stanzel, said, “We think it is a good thing countries are developing, that more and more people have higher standards of living.”

Some economists argue that blaming India’s growth is not only unfair, but makes little sense.

Food prices have not been rising continually as developing nations grew, said Ramgopal Agarwala, a former World Bank economist and senior adviser at RIS, a research institute in New Delhi. “They were static until 2006, then in 2007 and 2008 there was a sudden spark,” he said. But India has been growing for the last decade. This is “not last year’s phenomena,” he said.

“I don’t know who advised the president” on his recent comments, Mr. Agarwala added, but his analysis is “subprime.”

Mr. Mehta of the research institute conceded that his remarks on liposuction were meant to be tongue in cheek, but that “politically incorrect” attitudes like President Bush’s and Ms. Rice’s needed to be challenged. Rather than blaming India, Mr. Mehta said, the West should be adjusting to a changing world.

“If the developing world is going to develop, demand is going to go up and there are going to be new political paradigms,” he said.

Indians bristle at U.S. criticism on food prices
International Herald Tribune, May 13, 2008

Criticism of the United States has ballooned in India recently, particularly after the Bush administration seemed to blame India's increasing middle class and prosperity for rising food prices. Critics from India seem to be asking one underlying question: "Why do Americans think they deserve to eat more than Indians?"

The food problem has "clearly" been created by Americans, who are eating 50 percent more calories than the average person in India, said Pradeep Mehta, the secretary general of CUTS Center for International Trade, Economics and Environment, a private economic research organization based in India with offices in Kenya, Zambia, Vietnam and Britain.

If Americans were to slim down to even the middle-class weight in India, "many hungry people in sub-Saharan Africa would find food on their plates," Mehta said. The money Americans spend on liposuction to get rid of their excess fat could be funneled to famine victims instead, he added.

Developing nations like China and India have long been blamed for everything from the rising cost of commodities to global warming, because they are consuming more goods and fuels than ever before. But Indians from the prime minister's office on down never fail to point out that per capita, India uses far fewer commodities and pollutes far less than the West, and particularly the United States.

Many Indians felt that the remarks of President George W. Bush on May 2 were more of the same, though this time they seemed to breed a widespread sense of "We're not going to take this anymore." During a news conference in Missouri, Bush mentioned India's growing middle class, and said "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." This came on the heels of a similar statement by Secretary of State Condoleezza Rice that had already upset many in India.

"George Bush has never been known for his knowledge of economics," Jairam Ramesh, the minister of state for commerce, told The Press Trust of India after Bush's remarks, which he said proved again how "comprehensively wrong" Bush is.

"To say that demand for food in India is causing increase in global food prices is completely wrong," Ramesh said.

Subsidies to Western farmers have undercut agricultural production in fertile areas of Africa for decades, Kamal Nath, India's minister for commerce and industry, said by telephone. Meanwhile, he added, Americans waste more food than people in many other countries, in part because they buy in such large quantities.

The United States is responsible "many times more" than India for the world food crisis because of its higher food consumption, said Ramesh Chand, an economist with the Indian Council of Agricultural Research, which advises India's government on farming policy.

The Bush administration responded to the criticism from India with calls for a truce. Bush is a "great friend and admirer" of India, said David Mulford, the U.S. ambassador to India. He added that he thought "this is a time for increased cooperation among nations to solve this problem and that hostile political commentary is not productive."

A White House spokesman, Scott Stanzel said, "We think it is a good thing countries are developing, that more and more people have higher standards of living."

Blaming India's growth is not only unfair but nonsensical, some economists argue. Food prices have not been continually rising with the growth of the developing world, said Ramgopal Agarwala, a former World Bank economist and senior adviser at RIS, a think tank in New Delhi.

"They were static until 2006, then in 2007 and 2008 there was a sudden spark," he said. Meanwhile, India's boom has been happening over the past decade. This is "not last year's phenomena," he said.

"I don't know who advised the president" on his recent comments, Agarwala said, but his analysis is "subprime."

Bush's "ignorance on most matters is widely known and openly acknowledged by his own countrymen," The Asian Age argued May 5 in an editorial, but he must not be allowed to "get away" with an attempt to "divert global attention from the truth by passing the buck on to India."

Mehta said that his remarks on liposuction were meant to be tongue in cheek but that "politically incorrect" attitudes like Bush's and Rice's needed to be challenged. Rather than blaming India, Mehta said, the West should be adjusting to the changing world. "If the developing world is going to develop, demand is going to go up and there are going to be new political paradigms," he said.

The impact of National Foreign Trade Policy on the livelihoods and incomes of the primary producers and its relevance to the grassroots was discussed in a seminar organised by the Kolkata Centre of CUTS, an international NGO, on May 7.

The National Foreign Trade Policy (NFTP) helps the exporters find global markets and assists state governments to develop infrastructure for exports. The ideas expounded in this column have emerged from a seminar organised on May 7, by the Kolkata Centre of Consumer Utility and Trust Society (CUTS) International, a Jaipur based International Non-Governmental Organisation working in the area of consumer awareness and protection, trade and globalisation issues and the impact of World Trade Organisation on the primary producers of internationally traded goods and commodities with special focus on agricultural products and handloom workers.

The subject under discussion was the impact of NFTP on the livelihoods and incomes of the primary producers and was under the GRANITE (grassroots network on the impact of international trade on livelihoods and employment).

My distinguished co-panelist was Sanjeev Nandwani, the joint director general of foreign trade responsible for trade promotion activities and the implementation of Assistance to States for Infrastructure Development for Exports (ASIDE) in the Eastern region. He highlighted the macro aspects of trade policy in general and also in the context of agricultural products.

The fact is that gems, jewellers and software are the main stars in the Indian export firmament and it is only recently that some attention has been given to agricultural exports. Because we are a nation which is among the top five producers as well as consumer of several agricultural commodities, our position on agricultural exports is often ambivalent. Thus, when the farmers want to export wheat and rice, the government wants to ensure that the consumers do not have to pay too heavy a price. There are also times, when farmers clamour for the imposition of countervailing duties on a wide range of commodities – ranging from apple juice concentrate to tomato pulp/puree, but the foreign trade policy is not very clear about how and when this should happen. To that extent, the farmers have always pointed out that the NFTP does not really take their concerns into account.

In the course of discussions, this columnist’s attention was drawn to the recently introduced scheme of special incentives to export of agricultural commodities and products made by rural artisans. Under this scheme, the exporter will get a reimbursement of 7.5 per cent of the value of the exportable commodity. This incentive will however be given only when the export has been made. This columnist suggested that at least 50 per cent of this amount should go back to the primary producer. After all, if the primary producer has no stake in the transactions after he has sold the produce, the NFTP means nothing to him.

There will of course be some initial difficulties in implementing the scheme. The first of these relates to tracking the producer, and determining his share. As the processing units become more organised and IT savvy, it is possible to track each and every receipt. In any case, for several product categories, this is being maintained for reasons of quality and to meet the norms of the importing countries. The second relates to monitoring of the scheme and a guarantee that the incentive will actually be transferred to the farmer.

This columnist feels that this is best left to voluntary compliance, coupled with extensive information about the scheme and some random checks with exemplary punishment in case of default. The first advantage is that the farmer will begin to get involved with the export units and will prefer to improve his product quality so that the produce becomes an export consignment.

Secondly, this will actually lead to a transfer of resource to the rural areas and strengthen the capitalisation of primary producers. Thirdly, and not insignificantly, there will be an actual documentation of the primary producers who are engaged in the production of exportable commodities and it would be easier to focus extension activities among them. They will also be the more progressive farmers and National Bank for Agriculture and Rural Development (NABARD) sponsored Farmers Clubs would also be anchored with the group that is involved in export because farmers growing exportable commodities would be more amenable to institutional interventions than their (bucolic) colleagues.

The other point made by this columnist was that this process of consultation has to become much wider. A few weeks ago AgriMatters had drawn the reader’s attention to the problems faced by the sesame farmers when all oilseed export (including palm oil and sesame) was banned by the union government without any reference to or consultation with the state governments. True, concessions were given subsequently when the state governments wrote the protest letters – but the point is, why not involve stakeholders before the problem, rather than reacting to the problem once it has crossed a certain level. If consultations with state governments are difficult and time consuming, at least the commodity boards, export councils and the farmers groups engaged in production should be asked to give their views. Else the NFTP is a policy of, by and for the exporters only.

It is true that an exporter adds value in a way that is quite different from a normal consolidator or middleman. But the question is – should the value thus created be shared equitably or cornered by the exporter alone. If we take a long term view, then the aspect of cooperation will rise to the fore, because where such trust is lacking, export orders may flounder if there are changes in market prices because of extraneous factors. Agro-processing and export units will find it easier to build local alliances, create confidence within and among the communities in which they function and leverage all the incentive schemes of the central and state government for export promotion.

As the CUTS study in Agri-Export Zones (AEZ) for Lychee, Pineapple and Mango in West Bengal had shown, the primary grower is not really concerned or bothered about the outcome of the ASIDE scheme – for he asks – what is in it for me? Even as the percentage of India’s share in global exports goes up from 0.7 per cent to 1.5 per cent (no mean achievement), the farmer asks – how does it affect my income? How does it add to the sustainability of my operation? How does it make a difference for me if my consignment is exported or sold in the domestic market? The farmers are now hoping that as the policy is coming up for review in the next few months, it is time that the Ministry of Commerce addresses these concerns. Only then will the policy have some meaning for the grassroots.

In the wake of the rising food prices owing to a global shortage, the Confederation of India Industry (CII) has decided to set up a task force to chalk out steps to raise farm production, improve productivity and encourage private sector participation in food distribution.

In a statement here on Sunday, the apex chamber noted that the rising food prices was a matter of concern and called for an immediate global response by way of a platform for dialogue and action to manage the crisis.

“The entire issue of food prices needs to be seen in a global perspective and not just as an issue emanating from specific countries. There is a need for greater flow of global information on food production, consumption and reduction in food wastage,” CII Director-General Chandrajit Banerjee said.

According to the chamber, the main factors for the current food crisis include diversion of farm produce to generate bio-fuels, changing weather conditions across the globe leading to droughts and lower food production in several countries and huge farm subsidies which encourage leaving land fallow to maintain global prices of agricultural products.

The current crisis, the CII said, should trigger a global discussion to build stronger information networks on consumption and production so that corrective measures could be taken across the globe.

The global food management system could be developed under the Food and Agricultural Organisation (FAO), it said.

Meanwhile, CUTS International, an economic policy research and advocacy group, has criticised United States President George Bush for his remarks on food prices going up partly due to the rising prosperity of India’s middle class.

In a statement released here, CUTS Secretary General Pradeep S. Mehta and Research Director Siddarth Mitra said: “George Bush’s remarks on India being the cause for high food prices reflects his utter lack of intelligence, poor understanding on economics and sheer ignorance of basis statistics on food consumption.”

“The average American’s food consumption in calories is 50 per cent more than the average Indian’s; in addition it is still increasing over time at a rate which is faster than that of half-starved India. The current average American intake of 3770 calories, a figure provided by the FAO Statistical Yearbook, is the maintenance diet of a sedentary person weighing 114 kg. Indians, on the other hand, still consume only 2440 calories per capita – just enough to support a much leaner 74 kg,” they said.

The US President George W. Bush’s remarks that food prices are going up due to the high middle class consumption in India is as asinine as he is incomprehensible.

In a statement released here , Pradeep S Mehta, Secretary General and Siddarth Mitra, Research Director of CUTS International, a leading economic policy research and advocacy group said that the George Bush is well known for talking through his hat, and his remarks on India being the cause for high food prices reflects his utter lack of intelligence, poor understanding of economics, and sheer ignorance of basic statistics on food consumption.

“The average American’s food consumption in calories is 50 percent more than the average Indian’s; in addition it is still increasing over time and a rate which is faster than that of half starved India . The current average American intake of 3770 calories, a figure provided by the FAO Statistical Yearbook, is the maintenance diet of a sedentary person weighing 114 kilograms” say Mehta and Mitra. Indians, on the other hand, still consume only 2440 calories per capita – just enough to support a much leaner 74 kgs.

Clearly, the food problem has been created by Americans; if all of them were to come down to even the middle class weight in India many hungry people in Sub-Saharan Africa would find more food on their plates. On top of that, resource draining liposuctions would no longer be necessary; the money instead can go to famine victims in Somalia and Ethiopia . The loss of obesity would also probably make Americans look at the outside world with a less jaundiced and more benevolent eye.

Apart from the exploding problem of over consumption, rising food prices have been caused by the sudden shrinkage of food supply to the developing world by the developed countries who have been trying to sustain their unsustainable fuel guzzling life styles by trying to grow oil on plants and trees instead of food, thus suddenly short-circuiting the food supply in the international market.

“The harping on more consumptive lifestyles in India and China is nothing but a ploy to divert attention from their complicity in engineering food shortages and price spirals”, said Mr Mehta.