Information on where and how much food is available in various areas of Chennai to aid with rescue and relief work in the Chennai flood.
As of August 4, 2014, selling food on the street will be a criminal activity. Say goodbye to your favourite panipuri wala, sandwich wala, frankies stand and every other kind of street food vendor. Also bid farewell to small establishments like the neighbourhood mithaiwala, street-corner bakery, doodhwala, lassiwala, kulfi-wala and roadside butcher-shops-cum-kabab-joints. You should worry even if you are one of those enterprising housewives selling homemade chocolates, cupcakes, marzipan bunnies and Easter eggs to your friends and neighbours in the festive seasons.
In the popular serial Taarak Mehta Ka Ulta Chasma, Madhavi Bhide — the typical middle-class housewife — supplements her penny-pinching husband’s income by supplying papads and pickles. Well, now Madhavi faces a choice: either take a license by paying a fee of Rs 2000/-, or face imprisonment of upto six months or penalty of upto Rs 5 lakhs, under Section 63 of the Food Safety and Standards Act 2006.
Read this notification: http://tinyurl.com/FSSAI-4-Aug-Deadline
Also read the highlighted paragraphs in (a) Food Safety Act 2006 and (b) Food Safety (Licensing) Regulations 2011. Download from http://tinyurl.com/Food-Act-Regulations
But a licence is only the beginning. The vendor must meet FSSAI’s high standards. This could mean serious money in modifying facilities, or else shut down. Failure to comply could be fined lakhs of rupees, or even imprisonment for six months. This setup is ripe for a thriving business in bribery. Needless to say, the expenses in being compatible with the law - both officially and unofficially will be recovered from the customer, which basically means more expensive street food.
Food Safety Standards Authority of India has notified August 4, 2014 as the deadline for getting registration and license with Food Safety and Standards Authority. We can hope that this deadline will be postponed as it has been since August 2012, the original deadline. But the sword will continue to hang over our heads… unless, of course, the new government elected at the Centre furiously back-pedals.
NOT JUST COOKS, BUT ALSO TRANSPORTERS AND SELLERS
The dabba-walla who transports a home-cooked lunch to your office is a transporter and handler of food, and a Food Business Operator as defined under the Food Safety (Licencing) Regulations 2011. Needless to say, most dabbawalas cannot possibly meet FSSAI’s hygienic standards - which presumably won't allow tiffins on the floor of dusty luggage compartments on local trains - even though the tiffin itself remains unopened and has been successfully going through this system for decades without health issues.
Your neighbourhood kirana-store, who sells grains, spices, nuts, oil, biscuits etc. is also in jeopardy. Unless he invests lakhs or crores of rupees for upgrading his shop with air-conditioners, glass doors, freshly painted ceilings and marble floors etc, he may not be given a license to sell food items. Then he cannot sell so much as a toffee or a bottle of packaged water.
This is the brave new world envisioned by Government of India. The road to hell is paved with good intentions. Bubbling with good intentions, the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations 2011, are a nationwide disaster-in-the-making. It is about to hit the common man right where it hurts most. Wham! Right in his wallet!
Indeed, the conditions imposed on storage, preparation and handling of foods are so stringent that a majority of household kitchens and office canteens would not make the cut.
BIG BUSINESS IS THE GAINER
Who can possibly meet the impossibly high standards of food preparation and storage set by dozens of scientists at FSSAI? The likes of McDonalds and Pizza Hut may have no difficulties, and ditto for Pepsi, Coke, Haldirams and Britannia. Also, big retail outlets like D-Mart and Big Bazaar.
But small outfits will have no option but to close down, or to operate on the fringes as criminal offenders and fugitives. The current dispensation has given a death sentence to the entire unorganized food sector spread all over the country — consisting of many million self-employed men and women living in various cities, towns and even the remotest villages. In tiny settlements on snowy mountain-tops, or in the midst of forests and deserts, entire families and communities work together to survive by selling various food products to travelers and pilgrims. This vibrant food service industry of India is now marked for slaughter. One wonders why.
A vast expanse of potential criminals waiting for discovery by any cop walking down the street and Shangri La for the greedy who deal in law enforced to taste for profit.
FLYING UNDER THE RADAR
How did this horrific thing come to pass? How did such a far-reaching legislation slip unnoticed, like a jumbo jet flying under the radar? One explanation is: it happened because the Food Safety Act 2006 and the lengthy licensing regulations seemed like a good thing at first.
Food was earlier regulated under various orders passed by the union government, such as Prevention of Food Adulteration Act 1954, Fruit Products Order 1955, Meat Products Order 1973, and Milk & Milk Product Order 1992. Some people in the food industry actively lobbied for all these orders to be unified, so that implementation would be easier. However, the unification exercise was taken up with so much zeal by bureaucrats that it led to a kind of bureaucratic overreach. In the words of Gokul Patnaik (098100 63433), a retired IAS officer who was formerly chairman of APEDA (Agricultural and Processed Food Products Export Development Authority) is among those who lobbied for such a unification. And now, on hindsight, he regrets the outcome. “We seem to have created a Frankenstein’s monster, whose appetite for controlling our lives seems endless,” he remarks.
Indeed, if you casually browse through Food Safety Act and Regulations with a common man’s eye, it seems like a well-intentioned (if over-ambitious) effort to improve the quality of the food that all of us – both rich and poor – eat and drink. The standards imposed on the licensees are formulated by committees peopled by well-known scientists from all over the country. These standards are aimed at reducing pesticides, enzymes, antibiotics, harmful bacteria, and biological contaminants like hair. Who can possibly argue with that? How can anybody say that it is not a good thing for safeguarding public health?
Public consultations were also held in 2008, and trade bodies like FICCI and CII represented civil society. Hawkers and enterprising housewives were never aware of these consultations, and even if they were aware, would not have been able to put across their concerns in a way that the bureaucrats would understand.
Indeed, the impossibility of holding genuine stakeholder consultations becomes apparent when you consider the mind-boggling span of the term “Food Business Operator”. It climbs up the ladder of scale starting from the tiniest iterant chai-samosa vendors, temporary and permanent food stalls, home-based canteens and dabbawalas. It encompasses office and school canteens, langars in gurdwaras, distribution of various prasads in temples, religious gatherings and fairs, and wedding feasts. And at the top of the ladder are importers, packers, cold storages, warehouses, transporters, retailers, wholesalers, distributors and five star hotels.
Some traders’ associations and food manufacturers’ bodies opposed these regulations, but that too may have been written off as a knee-jerk reaction; after all, who among us says yes to more regulation? The remarks of Confederation of All India Traders (CAIT) can be found here here: http://www.cait.in/cait-articles.php (Article titled “Top Three Issues Under Food Safety Standard Act Faced by the Industry”)
The members of All India Food Processors Association (AIFPA) are on the central advisory committee, scientific panels and expert groups of Food Safety Authority. Dharam Vir Malhan (9868218848), Executive Secretary of AIFPA and formerly head of the Modern Foods, a government enterprise, is coordinating the participation of these members, who are deeply aware of the beneficial as well as adverse consequences of the proposed new licensing regime. “Going from feedback that I receive from food industry stakeholders at various levels, the new regulations are over-ambitious and at many places, highly impractical to implement,” Mr Malhan says mildly.
This is an understatement. The administrative burden at various levels is enormous and widespread. Registration under the Food Safety Act is to be done by local bodies i.e. municipalities and gram panchayats. The licensing mechanism is in state and centre, depending on the scale of the manufacturer. Large scale entities will require multiple licenses – one for each separate activity such as import, repacking, transportation etc., and one for each location of factories, warehouses, etc. The multiplicity of the paperwork required, and the massive reach and discretionary powers of the officials within the registration and licensing mechanisms is a sure-fire formula for both corruption and administrative overload.
According to its preamble, the Food Safety Act was conceptualized to consolidate the existing food laws; one presumes that the intention was to simplify, and not to complicate. Very clearly, this exercise has gone off track.
KILLING MICRO-ENTERPRISES & SELF-EMPLOYMENT AT BIRTH
The full menace of the regulations has clearly not been understood by civil society and activists; otherwise human rights crusaders would have been up in arms! Because even mild enforcement of these regulations will criminalize over 99 per cent of the non-packaged food sector in our country, rendering them liable for penalties of several lakhs of rupees and several months of imprisonment. If that is not a human rights outrage, then what is?
Such a formal business environment – where one is required to get a registration and license before selling his first plate of vada-pav – means that tiny food businesses may never come into existence… or may be seen as an unlawful enterprise from day one!
Let us take an example to understand how small businesses grow. Take the case of a neighbourhood auntie who prepares delicious parathas. One day, a group of young MBA students move into the neighbouring flat as paying guests. As a neighbourly gesture, the auntie sends them six parathas to go with their morning tea. The love the fresh hot parathas, and so they request the auntie to send them a dozen parathas every morning for their breakfast, and they voluntarily offer to pay Rs 5 per paratha. And then, word spreads among their friends, and the auntie, who used to cook only for herself and her family, now finds herself supplying parathas to several groups of paying guests in the neighbourhood. Voila, a food entrepreneur is born!
However, FSSAI’s regulations say that as soon as the students offer to pay for the parathas, the auntie has to apply for a license from FSSAI and pay Rs 2000 for a license. The Food Safety Officer may then come to her house and check her kitchen. He may deny her a license if her ceiling paint is peeling off, and while parting, warn her that if she continues to feed her neighbours, he can fine her Rs 5 lakh or drag her before a special court and get her imprisoned for six months! Behold, a food entrepreneur has been killed at birth!
Indian cuisine is full of experimental products, and street foods are at the cutting edge of experimentation. For example, popular items like bread pakodas, Chinese Bhel, roti-rolls and kathi-rolls and novelty items like ice-cream pakodas have all sprung up in response to entrepreneurial inventiveness sustained by market demand. All Indian foods have been created in this way. An over-scientific approach to the process and formulation is toxic to innovation. So, it is alarming that FSSAI’s bloated bureaucratic set-up wants to not only control the cooking and storage environment, but also control the FORMULATION of each and every item, and confine it within documented parameters!
Under the new FSSAI regime, all known items are standardized and their formulations are written down. If someone wishes to make a new item – say an item like bread-pakoda using crushed banana wafers in the filling – then he must first submit this formulation to FSSAI and seek their approval for it – a process that typically takes two or three years. And the new regime makes producing such innovative foods and selling them without approval a punishable offense!
It is both audacious and ridiculous to even attempt an exercise of defining standards for every food in India. Because a “chutney” in every state, every district, every tehsil, every caste and community has very different ingredients and methods of preparation. A simple thing like a roti tastes very different in every household, and has varying amounts of ghee, salt, thickness, diameter etc. The same goes for hundreds of types of halwas made in temples, gurdwaras and sweetmeat shops. How can a centralized body of scientists and bureaucrats like FSSAI impose standards for such things? But that is precisely what it is doing!
Manufacturing apart, it is also an offense now to import and sell a novel food that is well accepted abroad but not currently being sold in India – such as, say, fresh strawberries encased in a hard chocolate cover. Importers will not be able to release their stocks into the markets unless FSSAI first tests and approves it for public consumption.
Gokul Patnaik remarks, “If this sort of pre-approval process were in force in olden days, the halwais could never have invented foods like rasgollas and jelebis. Innovations happen in the kitchen at the spur of the moment, and the only approval needed is from the tastebuds of customers willing to pay for them. For bureaucrats to insist that a gulab jamun must only have this much sugar and this much ghee – no more and no less – is to impose a bureaucratic approach on cooking itself! This can only result in killing innovation!”
IMPOSING INSPECTOR RAJ OVER FOOD
The FSSAI Act mandates Food Safety Commissioners in every state to appoint numerous government employees as Food Safety Officers, with powers to slap a closure notice on any Food Business Operator, and also slap penalties of upto one lakh on them for any offense defined under the Food Safety Act. In the name of safeguarding the health and well-being of India, this is a return to inspector-raj and rampant bribery, far worse than the pre-liberalization days.
India’s people have to raise their voice against this over-zealous bureaucracy, and the time is now.
Edited from a press release ISSUED IN PUBLIC INTEREST BY
A lecture at University of Texas, Austin by P. Sainath, sponsored by the University of Texas School of Journalism, the South Asia Institute, AID-Austin and the Society of Professional Journalists UT.
We are also buying land - vast tracts of land in Brazil, in Kenya and in Ethiopia. These are the three places. China has bought them in about 20 other countries. They are way ahead of us in that absolute race to the bottom.
It's very, very curious that India that we are going to buy farmland in Ethiopia to grow food in India considering - and this is part of the economics of our time - we shifted millions and millions of farmers in the last twenty years from the cultivation of food crop to the cultivation of cash crop.
Millions of subsistence level farmers, small farmers, medium farmers, guys with 5-9 acres, being shifted from growing food crop like paddy, like rice, like wheat to growing vanilla for you, because you are the vanilla nation. 70% of the world's consumption of vanilla is right here. 70% of the coffee India produces - the Robusta - you know there are two families of coffee - robusta and arabica. So we produce mostly robusta. 70% of our robusta is consumed in Europe. Not in India.
So the farmers are getting into very high risk zones because they don't have an internal market. They are being shifted to very high risk crops. If you move from producing paddy to producing vanilla as many people did in 2003, so I'm giving you the 2003 figure, your cost of cultivation goes up 16 times. The bank loans you pay go up accordingly and the banks will not give you that amount of loan, so you go to the moneylenders.
We shifted millions and what is the result of that? How many of you have looked at the Indian budget - the latest Indian budget online? Economics Survey online? I'll save you the time so that you don't have to dig through it. There's a table. Table 1.17 under the tables section, page A17 to 22.
What does it show you? It shows you that the average per capita availability of foodgrain 2005 to 2009 is less than it was from 1955 to 1959. 436 grams for the last five years, 444 grams in 1955 to 1959. That's about 3 million tons in real terms.
In 1991 we reached a peak of production when we had 510 grams per Indian. That's when we started what they call the reforms. From 510 grams we have come to 436 grams in 20 years. That means an average Indian family has access to about a hundred kilograms of grain less than they did ten years ago.
That's how serious the food crisis is. We are still encouraging crops for export in the name of an economics that says grow cash crops make hard currency dollars, and do better.
So that's what's happening.
By the way, the food and hunger issues have grown massively in a country called the United States. According to the USDA - that is the United States Department of Agriculture - it brings out a report on food security in the United States 2009. If you look at that report, it shows you some very spectacular things.
2009 marks the highest number of people ever in food and security in the United States since they started doing the surveys in 1995. It marks the highest. One of every seven American households had difficulty providing food to all their members in 2009 according to the US Department of Agriculture study. One third of these families had very low food security. What does that mean? It means, members in 6.2 million households had reduced food intake or had completely disrupted eating patterns due to lack of money to buy food.
Over 36% of all female headed households in the United States - that is, with children - female headed households with children - means more than one household in every three female headed households with children in the United States were declared food insecure by the USDA's report.
Black and Hispanic households were more than twice as likely to be food insecure than white non-Hispanic households.
5.6 million households - an increase of 18% over the previous year were going to soup kitchens. And it isn't just the United States. I came to the United States via Brussels.
What is Brussels? Heart of Europe. Heart of NATO. One of the most prosperous nations in Europe. Top 20 of the Human Development list. You know what the figures out there are? One in every three women enthrepreneurs in entire Belgium is below the poverty line of the European Union and below the poverty line of Belgium as well.
The Flanders daily had this splendid news item on this subject. Inequality has grown faster in the last fifteen years than at any time in the preceding fifty, anywhere in the world.
In the United States, 2009 brought the number of people below the poverty line to 43.6 million.
In this country,
the crisis has about one in every four children is below the poverty line and 22% - over one in five of every American below the age of 18 is hungry is hungry or is at risk of being hungry.
You know, one of the most interesting examples of inequality cited about the US is if you compare it to say - Argentina - in the 1940s Argentina was one of the most unequal countries in the world. 1% of Argentina's population controlled 20% of incomes. Today, that's down to 15%, but United States 2007 - 1% of the population controlled 24% of the National Income. That is, the United States in 2007 is more unequal than Argentina in the mid-1940s.
Yet, in the same country, despite the crisis, despite your recession, would anyone like to give me a number on what the top ten hedge fund managers are earning per hour? [inaudible audience response] 900 thousand bucks.
And then come to the champion of grooming unequality on our continent - that's us. As I said, my favorite list is Forbes, right? It shows us that we have now 55 dollar billionaires. There are a few inconveniences in it in that we are ranked fourth. Above us, the usual irritating faces of China and Russia.
The Chinese I will dismiss briefly, because their average net worth of their billionaires is a piffling 2 billion dollars. Ours is four and a half. It used to be 6.5 until those twits on Wall Street blew it for everybody in 2008.
As for the Russians, there is our obvious moral superiority with the Russians, because the Russians after ten years send all their billionaires to prison. We send ours to Parliament. Where now we have about 11 of them.
That's a civilized democracy. We send them to Parliament.
The corporate giveaway in the current Indian budget is 18-19 billion dollars in direct income tax and if you add other corporate concessions under excise and customs, it crosses over a hundred billion US dollars. According to UNDP, that's the amount you require every year to solve all the basic problems of the human race.
But the same Indian budget cuts 4,500 million rupees from food security. Last year the same amount, nearly 10,000 million rupees had disappeared in 24 months from food subsidies in a country which has the largest number of hungry people in the world.
Now lastly, and I'm going to close on this note, what did it do? These policies - I said food crisis and farm crisis. I brought you to the farmland. All over the world, the policies of giant corporations getting massive subsidies. In the United States 7 in every 10 dollars going in farm subsidies goes to Fortune 500 companies.
There are very few farmers in the United States. The family farms left in the United States are less than 700,000 that's a 2006 figure and they were going bankrupt at the rate of one sixty a week according to the associated press.
By the way, it means, that you have three times the number of people in prisons than you do in farms. Count it. Fedral, state, penitentiaries and parole. If you include the parole. The people in the criminal justice system, under restraint are three times the number of people you have on the farms of this country.
In India, the gigantic subsidies of the United States and EU have destroyed millions of farmers in Western Africa in the cotton producing countries because all these people had been shifted, remember? To cash crop. In India and elsewhere.
So this system of economics, the system of subsidies, basically, the system of running the world by corporations has really caused damage. In India, from the last 15 years, from 1995 have seen the death by suicide of over 200,000 farmers. If you include two years of 95-96 it comes to nearly a quarter of a million.
And suppose we divide these figures into two halves, in the second half, the number of deaths is much, much higher. Very much higher. It means, its getting worse, not getting better.
A quarter of a million human beings, is the largest recorded wave of suicides in human history. That may have been bigger, but they are not recorded. These are recorded by the government of India. They have huge exclusions of large numbers of people and they still come up to 2,16,500 people if we take the period from '97 to 2009.
All these data are avaliable to you online, they are the data of what is called the National Crime Records Bureau.
The Crime Records Bureau keeps data on suicides. In India, suicide is a crime. If you commit it, we'll teach you never to do it again. And if we take the 95-96 figures, which are incomplete, because many states did not report, and if we take 2010 an average figure, way below the average of the last six years, then you cross a quarter of a million.
That's how the figures work. It means, that in the last six years, the rate of suicide is one farmer taking his or her live every 30-31 minutes. That's the scale of human distress. That's the scale of...
Oh ya, but it creates unique buying opportunities. You can buy farmland in India now. Unfortunately our legislation does not allow corporations to hold vast tracts of agricultural land, but don't worry, that will change. They are lobbying for it.
Now the same country that has 55 dollar billionaires - that's Forbes - let's take the Government of India's report. We don't want to always be with Forbes. The Government of India's constituted three committees between 2007 and 2010. For my.. since I was a member of one of those committees.
The first committee was National Committee for enterprises in the UnOrganized sector. First page of the report. The report is online. You can reach it in moments. It's called NCEUS Report on livelihoods and poverty headed by... now you might ask, why should a government have several reports and committees on the same subject.
On farm suicides, there are 13 commissions of inquiry in the state of Maharashtra alone. Indian governments have a very specific way of functioning on enquiry commissions. They will set up multiple enquiry commissions until one of them gives the government the report it wants to hear.
So the first committee they set up under the very safe tutelage of Prof. Arjun Sengupta, veteran of the World Bank, IMF, Planning Commission. With those sort of credentials they thought he would say all was wonderful, India is shining. Arjun Sengupta ended up putting on the first page of his report "836 million Indians live on less than 50 cents a day." 20 rupees or less.
Incidentally if you live on less than 20 rupees in India, you don't qualify as poor. To qualify as poor, you have to live on less than 11 rupees a day, because that's the poverty line in India. So 836 million people, less than 20 rupees a day. So they were disgusted with this report, which also said 88% of all tribals, 88% of all dalits, and 85% of all Muslims fall into this category of ultra poor.
So they set up a second commission. The N C Saxena, BPL expert group. I was one of the experts. And it was wonderful, it was scintillating. Some of the expert discussions we had were riveting. 17...
[contd in Part 5]
A lecture at University of Texas, Austin by P. Sainath, sponsored by the University of Texas School of Journalism, the South Asia Institute, AID-Austin and the Society of Professional Journalists UT.
In 1999, Egypt came under the structural reforms regime of the World Bank and IMF, but for some reason, they didn't push it. Maybe because the ministers of that time were a little smarter.
2004 - Mubarak sacks most of his cabinet, brings in guys, trained - where else? - land of the free, home of the brave. Brings them in, and they ruthlessly implement the economic reforms and you've got chaos. You've got 80% of those below 30-35 unemployed.
Ya, so democracy is a very important issue. Unlike in say, India, they did not have the option of voting out governments. Please know this, just so that you understand this, how important the food issue is. Election after election in India, many elections in India, I can't even count for you how many, the price of bread has been the price of power.
In 2009 elections, all those governments that provided cheaper rice to their public won those elections. Whether the BJP in Chattisgarh and Madhya Pradesh, BJD in Orissa under Navin Patnaik, the DMK in Tamil Nadu... it made a huge difference, because the public were reeling under food prices.
Understand how important. In Egypt or Yemen, the public did not have the option of using the electoral route of protest.
So yes, the democracy thing was an important driver, but incredibly important was the food issue.
Here we are.
Let's take each one of these countries. So I've given you the Egyptian stats. In the 6 years between 2004 and 2010 the rate of accumulation and concentration of wealth in Egypt is even higher than in between 1999 and 2004. Inequality is a theme. Deepening inequality is a huge driver.
And we come to the United States. Egypt IS the world's biggest importer of wheat. Take Yemen.
According to the World Food Programme... Yeme is by the way one of the very poor countries of the world. 15.7% of Yemen's population lives on less than a dollar a day. 43% live on less than 2 dollars a day. And in three months this year, in three months of 2011 , 6% of Yemen's population went below the poverty line, driven by food prices and drought.
Are we beginning to get the idea that food matters? 6% of Yemen's entire population in the first three months of this year. January, February, March. That's the estimate of the World Food Programme, which has declared that they are broke, because the budget that they had made for Yemen was destroyed by the price rise.
They had a very large budget for Yemen and now estimate they are 28 million dollars short. Those 28 million dollars measure for you the rise in food prices. So they're saying, we are going to have to drop from our list more than 300 thousand hungry people if we are to continue in the same budget.
Let's get to Syria. You know, Assad. President Assad, drew a quick lesson from what was happening in Egypt, drew a quick lesson from what was happening in Tunisia and immediately declared that he would bring down the prices of the staples. But you know what, it didn't work. The crowds are getting bigger.
But it is interesting to me that he recognized it, as always too late. Mubarak also. Too late.
In Yemen, it did not start with Twitter or Facebook, it started in the south with a bunch of students bringing out a public declaration against high food prices. School students. High school students. They took out a protest against... and they were astonished by the number of people who joined them.
When they went out to... because their meals in the canteen, everything was cut by these extremely high prices. That's so much for Yemen.
Take You know, in Syria, immediately after the crisis started, Syria lowered taxes on olive oil by 53% , on taxes on sugar by 25%, lowered taxes across the board on foodstuffs, but the price increase is so high, that it's not having that much of an impact. In fact, the announcement that they would do it, led to rapid hoarding and speculation of food grain, and that has also bitten into the crisis very severely.
The Food and Agriculture Organization estimates that in the year 2008 64 million people went below the poverty line, driven by food prices. The FAO has a food insecurity atlas that you can look at. 2008 was 64 million people. When they bring out their 2011 issue, you will find that it was exceeded in 2010 because much much greater stress on pricess came up in 2010.
Here's an interesting thing. As always, after the horse has bolted the stable the IMF comes out with the study saying that there is a serious link between food prices and political unrest. Gee! We needed to know that. And only the IMF could tell us. They did a study between 1970 and 2007 which said that a 10% increase.... I haven't quite understood ... very written in the jargon of the economists. But what it basically says is that it adds a factor of 0.5 in a given year, in the next year of raising the prices in political unrest. In terms of the average political unrest, that is an increase of 100% - that's basically what they're trying to say is what I understand.
Often, this seems to unfold against not just food price increase, but double digit inflation overall. In India, food price inflation has been ranging between 13 and 18 percent for the last year, year and a half. And overall inflation has been close to double digit, but it's up and down, within a band of 2%.
Now let's take a look at my favorite magazine and website - Forbes.
Was all this an issue of demand and supply? Was all this chaos over riots and food was it entirely an issue of demand and supply? Yes, those were factors. The collapse of the Russian harvest, the drought in Australia had an impact, but nothing like the impact that speculation on commodities is having on world food prices.
Do you remember in 2008 the price of petrol went from 40 dollars a barrel to 170 dollars a barrel and then came down to 120? production didn't change so fast, did it? Food prices if you remember shot up in 2008 and toward the end of 2008 fell dramatically.
Why does that happen?
It's called futures trading. It's called speculation in food grain. The difference about speculating in food grain and.... see now some of the wealthiest investors... I've got to read you a quote from Wall Street Journal on this. What are they...? They are not even acquiring a physical commodity. They are not acquiring so many tons of rice. They are just betting on the price of rice.
They are just betting and they have a very simple bet. Food price goes ... up.
So its driving the prices of food way beyond what the public of many, many nations can afford. That's what's happening. Okay?
So it's really going dramatically up, and Fortune advises its investors ... it says "this is a bet worth dipping into." It's going up.
So I... today I looked at Fortune's list of fastest growing industries of 2009. What was number 1? Food Production. Fastest growing in revenues, food production. Number 2 is Energy, number 3 is petroleum refining, but Number 1 is food production.
In the top 20 there are two other food related... food processing is number 15, and another food related item is in the top 20, but food production is the number 1 in revenues, and in terms of growth of profit, the fourth most profitable industry in the world.
According to Fortune 500, whom I trust implicitly, because they tell me correctly how many billionaires we have each year.
And it's very... Fortune's 2009 results are very important. In a way they tell us what happened and what follows in 2010. When we look at those numbers today, we get a much better understanding of the food crisis.
Here are some of the biggest beneficiaries of that boom. Number 1 company in the world. Profiting from the largest expansion. Number 1 industry in the world and the fourth highest profit making industry in the world is Archer Daniels Midland - ADM.
If you look at it in terms of percentage change in profits, the food industry 2008-09
48% increase 42.8% increase. The next highest is some 14% behind and that is energy.
Here is how Archer Daniels Midland - an American company did. I'm quoting from Wall Street Journal "It not only reported record third quarter profits and windfall as all other food companies including Monsanto did, in the seeds sector, but Archer Daniel's profits included a seven-fold increase - a net increase in its unit that stores transports and trades in grain. Not produces grain.
The highest profits were in the units in those companies storing grain. You can the enhance speculation. You're not producing one morsel of grain. You are trading in it, you are hoarding in it, you're speculating in it, you're storing it and that unit has the highest profits of the fastest growing industry in the world.
Tells you how important food is.
Welcome to the ultimate profit zone. I'm surprised Warren hasn't found it yet or maybe he has investments we don't know about. It's called food and water. You know, if the world has to do without petroleum, it will. Humanity lived without it for millenia, but you can't live without food and water.
The countries that control food grain in the next twenty years will run the world.
The countries that control food grain or the food grain trade, they have the world by its belly. It's literally having the world by its belly. Now if that was Archer Daniel's profits, you know, I won't go into the whole list. the profits became so much, that the United States Senate set up a commission.... what was it called... the commodity futures trading commission. It held a session in Washington with Congressmen participating, I think, because of the kind of damage it was doing.
Today, the point of it is that hedge funds and index funds control between an estimated 50-60 percent of wheat traded on the world's largest commodity markets. So hedge funds and index funds are driving food prices. In India, the volume of futures trade - it's not possible to calculate how many percent it has increased in 18 to 24 months. The percentage and level it has increased in a very, very brief time.
So that's what's happening.
By the way the food production industry increase - I said 42.8% - I'm wrong, it is 48.8%.
Now the fast growing investment is coming. It is moving to another area. Farmland. How many of the Indians sitting in this - or the people of Indian origin sitting in this audience are aware that India is buying vast tracts of farmland in Kenya and Ethiopia. Are you aware of this? [inaudible audience response] Two people. Not bad. That's about the National average.
We're locked in a race with China and we're damned irritated because they've bought more land than us. And what are we buying this land for? To grow food in India. Having destroyed India's food production capabilities over 20 years of neo-liberal economics.
And we're buying... we're going to be buying hundreds and thousands of acres - we've invested 4.3 billion dollars in Ethiopia as a country. We're going to be buying tens of thousands of farmland in Ethiopia - for God's sake, don't you think they have enough problems without us landing up there?
[contd in Part 4]
P. Sainath on Mass Media v. Mass Reality: From Farm and Field to Wall Street Deals
A lecture at University of Texas, Austin by P. Sainath, sponsored by the University of Texas School of Journalism, the South Asia Institute, AID-Austin and the Society of Professional Journalists UT.
Seeing so many students in the audience always provokes the teacher gene. So I'm going to begin with a question.
Who do you think is the world's biggest importer of wheat?
I'm not doing it as a test for you, it is a measure of your media. One of the most important processes is unfolding in Africa. How much of the discussion have you seen around the African uprisings that tells you that one of the big drivers of those uprisings is food prices.
The biggest importer of wheat in the world is Egypt. 20 million tons in the last
twenty months 2 years. 20 million tons. So, when food prices soar, people pay an incredible price.
In Egypt, the average Egyptian citizen spends far more as a share of his or her income on food than people in comparable countries. For instance, in Brazil. If you were in Brazil, you would spend 17% of your income on an average - national average - on purchasing food. If you live in Egypt, you will spend much more than twice that. 40% of your income goes on food.
How important do you think has been the emphasis of the media on food prices as a major problem in these countries. Did you get that impression from your media? You can't. I don't blame you. But it is... don't you think it adds some perspective to what's going on? To know that that country is the biggest importer of wheat? That food prices have gone up 30.. 40.. 50% over a couple of years?
Also one of the last things Mubarak did in desperation, six weeks before he was ejected, was to reintroduce price controls, which he had removed under the orders of the structural adjustment programme put on him by the World Bank and the IMF with renewed vigor in 2004.
So there you are. Food prices were and are a major...
Have we forgotten already that in 2008... because I think the meltdown wiped out everybody's memories... 2008 was the year of food riots across the world. Remember? They were the highest.. First time you saw the Western middle classes worrying about the food prices in April to June 2008. Or have we forgotten that?
There were food riots in Kenya. There were food riots in Somalia. I think at least some of you might remember the food riots in Haiti.
2008 the food and agriculture organization of the United Nations tells us was the record highest price rise on the FAO food price index. But you know something? It got obliterated. In 2010, it was even higher. Midway through 2010, the food price index registered a 32% increase in a matter of months. And that was much higher.
2008 produced food riots. 2010 produced regime change.
It's not that these were the only factors. Not at all. There were many political factors, compelling internal factors, but they need a spark. They needed something.
Don't write off what food prices and the role of food is, and I'll explain why.
Incidentally another country... How many of you can name the African country that was completely self-sufficient in cereals in the 1970s and becomes one of the most major importers of food in the world?
1970s - completely self-sufficient in cereals. 2010 - one of the world's biggest importers of food.
I could name 20 countries like this and you'd see half of them in that situation you are seeing now in Africa. So it is not that... yes, democracy is very important, the politics of it is very important, but there was a major driver called hunger. Food prices.
If you look at the Arab streets, you will see people out on the streets who never ever stepped out in demonstrations and protests. Very conservative sections who never participated in protests and demos. They were there on the street. They still are on the street. Because the problem is not solved.
Ok, we'll come back to the food issue, because what's my.. this is titled as... Wages of inequality, food crisis, farm crisis and the media. We are already into two of those.
The media told you nothing about this... from what you are telling me. You did not glean from the media coverage that food prices were a major factor in what's going on.
You know, every year, the United Nations Development Programme ... and in fact, the UN has been doing this even before the UNDP became active... it's been for 30 years, the United Nations has been presenting us every year with a menu - a bill of fare. We don't see it as a consolidated menu, but we do see it in little bits and blobs.
Don't we... haven't you read somewhere, you vaguely remember... "The Secretary General of the United Nations said that if we spend 15 billion dollars a year additionally, additional expenditure on hunger, we could eliminate hunger. Have you read those sort of little items all over the newspapers? Ya... this you have.
Now what I do is, these different little items that appear, I add them up as a menu, and try figuring out what they come to.
- Hunger - 15 billion dollars a year the Secretary General tells us will eliminate the extremes of hunger.
- 10 billion dollars additional expenditure a year, and ever person on the planet has got sanitation.
- 15 billion dollars a year and every child... additional expenditure. We're talking about additional expenditure, ok? 15 billion dollars additional expenditure a year, and every child on the planet will be in school.
- 12 billion dollars additional expenditure a year, or something like that, and everyone's got access to basics like water.
You put these together and you get something like between 60 billion and 80 billion dollars. Right? So what is the UN telling you? It is telling you that 60 to 80 billion dollars additional expenditure you can solve the most pressing problems of the human race.
Its never happened in all those 30 years. Why?
What did the government say? No money. There's no money, we can't solve this problem. Where's the money? You put up the money. But we can't do it. You know? Let charitable foundations and the UN and philanthropic... let Gates and Buffett do it and all that stuff. But we can't do it, because we don't have any money.
So for 30 years, this amount of 60 to 80 billion dollars the governments could not find.
Then, 2008 September, Wall Street hits the fan. And the guys and the governments who couldn't find 60 to 80 billion dollars for 30 years find a trillion dollars inside of a week. Along with their friends in Europe, they find 3 trillion dollars in the next three or four months and God knows how much more since then, and what do they find it for? They find it to give it to the very guys who tanked the world economy.
Who wrote your bailout plan? Goldman Sachs.
You collect trillions of dollars, public dollars to give it to the very guys who tanked the world economy, and you have the money!
All these years you didn't have 60... you didn't have 8% of that money, to solve the basic problems of the human race, but you have twelve times that money to hand over to the banks and the trusts and the corporations that completely destroyed the global economy.
Incidentally, a little piece of statistical trivia, if you will: In 2008 - the year they blew the global economy, American CEOs took home 18 billion dollars in bonuses - for that fiscal. For the fiscal in which they blew the global economy.
Well, I suppose it was very modest, because the previous year, it was 34 billion, but they still took home 18 billion dollars in reward. And remember where those dollars came from. It came from a public dollar bailout. It came from public tax dollars which bailed them out.
Giant corporations, having brought the world economy to its knees, in a drama scripted for the last two or three decades by neo-liberal economists and corporations have benefited massively from the ruins and the wreckage. As I said, you destroy the world economy, you take home 18 billion dollars in bonuses. But remember this, in the world we live in, and the economics we follow, and the moral philosophy of that economics, every misery is an opportunity. I assert. Every misery is an opportunity.
Let me quote for you, the sage of Omaha - Warren Buffett. Whose reaction to the Tsunami and nuclear meltdown in Japan is that it provides a unique buying opportunity of Japanese stocks. This is Reuters quoting Warren Buffett. Here he is "Immediately after the nightmare... after Japan's tragedy, he said, if I owned Japanese stocks, I would certainly not be selling them. frequently something out of the blue like this an extraordinary event creates a buying opportunity." And he advised his friends to invest, because the Japanese companies are on their knees, the stock prices are down, this is the time to buy!
Actually, he's right. I don't know... I think six years ago, Bob, when I spoke here, soon after the Tsunami, I pointed out... I don't know if any of you were here. You look too young to have been around then... Ever since the Tsunami - struck me then, and ever since then, in every natural calamity, I - a non-financial journalist - follow the stock markets when something terrible happens, because they start doing very well after a week.
Buffett was right. One week after the Tsunami, as the damage was really unfolding. We knew for instance, that Indonesia had lost nearly a quarter of a million people... you know 11 countries were devastated by the tsunami - eleven. Out of those 11 countries, 5 have significant stock exchanges - India, Indonesia, Sri Lanka, Thailand and Malaysia.
Malaysia, Thailand, Sri Lanka, India and Indonesia.
Now what happens? One week, everything is devastated and at a standstill. Then these very stock exchanges register the highest gains of stock exchanges anywhere. Why?
The smell of reconstruction dollars. The smell of the money that comes out of the misery. When Warren Buffett says invest in Japanese stocks, he knows what he is talking about. He's talking about that pace of rapid reconstruction that's going to take place. Millions and billions of dollars in contracts.
So if you are smart, you're going to put money where the Japanese stocks are, because the reconstruction will be beginning and we all know that the Japanese are very good at it, they are very efficient people. When the reconstruction starts, it will be massive. So he says, buy those shares now.
In 2004 December 26th, the Tsunami hit those 11 countries. Those 5 countries were devastated. And you know what happened after the devastation? From the first week after the devastation, the sensex, which had never broken out of the 4 thousand bracket - the Sensitive Index of the Bombay Stock Exchange, which had never broken out of the four thousand bracket crossed six thousand and never looked back. Today scaling around twenty thousand.
It never looked back. That was the breach point. The Composite Share Index of the Colombo Stock Exchange - the CSE - reached within 16 points of the highest - which was the year of its founding. Indonesia - the worst affected nation - quarter of a million people dead, the Stock Exchange is rocked by the earthquake and Tsunami.... [contd in part 2]