Development Sector

Having been engaged in the development sector for the past two years, I have discovered the difficulty the sector and people working in it face... i.e. their inability to move at speed, though they are tremendously dedicated and do not lack initiative.  In the Financial Times report on the sector:

"...as multilateral institutions and government development agencies work more closely with business, the non-profit sector faces the challenge of moving at the same fast pace as its private-sector partners."

"“Businesses take decisions faster than UN agencies,” says Ms Roman [director of communications, private partnerships and public policy at the UN World Food Programme]. “Right now, we’re partnering with Kraft and Unilever in Bangladesh. They’re eager to move tomorrow, and I’m eager too, but the system on our side doesn’t move that quickly.”"

Yet, public and private partnerships are enabling solutions to reach places where the needs are extreme, from medicine to shelter, clean water to education, self sufficiency to economic development.

World Perspective 6 [Water]

Food and Farms

""According to our laws and our policy, foreigners or foreign companies are not allowed to rent or buy land to grow rice or any kind of food, including raising any livestock in Thailand," Deputy Commerce Minister Alonkorn Pollabutr told reporters."

Reports Maktoob Business here.  I have written previously about the consumer choices for farm commodities and products in regions where the ability to produce either is minimal or difficult, and the results of it.  Collectively, the GCC states currently lead the world in land acquisition and/or leasing of farms.  Yet the above may be a small set back for now.

The Economist writes an excellent article on the subject here.  The article states:

"It is not just Gulf states that are buying up farms. China secured the right to grow palm oil for biofuel on 2.8m hectares of Congo, which would be the world’s largest palm-oil plantation. It is negotiating to grow biofuels on 2m hectares in Zambia, a country where Chinese farms are said to produce a quarter of the eggs sold in the capital, Lusaka. According to one estimate, 1m Chinese farm labourers will be working in Africa this year, a number one African leader called “catastrophic”."

Below is a revealing data diagram highlighting investment and deal structure from the Economist.

(Click to enlarge)

A bit of hype and herd (crowd) mentality is shown in the following statistics followed by of course pullback - "Between the start of 2007 and the middle of 2008, The Economist index of food prices rose 78%; soyabeans and rice both soared more than 130%. Meanwhile, food stocks slumped. In the five largest grain exporters, the ratio of stocks to consumption-plus-exports fell to 11% in 2009, below its ten-year average of over 15%."

Yet, all this activity is termed as "neocolonialist" as the article states - "The head of the UN’s Food and Agriculture Organisation, Jacques Diouf, dubs some projects “neocolonialist”."

As the need continues to grow for food, the agri-focused economics will gain from it.  Will the results be similar to oil economics?

China - Consumer Sector Updates

Through my good friend Mr. Tony Tsai:

Ministry of Health to launch two-year crackdown on illegal food additives
May 11, Su Zhi, deputy director of the Food Safety and Sanitation Surveillance Bureau under the Ministry of Health, says the ministry will launch a two-year crackdown on illegal food additives. He puts forward a five-point proposal on the crackdown of illegal additives, such as improving related standards on food additives and further strengthening the government's measures for food safety supervision and crackdown.

It is hard to keep China's fuel prices in line with international crude oil prices
The National Development and Reform Commission (NDRC) has published the administrative measures for crude oil prices, taking effect May 8 on a trial basis. According to the measures, China will adjust domestic fuel prices when global crude oil prices report a daily fluctuation band of more than 4% for 22 working days in a row. The launch of the measures is aimed at keeping China's fuel prices in line with international crude oil prices, in order to ensure Chinese fuel prices do not drop lower than international crude oil prices. If that happens, the Chinese government will have to increase fiscal subsidies to oil companies and the domestic oil industry and market will become disorderly. Zhou Xiaogang, an energy expert, thinks it is hard to keep China's fuel prices in line with international crude oil prices. China's oil market is not competitive. Private oil firms are still weak, and unable to compete with domestic state-owned oil giants.

PWC: there is a great deal of room to increase human capital effectiveness in China
PricewaterhouseCoopers (PWC) recently published the research report about human capital influence among China's listed enterprises for 2008. The report pointed out it is a good idea for Chinese enterprises to increase core competitiveness of human capital which can help them tackle economic crisis and realize long-term sustainable development. Compared with enterprises in the US and Europe, there is a great deal of room for China-listed enterprises to increase human capital effectiveness.

Expert: consumer prices expected to show rise in second half of year
May 11, the National Bureau of Statistics says that China's Consumer Price Index (CPI) fell 1.5% in April from a year earlier, marking the third straight decline. China's Producer Price Index (PPI) fell 6.6% in April year-on-year, marking the fifth straight decline. But some experts believe that consumer prices should show an upward trend in the second half of the year. The government stimulus package and explosive loan growth will drive industrial product prices and consumer prices up.

Beijing to reduce 300 hectares of land supply for commercial buildings and to loosen control on foreign investment in local real estate market
May 11, the Beijing Municipal Bureau of Land and Resources publishes the 2009 annual land supply plan. By the end of last year, approximately 40m sq m of commercial buildings had not been sold, which is expected to meet market demand for two to three years. Compared with last year, land supplied for the construction of commercial buildings in Beijing this year will be down by 300 hectares. The Beijing Land Reserve Center will loosen control on foreign investment in Beijing's real estate market.

Coca-Cola claims it will focus on existing brands and give up take over of Huiyuan Juice. According to media reports, Coca-Cola is set to abandon any attempt to take over the Huiyuan Juice Group. Buying a small stake with no decision power is not what Coca-Cola wants at all. May 12, Coca-Cola says in a statement, "We were disappointed, but we also respect the Ministry of Commerce's decision not to approve our proposed purchase of the Huiyuan Juice business. We are now focusing all of our energies and expertise on growing our existing brands and continuing to innovate with new brands, including in the juice segment. Beyond that, it is our policy not to comment on speculation."