Slack and disruptions in the ecosystem

A mail from Suyodh:

The idea of this mail is to show how production systems can behave in erratic ways when something like oil gets erratic. Keep in mind that production systems have lags - meaning they take time to adjust to new levels of prices. When oil prices are oscillating as wildly as $147 in July 2008, $ 34 in Feb 2009 to $70 today - other systems too will behave weird.

Japan and Belgium are a continent removed; but, do not underestimate the disruptive power of such swings in oil prices. Climate change also chips in. Reduced European milk products/derivatives demand due to the recession will also be chipping in.

An economy cannot be immune to the constraints imposed by the ecosystem that it dwells within. As long as there was slack within the various sub-systems of the ecosystem, disruptions did not manifest; as we are
reaching a point of almost no slack, the disruptions will manifest more frequently.

We live in interesting times for sure :)

The first link below is a video on Belgium in 2009 and the second on Japan in 2008
Three million litres of milk sprayed on the field
Belgian milk producers pour about 3 million litres (793,000 gallons) of milk on a field near Ciney, September 16, 2009, in protest over a growing industrial dispute over low prices. Low milk prices they say are bankrupting farmers. Source: REUTERS

Japan's Butter Meltdown


By COCO MASTERS/TOKYO Saturday, May. 03, 2008

The world's second largest economy is now crying over spilled milk — and its delicious by-product, butter. Japan, insulated from rice shortages that plague other parts of Asia, is experiencing an unprecedented shortage of the household staple — and discovering that it is not as immune from the growing global food crisis as it wants to be.

The butter shortage results from a chain of events. When the country suffered an overproduction of milk in 2006, the government ordered about 1,000 tons of raw milk poured down the drain and dairy cows slaughtered to prop up prices and defend local milk farmers. Dairy prices were then managed to retain their advantage to imported milk and butter, whose prices were inflated by tariffs. (To protect domestic butter, the tax on imported butter went up twice last year. There is a nearly 30% tariff on butter imports.)Butter has a strange status in Japan. Historically, butter is a reminder of Japan's first contacts with the West — the islanders complained that the foreigners were bata-kusai , that is, "butter-stinkers." But since the 1960s, local butter making and consumption has been seen as a symbol of Japanese self-sufficiency in and mastery of an originally Western product. The shortage is a blow to that independent self-image.

But now grain-feed prices have risen as a result of a drought in Australia as well as the accompanying use of corn for ethanol, which has reduced the amount available for feed for Japan's cows. The drought has also cut back on milk that would have been imported to supplement the Japanese market. Combined with competing demand for milk and milk products from emerging markets in China and Russia, the result is a collapse of the local butter production in Japan.

Borlaug and the Green Revolution

Norman Borlaug passed away on 12^th September. Newspapers have carried eulogies and criticism for his work towards ensuring food self sufficiency in India in the sixties.

From the Hindu

Norman Borlaug’s association with India began in the late 1960s. India was then importing 10 million tonnes of wheat and “we lived a ship-to-mouth” existence. The introduction of the dwarf variety of wheat developed by him in Mexico was a turning point in India’s food production pattern.

And the Hindustan Times carried this piece on ‘The American who helped India conquer hunger’

Borlaug had been criticised by environmentalists for his innovation of genetically modified food (food developed by altering gene structures) and advocating the use of fertilisers, insecticides and pesticides. “It is better to die eating genetically modified food instead of dying of hunger,” he remarked at PAU.

There is a sharp attack in the Business Standard by Sadanand Menon

Within three decades, the pattern was to lead to a new kind of devastation — extreme rural indebtedness on the one hand and high levels of soil salinity on the other. The unprecedented levels of rural migration to urban areas in the 1990s, was only one of the consequences. The other was the rapid decline in the productivity of cereal farming and a wholesale turnaround to cash crops. Cotton, sugarcane, tobacco, bananas, coconuts, etc. replaced rice, wheat and millets in many pockets. This was to lead to further experiments in hybridisation of production and an invasion of Indian agriculture by multinational giants like Monsanto, who could exercise long-distance control over the entire process.

And a defence of Borlaug in the Mint

To be sure, agricultural productivity has declined, but that drop is due to a complex set of reasons: Nothing, not even population, rises at the same rate over a period of time. The drop in the size of a farm due to inheritance leads to a drop in productivity. Politicized subsidies encourage waste of water and power, as well as overuse of fertilizers and pesticides by the well-connected farmers, skewing distribution of resources. Warehouses are poorly managed, and a chunk of what is produced gets wasted in transit, or consumed by rats. Insufficient and inefficient irrigation means Indian agriculture remains a gamble with monsoon. Borlaug wanted poor farmers to be paid remunerative prices; governments avoided that, in order to placate the influential urban constituencies.

There is a lot that needs to be fixed in Indian agriculture. But don’t blame Borlaug for these problems. His legacy is the gift of life for millions.

It is true that our problems as they exist today need an overhaul in many existing systems and Borlaug is not responsible for them. However, one of Menon’s points needs to be stressed:

The Vishnu Mitter Institute of Paleo-Botany in Lucknow, for example, has studies showing that while there were over 127 varieties of rice alone being cultivated in the Indian subcontinent during the first two decades of the 20th century, these were steadily dropping and had reduced to 18 within the first two decades of the Green Revolution period. Along with everything else, the idea of agricultural and food diversity too was receiving a knock. Mono-culture and the idea of single-point control systems, so important for designing market strategies, became the norm.

Even as we continue to wage the battle against hunger in India today (another post on that later) somewhere along the way the ecological balance has been lost and we are all the worse off for that.