Archive for the ‘Agriculture’ Category


The information is a bit outdated, 2007, but still interesting nevertheless…

Understanding Chinese Energy 

Infographic

As the world looks to a more energy efficient future, it is economic and population powerhouses such as China that will come under the most intense scrutiny. By carefully examining the Chinese energy policy (in fields such as wind and solar), and conjoining this with surveys on popular opinion, WellHome have managed to compile this interesting infographic.
However, the source of energy use are left largely unexplored yet a brilliant piece on Chinese energy gives us a clearer indication of the forces at play (the PDF is worthy of downloading): 

What’s driving demand: An explanation of the internal dynamics fueling China’s energy needs. Our key point: It’s not air conditioners and automobiles that are driving China’s current energy demand but rather heavy industry, and the mix of what China makes for itself and what it buys abroad. Consumption-led demand is China’s future energy challenge. [Source: China Energy: A Guide for the Perplexed (PDF)]

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Israelis teach Vietnam how to milk it

By Ben Bland
Published: March 17 2011 21:27 | Last updated: March 17 2011 21:27
TH Dairy
On a remote farm in rural Vietnam, some 20 or so Israeli kibbutzniks are having to plan ahead for Passover even though it is not for another month.
Their early preparations for the Jewish festival have less to do with spiritual fervour than their location. For they have upped sticks from their homes in the Jordan Valley to move to Nghe An province in north-central Vietnam, where they are helping to build and operate one of Asia’s biggest dairy farms.
It is not easy to get unleavened bread and other traditional Passover fare in these parts. But it is important to keep up morale among the Israelis in their “expat village”, says Barak Wittert, the farm’s director.
Mr Wittert, who grew up on an Israeli kibbutz, has helped set up high-tech dairy farms in the developing world, from Africa to the Middle East. But the TH Milk farm, backed by Thai Huong, a well-known Vietnamese businesswoman, is the most ambitious project he has seen.
The plan, devised by Ms Huong, who runs a local bank, and executed by the Israelis, is to build a huge, state-of-the-art dairy farm and transform the small but fast-growing fresh milk industry in Vietnam.

Audio slideshow: Vietnam’s mega-farm

Audio slideshow: Vietnam's mega-farm

Ben Bland visits a milk farm in Vietnam that is one of Asia’s biggest, with capacity for more than 100,000 cows
Since construction began in October 2009, 12,000 cows have arrived from New Zealand and nearly 300 workers have been hired.
The first milk cartons appeared on store shelves in December 2010 and more than 2,000 cows are now milked daily.
“This is the first time I’ve seen so much achieved in such little time,” says Gil Inbar, chief executive of TH Milk and a veteran of dairy projects in Africa, India, Turkey and Ukraine.
The aim is to expand to 137,000 cows by 2020 after a total investment of more than $1bn.
Mr Inbar concedes that there were “cultural conflicts” initially, as most of the Vietnamese workers were new to dairy farming and unused to operating such high-tech systems. “But sometimes it’s easier to take on people with no prior experience as they have no bad habits,” he says.
Mr Inbar and Mr Wittert work for TH Milk, the Vietnamese company that controls the project. But the farm is being set up and operated by Afimilk, a dairy farm technology company owned by Kibbutz Afikim.
Like many of Israel’s collective farms, Afikim abandoned its socialist ideals in the 1980s for more capitalist activities. Vietnam’s communist leaders, who started opening their country at around the same time, have followed a similar path.
This shared heritage has helped the Israelis to hit the ground running, according to Rami Ofer, Afimilk’s project manager in Vietnam. “There is some advantage for people who come from a socialist background to understand the environment in Vietnam,” he says.
To keep costs down, the Israelis are training Vietnamese dairy farmers and handing over as much responsibility as soon as possible.
The plan is to turn the farms over to the locals within five years.
The pace of progress is all the more impressive in a country where big projects are often delayed by corruption, red tape, financing problems and extreme caution in local government. Senior staff say the initial success is largely down to Ms Huong, whom they describe as an exacting taskmaster.
“It’s not easy to get land and financing in Vietnam, but fortunately we have a very strong chairwoman to bring us everything we need,” says Mr Inbar.
Ms Huong is general director of North Asia Bank, which is financing the project, along with other unnamed investors.
As well as profits, she says the project will bring wider benefits. “Milk is an essential need for the human development of Vietnam,” she says.

Nghe An, birthplace of Ho Chi Minh, Vietnam’s late revolutionary leader, will get some much needed investment, jobs and infrastructure in the area near the farm. Indeed, Ms Huong is already thinking ahead to how she can promote further large-scale industrialisation in agriculture. “You must complete your strategic thinking first in order to develop a project quickly,” she says. “But the critical factor in the success of this project has been the Israeli experts guiding the Vietnamese.”

FT.com / Management – Israelis teach Vietnam how to milk it

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Drought, Fire and Grain in Russia

August 10, 2010 | 0856 GMT

By Lauren Goodrich

Three interlocking crises are striking Russia simultaneously: the highest recorded temperatures Russia has seen in 130 years of recordkeeping; the most widespread drought in more than three decades; and massive wildfires that have stretched across seven regions, including Moscow.
The crises threaten the wheat harvest in Russia, which is one of the world’s largest wheat exporters. Russia is no stranger to having drought affect its wheat crop, a commodity of critical importance to Moscow’s domestic tranquility and foreign policy. Despite the severity of the heat, drought and wildfires, Moscow’s wheat output will cover Russia’s domestic needs. Russia will also use the situation to merge its neighbors into a grain cartel.

A History of Drought and Wildfire

Flooding peat bogs appears to be bringing the fires under control. Smoke from the fires has kept Moscow nearly shut down for a week. The larger concern is the effect of the fires — and the continued heat and drought, which has created a state of emergency across 27 regions — on Russia’s ordinarily massive grain harvest and exports.
Russia is one of the largest grain producers and exporters in the world, normally producing around 100 million tons of wheat a year, or 10 percent of total global output. It exports 20 percent of this total to markets in Europe, the Middle East and North Africa.
Cyclical droughts (and wildfires) mean Russian grain production levels fluctuate between 75 and 100 million tons from year to year. The extent of the drought and wildfires this year has prompted Russian officials to revise the country’s 2010 estimated grain production to 65 million tons, though Russia holds 24 million tons of wheat in storage — meaning it has enough to comfortably cover domestic demand (which is 75 million tons) even if the drought gets worse.
The larger challenge Moscow has faced in years of drought and wildfire has been transporting grain across Russia’s immense territory. Russia’s grain belt lies in the southern European part of the country from the Black Sea across the Northern Caucasus to Western Kazakhstan, capped on the north by the Moscow region. This is Russia’s most fertile region, which is supported by the Volga River.





Drought, Fire and Grain in Russia
(click here to enlarge image)

Though drought and wildfires have struck Russia over the past three years, they have not affected its main grain-producing region. Instead, they struck regions in the Ural area that provide grain for Siberia. Those fires tested Russia’s transit infrastructure, one of its fundamental challenges. Russia has no real transportation network uniting its European heartland and its Far East save one railroad, the Trans-Siberian. While its grain belt does have some of the best transportation infrastructure in the country, it is designed for sending grain to the Black Sea or Europe — not to Siberia. The Kremlin began planning for disruptions of grain shipments to Siberia during the droughts and fires of 2007-2009. During that period, Moscow established massive grain storage units in the Urals and in producing regions of Kazakhstan along the Russian border.
This year’s drought and fires do not primarily affect Russia’s transportation network, but rather the grain-producing regions in the European part of Russia that make up the bulk of Russia’s grain exports. These regions lie on the westward distribution network, with the port of Novorossiysk on the Black Sea handling more than 50 percent of Russian exports.
Russia has focused largely on being a major grain exporter, raking in more than $4 billion a year for the past three years off the trade. This year, the Kremlin announced Aug. 5 that it would temporarily ban grain exports from Aug. 15 to Dec 31. Two reasons prompted the move. The first is the desire to prevent domestic grain prices from skyrocketing due to feared shortages. Russia’s grain market is remarkably volatile. Grain prices inside Russia already have risen nearly 10 percent. (Globally, wheat futures on the Chicago Board of Trade have risen nearly 20 percent in the past month, the largest jump since the early 1970s.)
The second reason is that the Kremlin wants to ensure that its supplies and production will hold up should the winter wheat harvest decline as well. Winter wheat, planted beginning at the end of August, typically fully replenishes Russian grain supplies. Further unseasonable heat, drought or fires could damage the winter wheat harvest, meaning the Kremlin will want to curtail exports to ensure its storage silos remain full.
Russia’s conservatism when it comes to ensuring supplies and price stability arises from the reality that adequate grain supplies long have been equated with social stability in Russia. Unlike other commodities, food shortages trigger social and political instability with shocking rapidity in all countries. As do some other countries, Russia relies on grain more than any other foodstuff; other food categories like meat, dairy and vegetables are too perishable for most of Russia to rely on.
Russia’s concentration on food volatility has a long history. Lenin called grain Russia’s “currency of currencies,” and seizing grain stockpiles was one of the Red Army’s first moves during the Russian Revolution. In this tradition, the Kremlin will husband its grain before exporting it for monetary gain. And this falls in line with Russia’s overall economic strategy of using its resources as a tool in domestic and foreign policy.

Exports and Foreign Policy

Russia is a massive producer and exporter of myriad commodities besides grain. It is the largest natural gas producer in the world and one of the largest oil and timber producers. The Russian government and domestic economy are based on the production and export of all these commodities, making Kremlin control — either direct or indirect — of all of these sectors essential to national security.
Domestically, Russians enjoy access to the necessities of life. Kremlin ownership over the majority of the country’s economy and resources gives the government leverage in controlling the country on every level — socially, politically, economically and financially. Thus, a grain crisis is more than just about feeding the people; it strikes at part of Russia’s overall domestic economic security.
Russia’s use of its resources as a tool is also a major part of Kremlin foreign policy. Its massive natural resource wealth and subsequent relative self-sufficiency allows it to project power effectively into the countries around it. Energy has been the main tool in this tactic. Moscow very publicly has used energy supplies as a political weapon, either by raising prices or by cutting supplies. It is also willing to use non-energy trade policy to effect foreign policy ends, and grain exports fall very easily into Moscow’s box of economic tools.
Russia is using the current grain crisis as a foreign policy tool even beyond its own exports, prices and supplies. It has asked both Kazakhstan and Belarus to also temporarily suspend their grain exports. Belarus is a minor grain exporter, with nearly all of its exports going to Russia. But Kazakhstan is one of the top five wheat exporters in the world, traditionally producing 21 million tons of wheat and exporting more than 50 percent of that. The same drought that has struck Russia also has hit Kazakhstan; production there is expected to be slashed by a third, or 7 million tons.
Kazakhstan traditionally exports to southern Siberia, Turkey, Iran and its fellow Central Asian states: Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. For the first time, Kazakhstan had planned to send grain exports to Asia. It had contracted to send approximately 3 million tons of grain east, with 2 million of those supplies heading to South Korea and the remainder to be split between China and Japan. The drought has forced Kazakhstan to reassess whether it can fulfill those contracts along with contracts for its immediate region.
Russia’s request that Belarus and Kazakhstan cease grain shipments does not seem primarily connected to Russia’s concern over supplies, but instead looks to be more political. The three countries formed a customs union in January, something that has caused much political and economic turmoil. Kazakhstan sought to lock in its president’s desire to remain beholden to Russia even after he steps down, while Belarus reluctantly joined as Russia already controlled more than half of the Belarusian economy.
For Moscow, however, the union was a key piece of its geopolitical resurgence. The Russian-Kazakh-Belarusian customs union was not set up like a Western free trade zone, where the goal is to encourage two-way trade by reducing trade barriers, but as a Russian plan to expand Moscow’s economic hold over Belarus and Kazakhstan. Thus far, the customs union has undermined Belarus and Kazakhstan’s industrial capacity, welding the two states further into the Russian economy.
Since the customs union has been in effect, Russia has quickly turned the club into a political tool, demanding that its fellow members sign onto politically motivated economic targeting of other states. In late July, Russia asked both Kazakhstan and Belarus to join a ban on wine and mineral water from Moldova and Georgia after continued spats with each of the pro-Western countries. Russia has added another level of demands in light of the grain shortages. As of this writing, neither Astana nor Minsk has accepted or declined the demands from Moscow, with grain exporting season just a month away.
Given current Russian production and storage supplies, Russia doesn’t actually need Belarus or Kazakhstan to curb their exports. Instead, it is seeking to use the drought and fires to create a regional grain cartel with its new customs union partners.
And this leads to the question of the other former Soviet grain heavyweight, Ukraine. Ukraine, which does not belong to the customs union, is the world’s third-largest wheat exporter. In 2009, Ukraine exported 21 million tons of its 46 million-ton production. Also hit by the drought, Ukraine revised its projected production and exports for 2010 down 20 percent, with exports down to 16 million tons. Some fear Ukraine will have to slash its export forecasts even further. Moscow will most likely want to control what its large grain-exporting neighbor does, should it be concerned with supplies or prices. Despite Russia’s recent actions with regard to Belarus and Kazakhstan, however, Ukraine has not publicly announced any bans on grain exports.
If Russia is going to exert its political power over the region via grain, it must have Ukraine on board. If Russia can control all of these states’ wheat exports, then Moscow will control 15 percent of global production and 16 percent of global exports. Kiev has recently turned its political orientation to lock step with Moscow, as seen in matters of politics, military and regional spats. But this most recent crisis hits at a major national economic piece for Ukraine. Whether Kiev bends its own national will to continue its further entwinement with Moscow remains to be seen.

Read more: Drought, Fire and Grain in Russia | STRATFOR

Drought, Fire and Grain in Russia is republished with permission of STRATFOR.

Drought, Fire and Grain in Russia | STRATFOR

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Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance

China and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.
“Everyone should be raising interest rates, they are too low worldwide,” Rogers said in a phone interview from Singapore. “If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”
China’s central bank hasn’t increased rates since November 2007. In the U.S., the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 percent, where it’s been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 percent.
Policy makers in Malaysia, South Korea, Taiwan and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.
The global economy is at the risk of prolonging a recession after reports over the past two days showed U.S. home sales plunged by a record and Japan’s export growth slowed for a fifth month in July, he said.
“We never got out of the first recession,” Rogers said. “If the U.S. and Europe continue to slow down, that’s going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can’t bail us out.”
Rogers, who predicted the start of the global commodities rally in 1999, said he was short emerging markets and stocks and long on commodities.
“Commodities will go above their old high sometime in the next decade even if they only grow 5 to 6 percent annually,” said Rogers, who is a consultant for the Dalian Commodity Exchange.
Rogers said he would resume buying China’s stocks if they were to tumble as they did during the aftermath of the global financial crisis in 2008, when they plunged 65 percent. “I haven’t bought since the fall of 2008,” he said. “It it were to happen again, I hope that I’m smart enough to buy again.”
Allen Wan. With assistance from Chua Kong Ho. Editors: Richard Frost, Linus Chua
To contact the Bloomberg News staff on this story: Allen Wan in Shanghai at awan3@bloomberg.net

Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance – Bloomberg

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Socialism and communism: the same thing

The Property Rights Alliance’s latest International Property Rights Index ranks Venezuela 123rd out of 125 nations, below Zimbabwe and Cuba and above only Ivory Coast and Bangladesh.
This index reflects what is obvious for the vast majority of Venezuelans: that over the past eleven long years, their property rights have been ignored.
This sad story started with the “rescue” of agricultural land on the pretext of fighting against the latifundios or large estates. But that did not prevent the government from snatching properties of all types and sizes, many of them modest and clearly productive. And now, the latest amendment to the Lands Act introduces so many justifications for expropriating a plot of land that, in practice, it eradicates private ownership of agricultural land.

Then came the expropriation of a large number of companies with the excuse that they were supposedly “strategic.” Using this rationale, the entire oil and electricity sectors, a large part of the telecommunications sector, and companies in basic sectors and companies engaged in food distribution and a whole series of associated activities were nationalized.
Meanwhile, in the cities, the authorities were encouraging squatters to invade and take over plots of land and buildings that were in strategic locations or were allegedly abandoned or being remodeled.
At that time, experts warned that the attack on property was not only aimed at large landowners or corporations and that, sooner rather than later, the regime would go after small landowners and owners of small businesses, as this was an attack on the foundations of the Venezuelan economy and against people’s freedom to engage in the economic activity of their choice, progress, and have the means to meet their needs without depending directly on the government and its handouts.
This has become more than clear in recent months. At the end of 2009, President Chávez ordered the expropriation of buildings in downtown Caracas housing dozens of small businesses, with the result that hundreds of ordinary workers were left without a job. Another group whose rights have been restricted is that of the concessionaires in municipal markets that have come under the aegis of a mayor sympathetic to the government. Today, these small merchants cannot dispose of the businesses they have built up, they are forbidden to transfer and even bequeath their concessions, and they now have to comply with conditions that make their continuing in business unviable, and meanwhile they are being harassed and threatened.
Just this week, a small shoe store was suddenly evicted in downtown Caracas. The excuse was the expropriation of Edificio Gradillas, a building that belongs to the Episcopate. The shoe store’s elderly owners, who had been in business for more than 40 years, were left out on the street along with their three employees and 14,000 pairs of shoes.
 
Then there is the case of Friosa, the largest food distribution company in Bolívar state that was intervened in May this year for 90 days. During that time, sales fell by 70% and working conditions were adversely affected. The workers have publicly shown how the company’s facilities and vehicles have been allowed to deteriorate and even how food that was going bad was being used to provide meals at the basic companies, but all their protests have been to no avail. The intervention has been extended for another 90 days and now anyone who protests runs the risk of losing his job.
 
As Fidel said: socialism and communism are the same thing.
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Goldman Backs Oil, Copper, Gold, Maintains `Overweight’ Commodities Call

Commodities demand from emerging markets and limited growth in supplies will help to support prices toward the end of the year, according to Goldman Sachs Group Inc., which backed oil, gold, copper, zinc and platinum.
The bank reiterated an “overweight” recommendation on commodities, analysts led by Allison Nathan and Jeffrey Currie wrote in a report. Goldman pared its 12-month forecast for the S&P GSCI Enhanced Total Returns Index to a 19 percent gain from 21.6 after recent gains in agricultural commodities and metals.
Commodities last week had the worst weekly performance in six after the Federal Reserve said the recovery is weakening and European industrial output fell, stoking concern that there may be a double-dip recession. Reports also showed China’s retail sales and new lending grew in July at a slower pace than June.
“We are not overly optimistic about commodities prices in the second half,” Ni Xiaolei, a trader at Donghai Futures Co., said from Jiangsu today. “‘We saw a very sharp ascent in commodity prices last month, which will be hard to sustain as global macroeconomic data emerges weaker than expected.’’
Goldman’s commodity ‘‘overweight’’ call was maintained even as the bank has been paring forecasts for U.S. and Japanese economic growth for next year. Ed McKelvey, Goldman’s senior U.S. economist in New York, has also said that the chance the U.S. may tumble back into recession is as high as 30 percent.
Gold, Crude
Gold, which surged to a record $1,265.30 an ounce in June amid concern sovereign-debt levels in Europe may be excessive, traded at $1,29.60 at 2:11 p.m. in Singapore, 11 percent higher this year. Goldman forecast a rise to $1,260 in three months and to $1,300 in six. New York crude futures were at $75.86 a barrel, 4.4 percent lower over 2010. Goldman’s report put them at $92 a barrel in three months.
‘‘The current softness in economic data, combined with increasingly mixed signals from the underlying commodity markets, is likely to continue to generate choppy commodity-price action in the near term,” the Goldman analysts wrote in the Aug. 13 report. Still, “high and rising emerging-market demand levels against limited supply growth in key commodities are likely to increasingly tighten balances,” they wrote.
Japan’s economy expanded at an annualized 0.4 percent in the three months to June 30, the Cabinet Office said today. That’s the slowest pace in three quarters. U.S. industrial production figures are due for release tomorrow, the same day as data on investor confidence in Germany.
Chinese Demand
Commodity prices may advance into the end of the year on evidence of increased oil demand in China, a decline in crude stockpiles in Europe and the U.S., and further falls in metals inventories, the report said.
“We expect upside to be greatest for crude oil, copper, zinc, platinum and gold,” it said. “Improved data will likely be required to sustain rising prices.”
Goldman Sachs last week backed gold to resume a rally and climb to a record $1,300 an ounce within six months on renewed investor interest. The precious metal, which has risen for nine years to last year, may also climb in 2011, the report said.
A ban on wheat exports by Russia helped to drive futures to $8.68 a bushel earlier this month, the highest price in almost two years. The country is battling reduced grains production amid the worst drought in at least 50 years.
‘Sharp Gains’
“Commodity returns rose over the past month led by sharp gains in the agricultural complex owing to weather-related supply shocks in wheat,” according to the Goldman report.
Zinc, trading today at $2,080 a metric ton, has fallen 19 percent this year, making it the worst performer on the London Metal Exchange. Goldman’s analysts forecast that the metal may climb to $2,121 a ton in six months, according to the report.
Copper rose 1.3 percent to $7,246.50 a metric ton, paring this year’s loss to 1.7 percent, while platinum gained 0.8 percent to $1,535.75 an ounce, 5 percent stronger this year. Goldman forecast copper at $7,925 a ton in six months.
Japan will grow 1.4 percent in 2011, compared with an earlier forecast of 1.7 percent, Goldman’s Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. The week before that Goldman lowered its projection for U.S. growth for the same year to 1.9 percent from 2.5 percent.
To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net

Goldman Backs Oil, Copper, Gold, Maintains `Overweight’ Commodities Call – Bloomberg

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