Effects of uncertain monsoon projection on food supply

Markets are bracing for a possible global food shortage amidst fears that an unpredictable El Nino could see crops drowned by heavy rains in the American mid-west and shrivelled by excessive heat in Australia, South east Asia, India and Africa

As the election process ends today, the public are now looking forward to the declaration of results on 16th May. It is reported that the present United Progressive Alliance (UPA) government may submit its resignation to the President, who will, upon knowing the election results will decide the next step to be taken in inviting the leader of the victorious party to form the government.


In the interim budget, the UPA government had made provision, for the first four months, covering April-July, a sum of Rs28,000 crore as subsidy for urea, both imported and indigenous and decontrolled fertiliser. It appears the subsidy allocated for this purpose is already exhausted and the Finance Ministry have to take a call on for arranging Rs18,000 crore as special banking facility to pay for subsidy dues to fertiliser companies. Presumably, it would depend upon the election results, and they may choose to leave this decision to the new incoming government.


From the media reports it appears that the Fertiliser Ministry feels that the total subsidy may require Rs90,000 crore, including Rs10,000 crore on account of gas price revision for this fiscal. Here again, the decision on gas price itself, which was orginally gazetted on 17th January, and which could not be implemented, due to the model code of conduct,coming into force, may now rest with the new government. Not a very comfortable situation to be in!


As for the increased cost of subsidy, this is attributed to the change in fixed cost of urea, as the government increased it to Rs350 from Rs200 per tonne. Since there is no revision in the selling price and the difference between the cost and selling price is paid by the government, the subsidy will go up - unless the new government makes its own ruling on the subject.


India's total consumption of Urea alone is about 30 million tonnes (mt), 22mt of which comes from 16 fertilizer units, who obtain gas from Reliance Industries' KG-D6, and the balance of 8mt is imported. According to the Fertiliser Association of India, the total sale of nutrients in 2013-14 amounted to 51.23mt. According to the press reports, Satish Chander, Director General of Fertiliser Association has called for reforms in the industry.


The government decides the cost to end price and he says this sector needs to be decontrolled because of the increase in cost of production. He has contended that the price of feed stock of natural gas in north India is lower than what southern manufactures have to be paid. Delays in release of subsidy has caused trouble and at the same time balanced usage of urea also needs to be implemented. He points out that the maximum retail price (MRP) for urea in India is the lowest in the world at $85, whereas it is $250 in Bangladesh, $350-400 in Pakistan and $350 in China, all without subsidies!


Satish Chander has further charged that urea policy by the government enables increased usage of highly subsidised fertiliser resulting in spoiling of soil health in the country.


The weather conditions continue to cause worry, not only in India but all over the world, due to the uncertainty of the anticipated El Nino strike! The Indian Meterological Department (IMD) still expects the south west monsoon will be lower than normal this year with a 60% probability of El Nino occurance. The government scientists in the US say that El Nino odds may rise to 80% during the "late fall/early winder of this year". But, at the moment, the intensity of this El Nino effect cannot be measured or projected.


As far as the fertiliser companies are concerned, many like the Indian Potash and Zuari have began to confirm orders for supply to meet this year's requirements. Almost 1.6 million tonnes have been contracted, as per press reports.


In a recent article, Prof MS Swaminathan has stated that "the new government must accord priority to both water scarcity and water use efficiency. Water harvesting in homes, farms and factories must become mandatory". Also, he has pointed out that the rain-cum-solar energy centre at Chennai as a source of credible public information on rain water harvesting and solar energy use. Such centres need to be replicated in all our cities, towns and block headquarters"


In Prof Swaminathan's estimation, though we have adequate foodgrain stocks to meet the national food security needs, in case of severe drought conditions, these will only cover 75% of the population and in the event of such a mishap happening, our stocks will be completely wiped out!


In general, "markets are bracing for a possible global food shortage amidst fears that an unpredictable El Nino could see crops drowned by heavy rains in the American mid-west and shrivelled by excessive heat in Australia, South east Asia, India and Africa."


The new government needs to have a very experienced and responsible professional agriculturist in the top of the Ministry of Agriculture to advice the new Minister who will take over this gigantic responsibility.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


Why China failed in creating own brands

Western markets are not dominated by Chinese brands. It is the Chinese market that is being dominated by foreign brands. Even in surveys, local Chinese brands get criticized for poor quality and engineering and lacks the trust

When China started to make cars, a chill went through automakers in the US and Europe. They shared a vision of millions of cars made with exceptionally cheap labour landing on western shores. It looked like a repeat of the success experienced by the two exporting powerhouses, Japan and Korea. Besides, China was well on its way to become the workshop of the world dominating sector after sector. Why not cars?


Why not indeed. Something happened that had not been predicted by the economists and analysts. It wasn’t the western markets that were dominated by Chinese brands. It was the Chinese market that became dominated by foreign brands.


Ten years ago, Chinese brands controlled 70% of the local market. Now they have been reduced to 45%. If you exclude the barebones pickup trucks and minivans that make up the light commercial vehicle market, domestic brands have only 29.5% of the market.


Even in a globalized world, it is distressing to watch foreigners come to dominate a local markets. This is especially, true for an important industrial segment like automobile manufacturing. Even in the US, where the Japanese cars have been present for 40 years, there are places where it is considered unpatriotic to own one.


Why have the Chinese failed to build successful brands even in their home market? Obviously, they have not been able to match the quality of developed countries’ manufacturers. Until recently, they were very competitive on price. Why can’t they seem to develop successful brands?


The reason for the failure is the way the Chinese government use their legal and regulatory system. Foreign companies coming to China to produce products for export were lightly regulated in every way. China wanted to encourage exports and follow the Japanese model. In contrast, foreign companies that wanted to sell into China faced discrimination.


In theory, this sort of protectionism should have worked, but instead it backfired. The first problem for local brands was a lack of trust. For example, large Chinese dairies were only subject to minimal safety regulations. They took advantage of this by lacing infant formula with melamine a byproduct of coal. Melamine was put into the formula to allow substandard milk to pass protein tests. The result was a national scandal in 2008. Six children died and over 300,000 were sickened.


To this day, Chinese consumers go to great lengths to buy foreign brands. They even ask their friends traveling to other countries to send back infant formula a few cases at a time.


Rather than force local dairies, many of them government owned, to adhere to stricter standards, the Chinese government used laws, policy and even the state media to strike back at foreign brands.


The state television has accused Danone, the French food company, of bribing hospitals in Tianjin to use its infant formula. It restricts importation of foreign infant formula created for other markets imported by third parties into China. To help local dairies it has created subsidies.


The auto industry has similar problems. Domestic Chinese auto companies didn’t do well in crash tests. In surveys, local brands get criticized for poor quality and engineering.


Foreign companies are required to form 50-50 partnerships with local firms. The Chinese were thinking of dropping this requirement. Trading partners might retaliate if China were ever to start exporting cars in large numbers. But since they don’t, the largest politically connected; state owned Chinese companies were able to keep the restriction in force. With this type of protectionism in place, it is even more unlikely that China will be able to develop export markets.


The Chinese required foreign companies to produce “indigenous” brands. For example BMW Brilliance makes the local Zinoro. Dongfeng Nissan builds the Venucia. The most successful is the SAIC-GM-Wuling Automobile Company’s Baojun. They sold 100,000 Baojins in 2013 up 20%. This would be great except that Baojun’s achievement came at the expense of local Chinese brands.


China has also inhibited foreign competition by failing to enforce intellectual property laws. Stealing intellectual property in China is done on a massive scale including wide spread computer hacking to steal information.


Stealing from foreigners may seem like a good idea in the short term. But if Chinese companies can steal from western companies they can also steal from each other. A brand is one of the most important and valuable assets of any company. If it cannot be protected, then companies do not have an incentive to build it up.


Consumers in India, Indonesia and the Philippines do not have the overwhelming preference for foreign brands. Indonesia and the Philippines actually have a clear preference for local brands. India gives the foreign brands a slight edge.


What is interesting is that although their preferences are slightly different, the views of local and foreign brands in these three countries are quite similar. Foreign brands are considered to be more fashionable and of better quality. Local brands are believed to offer a better price. There is a universal preference to support local companies. As to reliability, consumers in all countries rated both local and foreign brands about equally.


It’s not that Chinese companies cannot compete with foreigners. Jin Duo Bao is a cold herbal tea that outsells Coca-Cola in China even though it is more expensive. It sells well because it is appeals to local beliefs and preferences.


Rather than attempt to regulate the market, the Chinese should take a lesson from the Indian processed foods market. The local companies view their competitors as positive. With large advertising budgets foreign firms have been able to increase the size of the market and create new market segments that nimble local companies with better distribution and local knowledge can exploit.


Every policy, every law, every regulation created by governments to solve a problem will have unintended consequences. These are sometimes worse than the issue that was meant to be solved. Sometimes the best use of power is not to use it at all.


( William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first-hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and speaks four languages.)




2 years ago

Well your argument may be true in consumer goods, but I see the opposite in industrial goods. In every industry, be it telecom, energy, Chinese companies have built brand value and are gaining market share. So how do we explain that?

Ways of ECI: Turn voters out and complain about poor voter turnout

When CEOs do not follow ECI guideline of maximum 1,200 voters per booth, it  certainly reduces the voter turnout, by design and not due to voter apathy as pronounced by armchair experts and authorities

At 5 past 7 O’ clock on 17th April, I was the third person in queue in front of my polling booth. One voter was inside the booth, arguing that his name was in the voter list while the polling booth officer was unable to find the name in the list. After about five minutes, which felt like 50, he cast his vote and allowed the queue to move. With the rate at which the queue moved, I hope that the 1,359 voters in my booth could cast their votes by 6pm, the deadline for voting.

The Election Commission of India (ECI) has taken exemplary steps to set up polling booths in remote areas even to cater for a single voter. A Times of India story states, “Mahant Bharatdas Darshandas is the lone voter in the midst of Gujarat’s Gir forest, home to the Asiatic lion, for whom an entire election team sets up a polling booth every election — and will do so again on 30th April. … a polling team [of 4 to 5 people] travels around 35km to reach the hamlet of Banej inside the Gir forest, located in Junagadh district.” We salute the spirit and efforts of ECI to include every eligible citizen in the democratic process of elections.

However, this exemplary step is only an example. We have many booths with voter population much higher than what ECI has stipulated, making it impossible for people to vote within the time available, even with the usage of electronic voting machines (EVMs).

Technical features of EVM:

“Operationally an Indian EVM is a set of two units – the ballot unit and the control unit. A vote can be recorded only after the presiding officer enables the ballot unit through the control unit. However, even the presiding officer cannot enable the ballot for twelve seconds after every ballot is cast. Thus, a maximum of five votes can be cast in one minute.” – Dr SY Quraishi, page 192, “An Undocumented wonder; The Making of the Great Indian Election”, Rainlight/ Rupa.

For each voter to move out of the polling box and the next person to enter, we can consider about 18 seconds. Thus, practically, we expect maximum two votes cast in one minute if (a) the voters are enthusiastic and clear about the voting process; (b) the polling staff is efficient and ensure smooth uninterrupted flow of voters; (c) electoral rolls are clean and unambiguous …

Remember that the officials search voter names in paper rolls – not on a computer terminal. People on polling duty take time to find a name in the rolls if the voter does not carry a voter slip with correct details. Though required, chief electoral officers (CEOs) do not give voter slips in some areas. Queues stagnate when a name is not found in the rolls.
Polling booths remain open for 11 hours as directed by ECI. With uninterrupted flow of voters and super efficient polling booth staff, 120 votes cast per hour, 1,320 votes may be cast per booth in a day. If a booth has more voters, then the administration is at fault. Even with voter enthusiasm and efficient staff, we cannot expect good voter participation.

Paragraph 37 of Handbook for Electoral Registration Officers (EROs), published by ECI in 2012 states, “… Registration of Electors Rules, 1960 indicates that the number of names to be included in any part should not ordinarily exceed 2000. The commission has however, with voter’s convenience in mind, has desired that a part should not have more than 1200 electors in urban area and 1000 electors in rural area.”

ECI guidelines are not only for voter convenience, but are necessary to allow the system to work even in ideal conditions. If the voters in a booth exceed 1,200, many voters may not get their turn to vote. Serpentine queues would form demoralising the voters. Many could return without voting.

In sample booths of some cities, we find the following:

Rolls of




Booths with

> 1200 voters

Booths with

> 2000 voters

Voters in largest booth


Mar 2014




AP0450068: 5,530


Mar 2014




DL0540109: 4806


Mar 2014




KA1600280: 3101


Oct 2013




TN0150060: 2,530


Sept 2013




MH1780157: 1,723


Jan 2014




WB1160023: 1,598

The features of the EVM technically put a limit of five votes per minute. This could be achieved in a simulation, without any gap between two voters and achieve 3,300 votes in the 11 hours duration of voting. Thus even in a simulated run, not all the voters in a booth can vote. Being illogically optimistic, if we consider a gap of 3 seconds between two voters through the day, then we have 4 voters per minute, which allows 2,640 voters to cast votes during the day.

However, the ECI guideline of maximum 1,200 voters per booth is pragmatic. In the sets of samples, 36% of booths in Delhi, 32% in Chennai, 26% in Bangalore, 16% in Mumbai and 1.4% in Kolkata have more than 1,200 voters. This will certainly reduce the voter turnout, by design and not due to voter apathy as pronounced by armchair experts and authorities. We should be alarmed if we find a high voter turnout in large booths.

When ECI cares much for the lone voter in a forest, provisions in several populated areas are grossly inadequate to allow citizens to vote.

Bad electoral management can turn voters out and complain about poor voter turnout.

(Commander (Retd) PG Bhat is a retired naval officer, an educationist and a social worker.)


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