Saturday, January 16, 2010

Food Crisis

Food Crisis.. what does it means in the nutshell? Short of supply? Lack of demand? Unregulated ceiling price? or no demand for food? Crisis can represent a general meaning, often to a negative term.
I still remember when I was residing in Lyon, France back in 2007 with my late-girlfriend, living in a hectic environment inside my apartment where wars towards stock market are happening in my trading room. Particularly a serious discrepancy to compare inside and outside my apartment where outside is much more calm and sooth, less vehicle noises, wheat and grape farms and vineyards surrounding the area.. that's is total peace as I could recall now. There's not in the slightest in my conscious that this issue would ever crossing my thought, until when I put on my TV and watch CNBC Europe on cable.. there's this dude from United Nation (can't recall his name) warns about the possibility of a food shortage. The most drastically impacted nation will be the third world nation where their GDP and GNP are in the lowest value.
I was sitting there in the couch and analyzing back his comment on the possibility of the food shortage that might occur in Mexico, African Continent, Indonesia, and some poor Latin American Nation. These mentioned nation produce tons of food, and the supply and demand are in a healthier pace. Agriculture in the main economic engines for these nation, they produce and they export in globally, so what is the possibility for a food shortage?? There's a book I read years back when I was in uni entitled Solidarity Of The People Of Nicaragua, I can't remember the author name. In that book, the research and surveyed made by the author indicates that the Nicaraguan bananas are shorting because they export in to America to make breakfast cereals, the coffee beans are short as well, to cater the global demand, and the result of the commodity is insufficient to the local itself. And they need to import several commodity which in a logical and biological terms is relevant to produce by Nicaraguan.
If you watch NBC recently. Legendary stock investor, Jim Roger quoted that the food shortages is coming in a few years because the agriculture sector is in dire need of funds. Speculators tend to hit the commodity as the buying distress commodity is the better way to make money rather than stock. When Mr. Roger said that the fundamental for agricultural is getting better, the investories has been in the lowest they've been in decades, not in years.
My late mentor and teacher on financial market loves to speculate on commodity. His favorite is cotton and coffee because they are often distress, Every week on Monday, he'll be calling in broker in Hong kong to set short or long the commodity. He said don't bother about stock as we tend to make her accumulate in due time but commodity is likely to win in both optimistic and pessimistic.
So the vital question is.. should traders and speculator be banned from getting near commodity?
History has showed us about the impact of hyperinflation when it hit German during World War 1, the rise of the food cost, the rising number on unemployment, the food shortage et cetera.. it is all a possibility that this scenarios could occur back in this new millennium. The remedy? Government and policy maker need to think outside the box and makes food more accessible, creates an independent food producer, maximizing the food reserve allocation, controlling the ceiling prices and minimizing the dependent of import goods. We have to look at the finest example for food and commodity independence country such as China and India. Priority is to cater the inhabitant first and then to those who demand.
I hope that this prediction on food crisis will be false because there's million of hungry children with malnutrition is in a serious need of food. And I don't want to be hungry as I love to eat, live to eat!!! Joi de Vivre.

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