Sunday, May 10, 2009


The world is sharply divided into two camps, "the haves and the have nots" because of historical economic factors. Industrialized countries with natural, economic and technological resources have been able to amass fortunes that enabled them to pamper to their populations with the very best in all spheres of life. In contrast poor countries, most of them coming out of the yolks of colonialism in the last century, can boast of only the starving populations for whom hunger and poverty are the only options. 75% of world's ultra poor people live in the African continent with less than 50 cents a day income that can hardly buy any thing to day. Mal distribution of wealth is a serious issue that confronts the world which defies any simple solution. Top 10% of the world owns 84% of the wealth while bottom half barely holds 1%. Food prices continue to climb in many poor countries while they are going down in affluent countries due to the on-going economic melt down which is ironical.
European Union (EU), a conglomerate of super rich nations, is finding it hard to satisfy their farmers because of lower demand for produce and the consequent rapidly sliding prices for them in the market place. It was as recent as in 2007 that EU congratulated itself for eliminating the large surplus of foods purchased and stored in the past with tax payers' money, mainly through exports to third world countries where increased demands emerged due to droughts and better economic conditions. For the records, it must be remembered that EU bought butter to the tune of 1.23 million tons from their producers creating the euphorically called 'butter mountains' which were disposed off by 2007. But the trend reversed sharply in late 2008 when economic recession depressed the domestic demand while farmers continued to produce with no let up. During 2008-09, EU is budgeting to buy from the farmers about 30000 tons of butter alone while similar schemes are being worked out for other dairy products. While global prices for butter has plummeted from Euros 3000 per ton in 2007 to less than Euros 1500 per ton in early 2009, the farm subsidy program is gearing itself to offer to them a minimum price of Euros 2299 per ton. EU is also planning to buy 1.09 lakh tons of non-fat milk powder @ Euros1698 per ton, much higher than what open market can offer. Already EU is stuck with 1,17, 810 tons of cereals, 41,422 tons of sugar and 2.3 million hectoliters of wine bought under its Euros 50 billion agricultural subsidy plan. Third world countries must wake up to the reality that these cereal mounds, butter mountains, skim milk powder stacks and wine lakes are likely to be dumped at low prices threatening the very existence of their domestic producers,
Similar picture emerges in USA also where more than $ 1 billion worth of non-fat milk powder were bought by the government in 3 years up to 2002 in an effort to prop up milk prices which saw a slump during this period. The 1.3 billion gallons of milk that went in making the powder came from 6.35 lakh cows over a period of one year and was sufficient to meet the needs of its population for 16 months. The powder was kept in a series of man-made caves near Kansas City, Mo and other private ware houses across that country. Though the 1996 Freedom To Farmer Law was supposed to have terminated the controversial subsidy system, it resurfaced again in 2002, continuing till to day.  Thanks to this, US exports of dairy products increased from $ 1 billion in 2003 to $ 4 billion in 2008, the milk powder export alone showing a six-fold increase during the period. Government offered 90 cents a pound then and to day it is giving 80 cents a pound to buy about 111.6 million tons of powder worth $ 91 millions with tax payer's money as the fluid milk price slumped from $20 per 100 pounds last year to $ 14 to day. To cap it the government spends $ 25 million an year to warehouse the dairy products bought from their farmers. It is ironical that the non-fat milk powder after three years, if not exported, will be sold at very low prices to animal feed manufacturers while millions of children in the third world are starving to death for want of food!.  

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