Promoting India Latin America Collaboration

The New Geopolitics of Food

April 27th, 2011 Posted in Agriculture, Ecology/Environment, Economics - Indicators, Policy and Trends
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By Lester R. Brown | Foreign Policy

the largest food bubbles are in India and China. In India, where farmers have drilled some 20 million irrigation wells, water tables are falling and the wells are starting to go dry. The World Bank reports that 175 million Indians are being fed with grain produced by overpumping.

IN THIS ERA OF TIGHTENING world food supplies, the ability to grow food is fast becoming a new form of geopolitical leverage (DR – an OPEC for foodgrains is not a farfetched possibility), and countries are scrambling to secure their own parochial interests at the expense of the common good.

This January [2011], a new stage in the scramble among importing countries to secure food began to unfold when South Korea, which imports 70 percent of its grain, announced that it was creating a new public-private entity that will be responsible for acquiring part of this grain. With an initial office in Chicago, the plan is to bypass the large international trading firms by buying grain directly from U.S. farmers. As the Koreans acquire their own grain elevators, they may well sign multiyear delivery contracts with farmers, agreeing to buy specified quantities of wheat, corn, or soybeans at a fixed price. [DR - I have talked to large grain buyers in India and the Middle East who are eager to adopt such a model, buying cost-plus from farmers]

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The Brazilian Economy is Humming Along

January 27th, 2011 Posted in Brazil, Economics - Indicators, Policy and Trends
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Despite the slow pace of the economic recovery in North America and Europe, Brazil has seen remarkable growth in the last few years. In 2010, Brazil created a record 2.52 million new jobs, well above the previous record of 1.61 million new jobs that was set in 2007.

From MercoPress:

Figures in Brazil show that 2.52 million new jobs were created last year, the Brazilian Labour Ministry reported.

The number surpassed the 1.61 million formal jobs the nation generated in 2007, which was the previous high until now, and contrasts with the 990,000 formal jobs created in 2009 when the country was still suffering the effects of the global economic crisis. This is the highest increase since the statistic began in 1992.

In the last two months of 2010, however, the number of layoffs was greater than the number of hirings and only created some 100,000 net new formal jobs, defined as positions with complete labour and social benefits.

The vigorous expansion of employment is attributed to the solid growth of the Brazilian economy in 2010, estimated at 7.3 percent, following the contraction of 0.6 percent in 2009.

While economists estimated that Brazil was going to end the year with 2.2 million new jobs, the Labour Ministry released a figure significantly higher.

Labour Minister Carlos Lupi said that with December’s results included, 15.04 million new formal jobs were generated in the country during the eight-year presidency of Luiz Inacio Lula da Silva, who left office January 1.

The minister said that with the Brazilian economy forecast to keep up its good performance, Brazil is likely to create close to 3 million new jobs in 2011, the first year of the Dilma Rousseff government.

The increase in formal jobs in 2010 helped reduce the official unemployment rate to 5.7 percent last month, the lowest figure for December in the last eight years.

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Latin America, and Mercosur in particular, leading the global economic recovery

December 3rd, 2010 Posted in Economics - Indicators, Policy and Trends, Latin America
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Latin America, especially Mercosur, is leading the global economic recovery. The forecasted growth in GDP for Mercosur countries in 2011 is 7.5%, and for Latin America in general it’s 5.8%. From MercoPress:

“Things in Latinamerica have rolled much better than expected” in an international context which still faces some turbulences resulting from the prolonged slowdown which begun in late 2008, according to Joaquin Vial, BBVA chief economist for South America

Vial said that besides domestic demand, the booming international prices of commodities have attracted a massive inflow of capital and an overall appreciation of the region’s currencies.

Domestic demand stimuli was followed by a strong consumers and investors confidence reaction, together with a favourable evolution of employment, which helped to begin a gradual withdrawal of fiscal and credit incentives.

In this scenario the countries which currently have the best growth prospects are Paraguay, 10.1%; Uruguay, 8.8% and Peru, 8.5%. Argentina is poised to expand 8%; Brazil 7.5%; Panama, 6% while the only country that could end the twelve months with an economic contraction is Venezuela, probably 2.3%.

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Brazilian and Indian economies on the rise

October 26th, 2010 Posted in Brazil, Economics - Indicators, Policy and Trends, India
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In 2011 Brazil is expected to surpass Italy to become the seventh largest economy in the world, and India is expected to move ahead of Spain. From MercoPress:

The research unit of The Economist is predicting that Brazil, the eighth largest economy of the world in 2009, with a nominal GDP of 1.5 trillion, followed by Spain, Canada, India and Russia, would continue in the same position during 2010.

However it is expected that in 2011 the largest Latin American economy will climb up to stand in seventh place in the ranking with a nominal GDP of just over 2 trillion. Thus, Brazil would regain the position it occupied in 1994 displacing Italy which it is not expected to reach 1.8 trillion in nominal output. Another European Economy that will surrender position among the largest economies in the world is Spain, being relegated to the 12th post because of the significant advance of Russia and India.

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Economic Prospects in Peru buoyed by agriculture and mining sectors

October 10th, 2010 Posted in Agriculture, Economics - Indicators, Policy and Trends, Peru
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TheStreet

For instance, Peru — South America’s fastest-growing large economy — has excellent economic prospects with reasonable valuation levels.

Until last year, investors could only buy into Peru through companies like gold miner Compania de Minas BuenaventuraADR (BVN_), copper miner Southern Copper (SCCO_), or the financial Credicorp ADR (BAP_). But iShares MSCI All Peru Capped Index Fund (EPU_) now offers a new way.

Granted, 20 years ago Peru struggled with raging hyperinflation and violent attacks by communist guerrilla groups. A lot has changed since then, and it’s set to grow 7% this year. Most economists can’t help but notice the difference — so should you.
Peru’s Commodity Advantage and More
Peru can trace its mining ties back to a time before the Inca Empire. That same tradition has helped push it into a successful economy today. Similarly, much of its future success relies on its exports of gold, copper and the like.

Fortunately, global mining companies can’t seem to get enough of any of those. In all, they have $41 billion in investments planned there over the next decade. That should quadruple Peru’s copper exports, putting it neck-and-neck with Chile, the world’s biggest producer right now.

Along with mining, the country has other factors going for it, such as agriculture. In the past decade, such exports have surged from $300 million to $2.5 billion.

* Peru exports the world’s largest amount of asparagus.
* The country produces the most specialty coffees, paprika and organic bananas.
* It also reaps significant amounts of cocoa, sugar, artichokes, avocados and mangos.

Right now, that sector only accounts for 8.3% of GDP, though it employs a third of the workforce. But it should grow fast with the introduction of superior farming methods such as drip irrigation. With strong sales in the first half of the year, revenue rose 19% over the same time in 2009 to $1.37 billion. That highlights Peru’s potential in the global agricultural market.

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India’s imports of milk, grain, beverages in April-July 2010 up 22% over 2009

October 10th, 2010 Posted in Agriculture, Economics - Indicators, Policy and Trends, Food and Beverages
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1 Crore is 10 million. 1 USD – ~~ 44 Indian Rupees. You do the math. If you’re in the business of feeding India, you don’t know what “global recession” people are talking about.
The Hindu Business Line

Import of food grains jumped 3100 per cent to Rs 111.7 crore in April-July 2010 from just Rs 3.5 crore last year. This is mainly due to import of wheat by flour millers in south India.

Import of milk and milk products in the period under review was Rs 370.4 crore, a 324.5 per cent increase from only Rs 87.3 crore in the same period last year. In March, the Government had allowed duty-free imports of up to 15,000 tonnes of butter oil and 30,000 tonnes of milk powder, anticipating shortfalls in milk supplies to cities ahead of the summer season.

Edible oil import grew 18.9 per cent to Rs 8,763.7 crore during April-July this fiscal from Rs 7,371 crore last year. A significant feature of edible oil import is that import of crude oil has gone up by 25.9 per cent to Rs 7,958.6 crore (Rs 6,319.8 crore), while imports of refined oil have fallen by 23.4 per cent to Rs 805.1 crore (Rs 1,051.3 crore). The increase in edible oil import is mainly due to substantial increase in import of soya-bean crude oil, the statement said.

Among those other sensitive items whose import growth has increased during the period under reference include  fruits and vegetables including nuts (up 10.8 per cent to Rs 2,178.3 crore), spices (11.9 per cent to Rs 302.7 crore), alcoholic beverages (85.2 per cent to Rs 147.4 crore).
Food inflation in India for the week ended September 25 was 16.24 per cent, mainly because of soaring prices of milk, fruits and vegetables.

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Latin America showing more resilience to the global economic crisis

October 10th, 2010 Posted in Economics - Indicators, Policy and Trends, Latin America, Research article
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China, Brazil to fuel global economic growth – International Business – MiamiHerald.com

Latin America and the East Asian Tigers are lifting the world economic tide, showing more resilience to the global economic crisis than the United States and many European nations.

Such a growth path is a break from the past for Latin American and Caribbean countries, which have had a “history of frequent and devastating financial crises,” the World Bank said in a report called The New Face of Latin America and the Caribbean.

The keys to the newfound resiliency of the Latin American and Caribbean region were more sound monetary policies and better debt and fiscal management, the World Bank said. But a growing connection to emerging Asian economies — especially for South American countries, Costa Rica and Panama — and the region’s evolution from a net debtor to a net creditor to the rest of the world were also big factors.
In addition to Brazil — Florida’s top trading partner — the best performers this year are expected to be Argentina, Peru, Paraguay and Uruguay.

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Why Prices of Commodities – Oil, Metals, Food and Farmland will skyrocket over the next decade

October 10th, 2010 Posted in Agriculture, Commodities, Economics - Indicators, Policy and Trends, United States
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as investors diversify into assets that cannot be “printed”. People like Jim Rogers and Marc Faber have been saying this for years, and Boston University econ Prof. Larry Kotlikoff says the U.S. is heading towards an Argentina 2001-like sovereign crisis.

Three Horrifying Facts About the US Debt “Situation” | zero hedge

#1 The US Fed is now the second largest owner of US Treasuries.

That’s right, this week we overtook Japan, leaving China as the only country with greater ownership of US Debt. And we’re printing money to buy it. Setting aside the fact that this is abject lunacy, this policy is trashing [the USD} which has fallen 13% since June…

#2: “There are only about $550 billion of Treasuries outstanding with a remaining maturity of greater than 10 years.”

the US has entered a debt spiral: a time in which fewer and fewer investors are willing to lend to us for any long period of time… at the exact same time that we must roll over trillions in old debt and issue an additional $100-150 billion in NEW debt per month in order to finance our massive deficit.

#3: The US will Default on its Debt

… either that or experience hyperinflation. There is simply no other option. We can NEVER pay off our debts. To do so would require every US family to pay $31,000 a year for 75 years. Obviously that ain’t going to happen.So default is in the cards. Either that or hyperinflation (which occurs when investors flee a currency). Either of these will be massively US Dollar negative

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Going for gold in Colombia: Good-Fortune Forces in Alignment

September 22nd, 2010 Posted in colombia, Commodities, Economics - Indicators, Policy and Trends
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Gold: Museo de Oro, Bogota, Colombia
 IBT Commodities & Futures

one has to look at the currencies of where the company is producing its gold and one has to look at what we like to call GARP, or basic “growth at a reasonable price,” in our stock selection model. As I indicated, we focus on historical and social economic cycles, applying both statistical and fundamental models, including GARP, to identify those companies with superior metrics.

TGR: Can you share with us trends in your fund today-either trends in countries, because of the currency play, or trends in companies that represent good GARP?

FH: I think the best country right now for value with government policies-and I’ve met with the ministers and the new president-is Colombia. The best performing stock last year on the Toronto Stock Exchange was Pacific Rubiales Energy Corp. (TSX:PRE; BVC:PREC), which has oil in Colombia. Government polices attracted capital. This was spectacular. It was up 600%. Even year-to-date it’s had great performance.

The Colombian government has made a real push to improve the gold mining industry too. There’s been a move away from artisanal miners  towards high-quality mechanized mining. It still employs thousands and thousands of people, but you won’t see the environmental disasters that have taken place previously with a bunch of those small miners that have no compliance for quality. So I think Colombia is a country that is spectacular.

TGR: Any particular gold companies that come to mind?

FH: A big holding for us is Medoro Resources Ltd. (TSX.V:MRS). If you take a look at the size of Marmato, their gold deposit. . .it’s so inexpensive as a producer and for reserves in the ground and the whole consolidation taking place. Another one is Gran Colombia Gold Corp. (TSX.V: GCM), which just went public. Those two companies combined have a $600 million market cap, but also 16 million ounces of production. So I think the rushes going into other countries are going to start to show up in places like Colombia.

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Latin America’s impressive little guys: Uruguay and Paraguay

September 17th, 2010 Posted in Economics - Indicators, Policy and Trends, Latin America, Paraguay, Uruguay, Videos
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beyondbrics | FT.com

Talk about Latin America’s rising stars and the focus is often on Peru or Colombia. But don’t overlook the little countries: Paraguay and Uruguay are punching above their weight – and both have just been upgraded by rating agency Standard’s & Poor’s.

That’s a tribute to their economic performance: Uruguay rode out the global crisis without recession, while Paraguay is growing at its fastest rate in 30 years. Both are also catching the attention of some foreign corporate investors.

After 2.9 per cent growth in 2009, Uruguay is now on course for 6.5 per cent this year. S&P has moved its sovereign debt rating to double B minus. That’s within two notches of investment grade, which is what Uruguay lost in 2002 during an economic crisis that spilled over from neighbouring Argentina. Its president, José Mujica, wants to regain [investment grade] status before his term ends in 2014.

Uruguay last month hosted a business promotion seminar organised by the Council of the Americas, whose president, Susan Segal, said US investors were looking with interest at agriculture, biotechnology and technology exchange opportunities in the Atlantic-coast country. Uruguay sees natural resources as key to future growth: it is already exploiting a gap in the market left by declining Argentine beef production, and is seeking to develop what it believes are large offshore hydrocarbons resources. But Mujica has also appealed for young people to “fall in love with maths and scientific analysis” to lay the foundations for a tech-savvy future.

Paraguay, a landlocked country whose population is unique in Latin America by still speaking the language of its Indian ancestors, Guaraní, is also emerging as a promising investment destination. Rio Tinto Alcan is planning to invest $2.5bn in an aluminium smelter. To give a sense of the project’s scale, the investment is equal to virtually half the reserves of the central bank. What’s more, Paraguay’s economy is on fire – set to grow at around 9 per cent this year, a 30-year-high according to Gabriel Torres, analyst at Moody’s Investor Service.

Central bank reserves have doubled in the last three years and political stability has increased under the presidency of Fernando Lugo, who took office in 2008 after 61 years of one-party rule.

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