Tuesday, March 18, 2014

Cost of breakfast rising due to drought, disease and rising demand

The Financial Times reports that drought, disease and rising demand have led to prices of eight key breakfast commodities rising on average almost 25% this year, fuelling consumer fears of food inflation.

Coffee has soared more than 70% because of unseasonably dry weather in Brazil, while US pigs have been hit by a virus epidemic, leading to a more than 40% rally in Chicago pork prices.

The Wall Street Journal says that in the U.S., much of the rise in the food cost comes from higher meat and dairy prices, due in part to tight cattle supplies after years of drought in states such as Texas and California and rising milk demand from fast-growing Asian countries. But prices also are higher for fruits, vegetables, sugar and beverages, according to government data. In futures markets, coffee prices have soared so far this year more than 70%, hogs are up 42% on disease concerns and cocoa has climbed 12% on rising demand, particularly from emerging markets.

Drought in Brazil, the world's largest producer of coffee, sugar and oranges, has increased coffee prices, while dry weather in Southeast Asia has boosted prices for cooking oils such as palm oil.

Sunday, March 02, 2014

Ireland's Kenny could become Europe's Mr Charmer

In the space of a few weeks, Stephen Collins, political editor of The Irish Times, in an economic commentary, swings from 'Bailout myth is a cocktail of half-truths and downright evasions - Wide acceptance of an unreliable narrative about what happened means we may never get to grips with the actual facts' to 'Kenny’s track record could land him a key EU position.'

It is however interesting that Enda Kenny (taoiseach/ prime minister since 2011) would be a suitable candidate for the largely ceremonial role of European Council president rather than the presidency of the Commission which has a key role in EU policy making - - one that could be well filled by Christine Lagarde of the IMF.

Kenny's optimism has been a positive thing, in particular when compared with his immediate predecessor but it's nonsense to claim he has had a big impact on investment inflows -- most of which come from the existing investment base (do not be misled by American Chamber of Commerce in Ireland spin on the issue.)

Besides, the charm did not get far when it was claimed that there had been an agreement at the June 2012 EU summit that Ireland would get a refund of the State's €64bn spending on rescuing Irish banks - - the curious thing about the claim is that it's still unknown which leader if any had made such a promise.  

It's easy to forget that Bertie Ahern (taoiseach/ prime minister 1997-2008) lauded by journalists for his 'common touch' once radiated optimism, but what he shared with Kenny was a lack of interest in the boring but crucial issue of reforming failed systems of governance.

At the MacGill Summer School in July 2009, Enda Kenny, then leader of the Opposition, asked why do we have a budgetary system in place that is unfit to run a corner-shop, let alone a nation of 4m people?

In July 2013, the IMF said on Irish government accounting, that there is no uniform set of accounting rules and procedures applying to government departments, extra-budgetary funds, semi-state bodies, local governments, and public corporations. "This makes consolidating government-wide financial information and promoting system-wide improvements in financial reporting practices very costly and time consuming."

The bailout terms were met but in terms of preparing for a world of different economic challenges, has there been change remotely comparable with what was done in Sweden and Finland in the aftermath of their crises in the early 1990s?

Wouldn't it be a shock if we had a society where workers have equal rights whether in the public or private sectors, including similar pension entitlements (the majority of private sector workers do not even have an occupational pension)?

Leo Tolstoy wrote in 'War and Peace' of the Battle of Borodino in 1812:

"it was not Napoleon who directed the course of the battle, for none of his orders were executed and during the battle he did not know what was going on before him... Napoleon fulfilled his office as representative of authority as well as, and even better than, at other battles. He did nothing harmful to the progress of the battle; he inclined to the most reasonable opinions, he made no confusion, did not contradict himself, did not get frightened or run away from the field of battle, but with his great tact and military experience carried out his role of appearing to command, calmly and with dignity."

However, a weakened Russian Army was allowed to escape and regroup.

Rather than Kenny's charm offensive, the vacuous 'Medium-Term Economic Strategy 2014-2020' that was published last December is a better pointer to the ultimate judgement on his leadership.

Finfacts: Irish Corporate Tax 2014: How official spin and distortion works - in short-term

Finfacts: Reality Check: Merkel did not agree to refund Ireland €64bn bank rescue cost