IBT News Blog

Business Week has a nice summary just posted of the rice crisis:

http://www.businessweek.com/globalbiz/content/apr2008/gb20080428_894449.htm

Rice is obviously one of the most important crops in the world, and has been for a very long time. Much of the worlds poorest populations, particularly in Africa and Asia depend on rice as the primary staple their daily diet.

submitted by Dave

Rice prices have soared tremendously, one statistic in this article is particularly telling I think: Rice from Thailand was priced at $320/ton at the end of last year. Now, a mere four months later, it is $1100/ton. Thats more than a 300% increase! The article points out that most rice is not traded, but consumed domestically.

One thing that is not really discussed in this short summary however is the impact on urban poor. As we all know, urban areas in Africa and particularly in Asia are drawing many people from rural areas. Imagine the impact on these people who spend a large portion of their budget on food, particualrly rice. This is also putting pressure on the very organizations that provide aid for the world's hungry. Estimates are that this spike in rice prices will push an additional 100 million people into starvation conditions. Thats the equivalent of one third of the U.S. population that could feed itself before, but now will be unable to feed itself.

Some other interesting points brought out in this short peice: the role of speculators and the impact of export restrictions imposed by India and Vietmnam (the second and third largest exporters of rice respectively). These measures backfired and encouraged speculators to horde rice. Speculators are playing a big role in making this problem worse, much as they do in the oil markets.

Finally, high oil prices and the drive for biofuel are also contributing to the escalating rice crisis. Because so much corn is being grown for ethanol in the US, that decreases the amount of wheat that is planted. Higher wheat prices makes more people turn to rice for their needs, this increases demand for rice and the price for it.

This problem has the potential to get far worse, lets hope that somehow the price goes back down or at least stabilizes. If it doesn't we are looking at a humanitarian disaster of epic proportions.

Russians and Ukrainians, in a agreement involving both their goverments, have reached a settlement agreement today according to which Ukraine agrees to pay its debt for natural gas provided by Russian producer Gazprom. By doing so, Ukraine avoids being a shut off in the middle of the winter. It is also a sigh of relief for many Western Europe countries who depend on Russian natural gas coming to them through Ukraine. This raises the question of a new pipeline that would not go through East European countries who, though they are very dependent on Russian energy, still have disputes with Russia. Ukraine has a pro-Western government since the Orange Revolution, which Russia frowned upon at the time.

www.nytimes.com/2008/02/13/world/europe/13ukraine.html?_r=1&ref=world&oref=slogin

http://www.lemonde.fr/europe/article/2008/02/12/russes-et-ukrainiens-trouvent-un-accord-sur-le-contentieux-gazier_1010553_3214.html#ens_id=1001154

Infographie

(from: Le Monde.fr)

This story is interesting - a mega company is trying to buy another mega company. I can only imagine the intricate negotiations that would take place if the deal was to move forward and the effect it would have on both companies' worldwide subsidiaries and branches.

A link to the story is attached here: http://www.nytimes.com/2008/02/01/technology/01cnd-subyahoo.html?_r=1&hp&oref=slogin

One topic that we did not address in our introductory sessions was the role of government in corporate governance. A Business Week article discusses the potential for the direct role that could influence trade and investment decisions made by companies: Sovereign Wealth Funds Top Davos Talks. The topic was the focus of a panel at the annual meeting of the World Economic Forum in Davos.

Large state pension funds (e.g., NY and CA) have exercised some muscle with respect to their holdings, what impact could these national funds, with their estimated $3 trillion, have? You can find out some basics in the IMF magazine Finance & Development or at the Economist.

I thought this story on European energy access might be interesting:

http://bigmarketing.files.wordpress.com/2007/05/logo_facebook.jpg

Reports today (1/17/08) claim social networking website Facebook is considering setting up its European base in Ireland.

The Minister for Enterprise, Trade & Employment Micheál Martin met with company executives during a visit to California last October, the Irish Times has reported.

In the US, Facebook is now more popular than MySpace and it is the most popular social networking site in the UK.