Wanted: A global platform to end commodity wars

Onions have always made us shed tears and unseat politicians. It is a fact! No wonder politicians in India feel a silver dagger going down their throat when the O-word is uttered coupled with an I-word: inflation.

India being inflicted with inflation, a side-effect of the growth pill it has taken; prices of sensitive commodities like vegetables have charted new highs.

That is why, despite record output in grains and pulses, despite improved storage facilities and better roads, despite a booming economy, despite a growing middle class, India was not spared a shudder when Pakistan decided to stop its exports of truckloads of onions.

And many people in India have upped the jingoistic ante which is an inevitable casting of political dice. The question is: are we seeing things in the right perspective?

May be we should know that the Pakistani embargo on landbound onions is not a singular event. It can be viewed from a bilateral perspective, which it necessarily is, and linked to a global trend.

The drama has a backstage in India’s decision to block cotton exports to Pakistan!

The Hindu reported on Monday:

India is understood to have told Pakistan that it is ready to lift the ban on cotton exports if the latter resumes its onion exports through rail and land routes.

Official sources in the Commerce Ministry said this was conveyed to Islamabad by the External Affairs Ministry. “The Indian side has conveyed to the Pakistani counterparts that it was ready to revisit the cotton export ban and ceiling issues, if the gesture is reciprocated by Pakistan through the removal of the ban on the movement of onion,” a senior official said.

Pakistan’s textile industry took a severe beating and cringed under price-pressure when India scrapped Pakistan’s orders for one million cotton bales; a measure India adopted to avert a similar disaster occurring in its domestic textile industries.

This episode is in turn preceded by the tragedy of flash floods and misery that hit Pakistan in August and September that displaced millions of people and ravaged more than a million acres of fertile land.

The areas in south Punjab and interior Sindh that contribute to largest chunk of cotton production in Pakistan were severely affected. (Please note that Pakistan is world’s fourth largest producer of cotton.)

Though the legitimacy of tit-for-tat-embargoes on both sides is a different question, the cues from the planet is suggestive of commodity wars slated to continue in one way or other in some place or other; in fact for years to come.

FAO has been warning endlessly that price rise of food would continue to trace record levels. (Already, there are reports of food riots in Algeria and Tunisia).This price rise would invariably bring more and more (innocent) people into the fold of the poverty leaving the battle-field open to a string of commodity wars to follow: not only in agri-commodities but also in metals, minerals and energy.

Remember the recent rare-earth export embargo that China imposed to preserve its strategic hegemony over Japanese interests; or Russia blocking the crude oil supplies to Belarus?

Floods in Australia, droughts in Russia and Ukraine, and heavy snow-fall across Europe… sure tickets to the food prices and energy prices heading northwards!

And what would countries do if not banning exports and triggering commodity wars?

Need for a global platform

On Tuesday, the Indian premier Dr.Manmohan Singh (an eminent economist himself) convened a meeting of his council of ministers and bureaucrats to take stock of the inflation which is hovering at around 18%.

The two hour meeting concluded inconclusively!

Not something to make fuss about, one can say. However it shows the complexity of the problem in its entirety.

The person who changed the fate of India by ushering in reforms (Dr.Manmohan Singh), the man who presented the first-ever dream budget of India (P.Chidambaram), Deputy Chairman of the Planning Commission of India (Montek Singh Ahluwalia)—if this trinity of Indian policy sector could not kiss the holy grail despite a two hour brain-storming session; it is not an intellectual failure but a sheer complicated problem requiring a global platform to redress.

Until that happens, the so-called commodity wars can be expected to continue.

Let’s wait for the next meeting then, with hope.

As published in: http://www.commodityonline.com/news/Wanted-A-global-platform-to-end-commodity-wars-35546-3-1.html