Rising Food Prices - Who Should Be Blamed?

[Adrian Wong]

Originally Posted by Brian

That's our views on government then. My view is of a small government, it should only regulate to ensure that the market functions properly and should never be a player in markets. Semantics? I personally think it's our own views on what government should be instead.

It is semantics. And I will tell you why.

You say "regulate" but doesn't regulating the market mean interfering with the market forces? It's the same thing really, just how you phrase it.

The difference I see is that when you regulate, you do so with a higher authority (others cannot object) while it is a little different if you participate on an equal footing.

You can say that both can be considered as intervention, but frankly speaking, anyone who participates in the purchase or sale of anything (including you and me) directly influence or intervene in the market place. It's a fact.

Originally Posted by Brian

It is accurate. I said the rise was due to increased demand in China/India. I didn't muddle it and say we've had a 100% rise in the last x years because of increased demand in China/India. I only mentioned the rise, and not the magnitude of it. And in that, it's increased demand from China/India, which we agree upon.

That's the point I'm trying to make. It's not just about increased demand for food in China or India. Demand for food can only go up so much at one time. There MUST be a sudden drop in food supply for such a crisis to happen.

Look at the news today. Cost of rice went up in Thailand by 50% in the last one month. Does that mean that suddenly, there are 50% more consumers of Thai rice?

If you read further, you will find out that the rice crisis is happening because of unforeseen problems like floods in Bangladesh, pests in Vietnam and bad weather in China. Compound that with increased demand, export restrictions, panic hoarding, etc... of course the price will rise.

In other words, problems like this happen as a result of a few factors coming into play. Nothing ever happens merely because of one issue.

Originally Posted by Brian

Percentage of cash meant for projects gone to some cronies hands. They're certainly stealing from us, but they're not robbing us dry either.

Well, they might be dumb, but we're stupider then if they can steal so much from us We did vote them in you know...

How do you know that they have not done their best in robbing us blind? LOL! Do you think that they would leave some money for us, out of the goodness of their hearts?

DYKT : Our government is the only one in the world that insists that companies must PREDICT their future profits and pay their taxes BEFORE the start of the financial year?

DYKT : Companies who do not do a good job of predicting their profits and paying the appropriate taxes are fined?

You have to ask yourself why? Obviously, our government is now strapped for cash. Our government is supposed to be rich with oil money. In the past, the government had never needed to do this. Why do they need to do this now?

If you actually believe they are not robbing us dry...

Hehe... I never voted for them. Of course, those who voted for them are stupid (or benefit from the corruption).

Originally Posted by Brian

But you've ignored the fact that India lacks good infrastructure, and that democracy sometimes means that progress is much slower, with planning permissions and stuff, while in a single party state you get a lot faster progress, that many African countries don't have stable governments and infrastructure. They're costs that you've ignored.

Hehe.. You forgot. I lived in India and it wasn't the rich part of India.

Anyway, this is a pointless argument cause when I quote China, you say that it is a communist country and therefore they force people to farm. But when I quote India, you say that as a democracy, progress is much slower. LOL! It's literally a "Die if I do, die if I don't" situation.

Originally Posted by Brian

But we have tons of rich Malaysians too, through industrialisation, which is more or less the same isn't it? But when you consider it in terms of percentages, it's minute. I reckon it's the same with China.

It was a direct rebuttal of your point that wages are rising faster for Chinese workers than Malaysian workers.

Well, it's hardly a rebuttal because you merely reckoned it's the same. I don't have the numbers with me right now, but I did read that the average wage of a white collar worker in Shanghai (for example) is much higher than that of a white collar worker in KL.

You can do a little Googling for average wages and see if that's true. If it's wrong, then you got your rebuttal.

Originally Posted by Brian

But you assume that there's no cost in storing grains. Even if you justify that cost, no single country will ever be able to store enough grains to last its population indefinitely, or at least for years on end.

LOL!! No one sane would store years and years of food la... Even the US Strategic Petroleum Reserves has less than 2 months of reserves.

Again and again, I have been repeating that such a buffer can only be temporary. It has to work hand-in-hand with food sufficiency to ensure some stability or at least reduce the effect of any global food crisis.

Originally Posted by Brian

I've only seen this. They're stealing cash from the poor farmers and stuff, but what about the competitiveness of our own farmers? This points to Bernas as a failure to help our own farmers modernise. Surely Thailand isn't selling their rice at a loss.

Obviously, they are making money. That's why farming can pay well, if you do it right. It's just like any other occupation in the world. If you are good at what you do, you will do well.

No, it's not about them stealing cash. It's about them not doing what they are supposed to do - encourage rice cultivation and help the farmers improve their productivity. Instead, BERNAS is out to make a quick buck and the local farmers are their competitors.

Originally Posted by Brian

But you're falling into your own trap of semantics here. Here's my question: Does China have their own production quotas for rice production? How do they do it without subsidies? No, the answer isn't the free market, and so I'll let you decide what the answer is. [there's also a historical element in it]

How can it be semantics? What China does now is no longer the same as what they used to preach. They are no longer the communists that they wanted to be in the '50s.

Err.. Do you have anything to support your assertion that China forces its people to farm? Or that they have some sort of production quota for each farm to fulfill or something? Cause I have not read or seen anything like that. When I was over there, what they were doing sure looked like free enterprise to me.

Originally Posted by Brian

But you're exaggerating what I'm saying about China and communism. China's certainly moved on to capitalism, but by no means is it a free market, in fact it's far from it.

Well, they are officially still communists, but we all know differently. Hehe...

Anyway, that's quite a contradiction isn't it... if you say that they are now capitalists but do not support a free market.

Originally Posted by Brian

Increased demand for grains and vegetables too. Grains particularly because of biofuels and increasing prosperity.

BBC NEWS | Magazine | China drinks its milk
Michael Gerson - A Prosperity Dilemma - washingtonpost.com

Yup, no doubt there's increased demand... but again, this is not a one-dimensional problem.

When it comes to increased demand due to prosperity or population growth, people can see it coming from a mile away. Countries can prepare for it by increasing food output, etc. In this case though, there's a sudden and unexpected reduction of food production. There's also the sudden surge of interest in biofuels after the rise in oil prices, etc....

Originally Posted by Brian

Nope, see this: BBC News | ASIA-PACIFIC | S Koreans told to stop wasting food
BBC NEWS | UK | Britons throw away third of food

I really don't think it's a cultural thing, it happens everywhere really to me.

LOL!! I'm not saying rich people don't waste food. But it would be really shallow to assume that this is the only issue at hand.

If you think it's matter of waste, then let me throw in the factor of population decimation in places like Iraq, Afghanistan, Myanmar, North Korea, etc. What about the 2006 Tsunami and numerous earthquakes after that which wiped out so many people in Indonesia and elsewhere?

If we follow your logic, then food prices should drop because of the lower demand, right? Of course not, because demand is not the only factor in the equation. This is probably the third time I'm repeating this... but again, there are many factors when you talk about food prices but to blame it on a single factor - increased demand by China and India would be really unfair to both of them. Hehe...

Originally Posted by Brian

Biofuels are an aspect, but what's your reason then for the increase in price for vegetables, given that most of them aren't used for biofuels at all?

My reason? I don't have ONE reason because I don't trade in vegetables but I can come up with a bunch of reasons, which are more or less related because in life, everything's related one way or another.

Originally Posted by Brian

I disagree, I think our farmers should be able to sell to the highest bidder in the market(and I mean global), and if our government wants to help stabilise prices using some form of subsidy, they should buy it at the global price and then subsidise it. It shouldn't be a case of forcing the farmer to sell to the government in the name of food security.

LOL!! Didn't I just say that earlier (see above)? Again, I will repeat that the government should participate as an EQUAL buyer/seller. You are the one (see above again) who thinks the government should "regulate" the market.

By participating as an ordinary business interest, the government can buy or sell food to help stabilize the price without resorting to "regulating" the market. Of course, their role will not be to make money but to ensure that even in the event there's a glut or run on food, they can help stabilize the market so that there's a smooth transition to a higher or lower price point.

Originally Posted by Brian

No, it's an observation. Many Malaysians are pissed that they voted BN in in 2004, and that these things are popping up now, and then there's a significant swing in the mood to the other way instead, blaming BN not for everything, but more than their fair share of what they're responsible for. You might argue that your stance is fair and responsible for BN, but from my point of view, no it isn't. We may never agree on it again, but well least we agree to disagree

Actually, I think the people have been rather slow at blaming BN. Do you really think BN only cheated the people's money in the last 5-10 years? No, it has been happening for a long time now. For certain, the old man, Dr. M has dirty hands. Oh yeah...

So why didn't the people vote Dr. M out? Because Mahathir understood what Nikita Khrushchev meant when he said that "When you are skinning your customers, you should leave some skin on to heal, so that you can skin them again."

Mahathir was smart. He knew that if he did not leave a little for the people, he will eventually get kicked out. Plus, by leaving "some skin" to heal, he can keep skinning "his customers" for many years to come.

Under Badawi's weak rule though, UMNO warlords were able to run rampant looting government coffers for whatever they want. It is during his "administration" or lack thereof that our government has started to insist that companies must predict and pay their taxes in advance.

So if you ask me, I do believe that we have not yet given BN their fair share of blame. They still have much to answer for. Until today, they are still hiding behind the lies and spin generated by the local media.

Just look at what the government has done recently? Asked the village heads to quit en masse and cutting off all tourism-related MOUs with Opposition-controlled states. Are we done blaming BN yet? Hell, no!

But I agree with what you said - the blame should be placed where it deserves to be. In the case of the increased cost of living that bslee mentioned, I have to say that BN should be blamed partially for it. Every country in the world is affected by it but unfortunately, we are totally unprepared for it.

The government's only recourse is to subsidize our food... and that's stupid because they are using OUR money to pull wool over our eyes so that everything looks hunky-dory. With a good government, there will be NO need for subsidies. Food prices can go up or down but there will be proper mechanisms in place to ensure that there won't be a massive change in price like what we are seeing in Thailand, etc.

[Brian]

Originally Posted by Adrian Wong

It is semantics. And I will tell you why.

You say "regulate" but doesn't regulating the market mean interfering with the market forces? It's the same thing really, just how you phrase it.

The difference I see is that when you regulate, you do so with a higher authority (others cannot object) while it is a little different if you participate on an equal footing.

The regulation i'm referring to is one where the government is only there to ensure a proper market functions, and we have competition. That involves things like breaking up monopolies. They DO NOT participate in the market. I don't see where the semantics are to be honest.

That's the point I'm trying to make. It's not just about increased demand for food in China or India. Demand for food can only go up so much at one time. There MUST be a sudden drop in food supply for such a crisis to happen.

Look at the news today. Cost of rice went up in Thailand by 50% in the last one month. Does that mean that suddenly, there are 50% more consumers of Thai rice?

If you read further, you will find out that the rice crisis is happening because of unforeseen problems like floods in Bangladesh, pests in Vietnam and bad weather in China. Compound that with increased demand, export restrictions, panic hoarding, etc... of course the price will rise.

In other words, problems like this happen as a result of a few factors coming into play. Nothing ever happens merely because of one issue.

I view it as the market not having anticipated the increase in demand, and the resulting tightness in supplies lead to a very inelastic market, where small events lead to massive increases in price, which is what we've seen with crude oil. The large increase in the price of oil hasn't been pure demand either, it's also a tightness of supply in the market. You may argue that it's another factor in the price of oil, but the tightness of supply is caused by the demand itself.

We both agree that there's a tight supply now, but I'm wagering that it's fundamentally more demand more than problems in Vietnam or anything else (note, they still managed to produce more rice than last year even with the pest problems).

Hehe.. You forgot. I lived in India and it wasn't the rich part of India.

Anyway, this is a pointless argument cause when I quote China, you say that it is a communist country and therefore they force people to farm. But when I quote India, you say that as a democracy, progress is much slower. LOL! It's literally a "Die if I do, die if I don't" situation.

I give it to you that it gives you an added perspective. But it does not make your view any more valid than mine unless you can back it up with facts about the infrastructure vs China using your place in India or the places you visited.

Well, explain this then: for over 50 years, India's been a democracy, has had an English-based education system, and yet it's only really rising right now. The Chinese, only really embraced capitalism in the 80's, and they're certainly ahead of India now. It's a gross simplification, but it's certainly where we are today.

If you can give me a satisfactory answer for that, I'll accept it.

And no, I'm not implying that China are pure communists, but I'm saying they're not close to free marketeers either. E.g. price controls on the price of fuel, which led to fuel shortages in China.

Fuel shortages spread into central China - International Herald Tribune

How can it be semantics? What China does now is no longer the same as what they used to preach. They are no longer the communists that they wanted to be in the '50s.

Err.. Do you have anything to support your assertion that China forces its people to farm? Or that they have some sort of production quota for each farm to fulfill or something? Cause I have not read or seen anything like that. When I was over there, what they were doing sure looked like free enterprise to me.

While I did mention that they had a legacy of communism and central planning, I did not say that they forced people to farm. They certainly do have their quotas to ensure self sufficiency though. I do admit that I was too ambiguous about it though, and I apologise for that.

China's move to ensure domestic grain supply benefits world, analyst says_English_Xinhua

I don't know if this is the case with Malaysia, but this is certainly not having a free market to incentivise farmers. Not being able to sell at (perhaps higher prices) the global market.

Well, they are officially still communists, but we all know differently. Hehe...

Anyway, that's quite a contradiction isn't it... if you say that they are now capitalists but do not support a free market.

I disagree, see price controls (they set the price at which they buy stuff at). They're still transitioning, or maybe not yet. I personally don't know.

Yup, no doubt there's increased demand... but again, this is not a one-dimensional problem.

When it comes to increased demand due to prosperity or population growth, people can see it coming from a mile away. Countries can prepare for it by increasing food output, etc. In this case though, there's a sudden and unexpected reduction of food production. There's also the sudden surge of interest in biofuels after the rise in oil prices, etc....

I really can't agree with you on this. Hindsight is always perfect, and the same argument could've been used for crude oil, the subprime crisis, etc. etc.

LOL!! I'm not saying rich people don't waste food. But it would be really shallow to assume that this is the only issue at hand.

If you think it's matter of waste, then let me throw in the factor of population decimation in places like Iraq, Afghanistan, Myanmar, North Korea, etc. What about the 2006 Tsunami and numerous earthquakes after that which wiped out so many people in Indonesia and elsewhere?

If we follow your logic, then food prices should drop because of the lower demand, right? Of course not, because demand is not the only factor in the equation. This is probably the third time I'm repeating this... but again, there are many factors when you talk about food prices but to blame it on a single factor - increased demand by China and India would be really unfair to both of them. Hehe...

I'm not saying that other factors have not played a role, rather I'm advocating the fact that the principal reason behind the increase is simply increased demand from more prosperity in China and India, and that we should welcome it.

No, it was a rebuttal to the thing you said earlier. People can only waste so much food. Well, they seem to be able to waste a lot more than even I thought myself.

LOL!! Didn't I just say that earlier (see above)? Again, I will repeat that the government should participate as an EQUAL buyer/seller. You are the one (see above again) who thinks the government should "regulate" the market.

By participating as an ordinary business interest, the government can buy or sell food to help stabilize the price without resorting to "regulating" the market. Of course, their role will not be to make money but to ensure that even in the event there's a glut or run on food, they can help stabilize the market so that there's a smooth transition to a higher or lower price point.

So let me make this clear: You're supporting the following. Government should be a buffer between the global and local market, and subsidise the cost of rice locally after buying rice at global market prices.

And no, I don't support governments as business entities for one reason alone: nearly unlimited cash. But that's a personal choice I guess.

My reason? I don't have ONE reason because I don't trade in vegetables but I can come up with a bunch of reasons, which are more or less related because in life, everything's related one way or another.

Fine, I made a mistake, your reasons then.

Actually, I think the people have been rather slow at blaming BN. Do you really think BN only cheated the people's money in the last 5-10 years? No, it has been happening for a long time now. For certain, the old man, Dr. M has dirty hands. Oh yeah...

So why didn't the people vote Dr. M out? Because Mahathir understood what Nikita Khrushchev meant when he said that "When you are skinning your customers, you should leave some skin on to heal, so that you can skin them again."

Mahathir was smart. He knew that if he did not leave a little for the people, he will eventually get kicked out. Plus, by leaving "some skin" to heal, he can keep skinning "his customers" for many years to come.

Under Badawi's weak rule though, UMNO warlords were able to run rampant looting government coffers for whatever they want. It is during his "administration" or lack thereof that our government has started to insist that companies must predict and pay their taxes in advance.

So if you ask me, I do believe that we have not yet given BN their fair share of blame. They still have much to answer for. Until today, they are still hiding behind the lies and spin generated by the local media.

Just look at what the government has done recently? Asked the village heads to quit en masse and cutting off all tourism-related MOUs with Opposition-controlled states. Are we done blaming BN yet? Hell, no!

But I agree with what you said - the blame should be placed where it deserves to be. In the case of the increased cost of living that bslee mentioned, I have to say that BN should be blamed partially for it. Every country in the world is affected by it but unfortunately, we are totally unprepared for it.

The government's only recourse is to subsidize our food... and that's stupid because they are using OUR money to pull wool over our eyes so that everything looks hunky-dory. With a good government, there will be NO need for subsidies. Food prices can go up or down but there will be proper mechanisms in place to ensure that there won't be a massive change in price like what we are seeing in Thailand, etc.

Nope, you're assuming that (I mean 5-10 years). BN's certainly has had more than its fair share of bailouts in Mahathir's era, Perwaja, Ku Li's Bank Bumi's bailout 20-25 years ago

Obviously, they are making money. That's why farming can pay well, if you do it right. It's just like any other occupation in the world. If you are good at what you do, you will do well.

No, it's not about them stealing cash. It's about them not doing what they are supposed to do - encourage rice cultivation and help the farmers improve their productivity. Instead, BERNAS is out to make a quick buck and the local farmers are their competitors.

I cannot agree on that. I agree that Bernas has failed in their main objective, but I cannot support the assertion that they're competing with the local farmers. If a local farmer, who is uncompetitive, decides that he wants to sell his rice to Bernas at a higher price than Thai rice, I wouldn't support him. If Bernas doesn't buy the rice from such a farmer, I wouldn't blame them either, it's not a matter of competing against them, but it's a matter of making more profits, which Bernas is supposed to do as a private entity.

However, Bernas has failed in their objective to make local farmers more productive and competitive in the global market and I think we both agree on that.

But then again, we're just on different sides of the fence I guess, we both blame Bernas for it, but (I think) you're advocating that Bernas should still support local farmers even if their asking price for their rice is higher than what Thai rice is being sold at in the name of food security. Is that what you're saying? [It goes without saying that Bernas would help that farmer be more competitive on the way, and then he can reduce his prices further until it's competitive with Thai rice, since that's a benchmark we've chosen]

(sorry, my quotes are all about the place)

[peaz]

Whoa... heated and nice discussions between Brian and Adrian
Heh!

Anyways, to be honest, I don't think there's any one model that works well for anyone. It's an ever dynamic economy and the govenment just have to adapt in every way possible to make it work best for it's people.

Yes, corruption and cronyism will always exist. Name me a country which is absolutely 0% clean and I'll buy you a good lunch. Seriously, a non inteferring government simply cannot exist. It's oxymoronic no matter how you look at it.

As for us, if we can afford it since we are so cash rich thanks to our oil, why not implement subsidies and price controls where we can? Or why not just offload the burden of taxes from the people? And mind you, when you take a look at the amount of oil we sell factored by our total population we are actually extremely rich. Unfortunately, many of these oil wells are kept secret and only known to a few select group. Even the oil companies have to keep mum about oil well discoveries. Interesting isn't it how the country is being run today.

My take is this, if Malaysia is doing so well over the past few years, why then am I still feeling the pinch even when I'm beginning to earn a nice salary. I'm not trying to boast about it here but simply jsut making a point. I'm today earning a package that's above the average salary of a manager. yes. let's just say the amount of digits is the same as the number of fingers (thumb included) on your hands.

Yet, even when I want to buy a car costing more than 50K i think more than 10 times. Yes of course my living standards increase and all that crap. But heck, why do I still feel that there's just so many things that I've to pay the government, YET still need to take care of all the darn basics in life. like health care insurance and all those. Aren't the taxes paying for anything at all???

And yet, with all this happening, you just wonder who are those who are buying those ferarris, touregs, cayenes on the road.

[Brian]

Originally Posted by peaz

Whoa... heated and nice discussions between Brian and Adrian
Heh!

Anyways, to be honest, I don't think there's any one model that works well for anyone. It's an ever dynamic economy and the govenment just have to adapt in every way possible to make it work best for it's people.

Yes, corruption and cronyism will always exist. Name me a country which is absolutely 0% clean and I'll buy you a good lunch. Seriously, a non inteferring government simply cannot exist. It's oxymoronic no matter how you look at it.

As for us, if we can afford it since we are so cash rich thanks to our oil, why not implement subsidies and price controls where we can? Or why not just offload the burden of taxes from the people? And mind you, when you take a look at the amount of oil we sell factored by our total population we are actually extremely rich. Unfortunately, many of these oil wells are kept secret and only known to a few select group. Even the oil companies have to keep mum about oil well discoveries. Interesting isn't it how the country is being run today.

My take is this, if Malaysia is doing so well over the past few years, why then am I still feeling the pinch even when I'm beginning to earn a nice salary. I'm not trying to boast about it here but simply jsut making a point. I'm today earning a package that's above the average salary of a manager. yes. let's just say the amount of digits is the same as the number of fingers (thumb included) on your hands.

Yet, even when I want to buy a car costing more than 50K i think more than 10 times. Yes of course my living standards increase and all that crap. But heck, why do I still feel that there's just so many things that I've to pay the government, YET still need to take care of all the darn basics in life. like health care insurance and all those. Aren't the taxes paying for anything at all???

And yet, with all this happening, you just wonder who are those who are buying those ferarris, touregs, cayenes on the road.

I can't peaz, because of the following reason:

Subsidies make us uncompetitive - we are lulled into a false sense of being competitive. Why is this so? Imagine some company X running a factory. It can pay its workers lower wages because they have subsidies lowering their cost of living, and thus gives a false impression of them being competitive. But in the case of oil - this subsidy doesn't last forever, and when it runs out, it'll hurt us very badly.

I'm fine with subsidies, but only if they're temporary, and that they're sustainable. Using oil revenues isn't a sustainable one. Using some form of progressive taxation system is sustainable, which is why I'm a fan of progressive taxation, tax the rich to help the poor.

Subsidies also divert cash that can be used to invest into the economy into things like infrastructure, and also indirectly lead to higher taxes.

I do agree that it will have to lie somewhere in between (governments), but I advocate a smaller one because it means less taxes and relies more on people's free enterprise instead.

We all hate getting taxed, but taxes are relatively low in Malaysia relative to countries which have social healthcare systems

[peaz]

one should read the petronas annual report to understand how rich our country actually is. and how it's been nicely organised so that only the few elite benefits from it.

[peaz]

well, even if it's not via subsidy.. the money should be well spent. NOT to fund some stupid corridors.

[Adrian Wong]

LOL!! I now dread this thread. Not because I don't like discussing this with it. It's pretty cool, really. But it sure takes up a LOT of time!

Plus, it's getting darn confusing because our forums only allows single quotes. Maybe we should allow at least double-quoting....

Anyway... Here goes my take. LOL!!!

Originally Posted by Brian

The regulation i'm referring to is one where the government is only there to ensure a proper market functions, and we have competition. That involves things like breaking up monopolies. They DO NOT participate in the market. I don't see where the semantics are to be honest.

Hmm.. Proper market functions? In a free market system, what role does the government have? None. So you cannot have a truly free market economy if you want to government to "watch" over it. That's a form of interference. That's why I say both what we suggested involves some kind of government intervention. That's what I meant by semantics.

Anyway, there is nothing wrong for governments to compete with businesses on a EQUAL footing. Canada did something similar in the past when the government created their own insurance company. Instead of undercutting the other insurance companies, their competition improved the insurance industry and ensured that Canadians received fair rates for their insurance.

IMHO, free market economy does not preclude the government from participating in it. As long as the said GLC operates independently and on a level playing field with their competitors, what's wrong. It is a free and OPEN market, right?

Originally Posted by Brian

I view it as the market not having anticipated the increase in demand, and the resulting tightness in supplies lead to a very inelastic market, where small events lead to massive increases in price, which is what we've seen with crude oil. The large increase in the price of oil hasn't been pure demand either, it's also a tightness of supply in the market. You may argue that it's another factor in the price of oil, but the tightness of supply is caused by the demand itself.

That's just your POV. The fact of the matter is that the market did anticipate the increase in demand. Heck, market pundits have been predicting increases in fuel and food prices for a long time now. Like I said, you can see this coming from a mile away.

However, while they may have seen it coming for some time now, it takes time to crank things up. You can't plant more rice/wheat/corn immediately even if you wanted to. Neither can you force your cows and pigs to breed more offsprings right away. Like love, it takes time to develop. Hehe...

The trouble is while we have seen this coming... we were also hit by unexpected disasters (as explained earlier). Hence, the sudden shift from a growing problem to a sudden crisis.

Of course! I agree. After all, I have been saying all along that increased demand alone cannot account for the rise in fuel and food prices.

Originally Posted by Brian

We both agree that there's a tight supply now, but I'm wagering that it's fundamentally more demand more than problems in Vietnam or anything else (note, they still managed to produce more rice than last year even with the pest problems).

No need to wager. It's happening right now. Check the news. Food supply shortages everywhere. There are even riots now. It's not like they suddenly developed increased appetite for food. It's just that there's a lack of food on the open market.

Originally Posted by Brian

I give it to you that it gives you an added perspective. But it does not make your view any more valid than mine unless you can back it up with facts about the infrastructure vs China using your place in India or the places you visited.

There's really no need to. Would it change anything if I prove that China is just as much of a capitalist country as India, if not more? Not really, because it has no relevance on the topic at hand - rise in food prices. I think we have more than enough to discuss without going off into another topic.

Originally Posted by Brian

Well, explain this then: for over 50 years, India's been a democracy, has had an English-based education system, and yet it's only really rising right now. The Chinese, only really embraced capitalism in the 80's, and they're certainly ahead of India now. It's a gross simplification, but it's certainly where we are today.

If you can give me a satisfactory answer for that, I'll accept it.

LOL! Let me give you an analogy. China = Singapore. Malaysia = India. I think it's pretty much self-explanatory.

India is really just like us. Loads of resources, many good people. But corruption and bad policy ensured that most of the population remained poor (at the expense of a small super-rich minority) with poor development.

China's like Singapore. They abhor corruption. In China, they even shoot you for corruption. Can't beat that, right? You do not have to be communist to push for good development. If what you suggest is correct, then heck, the USSR should have won the Cold War, no?

Originally Posted by Brian

And no, I'm not implying that China are pure communists, but I'm saying they're not close to free marketeers either. E.g. price controls on the price of fuel, which led to fuel shortages in China.

Huh? Price controls means they do not practice free market? Heck, isn't that what OUR government is doing? We have price controls on all kinds of food items and let's not forget the price control on fuel as well. Does that make us communists?

Many countries control prices on certain critical food items. It's a natural thing to do if they want to ensure stability. Heck, I still remember the Indians protesting and rioting when the price of onions went up. When the government intervened to reduce the price, I don't think that made them communists.

Originally Posted by Brian

While I did mention that they had a legacy of communism and central planning, I did not say that they forced people to farm. They certainly do have their quotas to ensure self sufficiency though. I do admit that I was too ambiguous about it though, and I apologise for that.

China's move to ensure domestic grain supply benefits world, analyst says_English_Xinhua

Honestly, I don't think they actually enforce any kind of quotas. I would love to see some kind of report on that. Haven't read anything like that yet.

But your link... on China's move to ensure domestic grain supply. That's what every food exporting country in the world is doing now, including Vietnam, India, etc. It's self-preservation. Hehe..

Originally Posted by Brian

I don't know if this is the case with Malaysia, but this is certainly not having a free market to incentivise farmers. Not being able to sell at (perhaps higher prices) the global market.

Malaysia? We are not even in the same league!

Don't forget, only countries with EXCESS food to export can afford to cut down on food exports. What food do we export? Heck, we are a net IMPORTER of critical food stuff like rice. We are at the mercy of those countries.

Trust me. The farmers in China are not complaining. These governments only act to restrict export when the prices are too HIGH domestically. That means the farmers are already making a lot of money selling domestically.

Why should the governments let their own citizens suffer even more when these farmers have a national duty to feed their countrymen first. Heck, it's not like they are not making good money from the higher prices.

Originally Posted by Brian

I disagree, see price controls (they set the price at which they buy stuff at). They're still transitioning, or maybe not yet. I personally don't know.

Price controls are everywhere. What do you think is going on in THIS country? The prices of most food items in Malaysia are controlled by the government. Heck, we also control the price of other things like steel, cement, etc. If price control = communism, then we are the world's no. 1 communists, Comrade!

Originally Posted by Brian

I really can't agree with you on this. Hindsight is always perfect, and the same argument could've been used for crude oil, the subprime crisis, etc. etc.

I'm not saying that other factors have not played a role, rather I'm advocating the fact that the principal reason behind the increase is simply increased demand from more prosperity in China and India, and that we should welcome it.

Oh, hindsight is always perfect which is why we can now see that the oil and food crises are not due merely to increased demand. There has been increased demand since China went into a boom so many years ago. The increase did not just start a few months ago. It was there for years.

IMHO, there's no one principle cause. Like accidents, it takes a whole chain of different events and causes to bring us to this particular crisis. It is true when they say it takes two hands to clap.

Originally Posted by Brian

No, it was a rebuttal to the thing you said earlier. People can only waste so much food. Well, they seem to be able to waste a lot more than even I thought myself.

Sure, they can waste food. But what's an extra third (33%)? Even if you throw away as much food as you consume (100%), it still won't explain the huge DECREASE in food supplies globally. Forget about the demand. Just look at the supply side alone and you will see there's a marked drop in supply. Greed or waste cannot explain that.

Originally Posted by Brian

So let me make this clear: You're supporting the following. Government should be a buffer between the global and local market, and subsidise the cost of rice locally after buying rice at global market prices.

Nope. I'm not in favour of subsidies. As mentioned many times already, the government's duty lies in preparing the country for eventualities and that means self-sufficiency in food. In case of emergencies, they can help reduce the effect of global crises on the local market by using food stockpiles as a price/supply buffer.

Originally Posted by Brian

And no, I don't support governments as business entities for one reason alone: nearly unlimited cash. But that's a personal choice I guess.

Unlimited cash? Then you must be assuming they would operate as government agencies. Even so, they would have limited budgets.

No, government-link corporations function just like any other business entities. It's only because our government and judiciary is so corrupt that GLCs are used by politicians to do all sorts of magic tricks.

A properly-functioning GLC should be considered as nothing more than just another business entity. The only difference is the government owns it or has a substantial investment in it.

Originally Posted by Brian

Fine, I made a mistake, your reasons then.

1. Fuel prices go up = higher transportation costs = higher vegetable costs
2. Fuel prices go up = higher food prices = higher labour costs = higher vegetable costs
3. Price of other commodities go up = farmers switch to more lucractive crops = lower supplies of vegetables = higher vegetable prices
4. Higher cost of fertilizer = higher cost of vegetables.
5. Greedy farmers take opportunity to raise prices
6. Poorer harvest = lower supply = higher cost of vegetables

You can go on and on...

Originally Posted by Brian

Nope, you're assuming that (I mean 5-10 years). BN's certainly has had more than its fair share of bailouts in Mahathir's era, Perwaja, Ku Li's Bank Bumi's bailout 20-25 years ago

Oh, of course. Like I said, the Old Man's hands sure are dirty. Naughty, naughty old man.

But even the Old Man did not preside over the BIGGEST bailout in the history of our country - the RM 4.6 billion bail-out of PKFZ.

I wonder why KWSP (EPF) suddenly announced an extraordinarily low interest this year for our retirement funds. Did the government dip into KWSP (OUR retirement funds) to bail out corrupt BN politicians and their cronies? I wonder....

Originally Posted by Brian

I cannot agree on that. I agree that Bernas has failed in their main objective, but I cannot support the assertion that they're competing with the local farmers. If a local farmer, who is uncompetitive, decides that he wants to sell his rice to Bernas at a higher price than Thai rice, I wouldn't support him. If Bernas doesn't buy the rice from such a farmer, I wouldn't blame them either, it's not a matter of competing against them, but it's a matter of making more profits, which Bernas is supposed to do as a private entity.

Hehe.. It really doesn't matter whether you disagree or do not support the assertion because this is what has been going on. No matter how you refuse to believe it, it's not going to disappear.

The point is Bernas has the SOLE rights to import rice. Don't you think it's a kind of a conflict of interest. On one hand, you are supposed to encourage and help farmers to improve their yield and productivity. On the other hand, it's in your best FINANCIAL interest to bring in loads and loads of cheap Thai rice so you can sell for easy profit. No prize for those who can guess what they chose to do.

Originally Posted by Brian

However, Bernas has failed in their objective to make local farmers more productive and competitive in the global market and I think we both agree on that.

But then again, we're just on different sides of the fence I guess, we both blame Bernas for it, but (I think) you're advocating that Bernas should still support local farmers even if their asking price for their rice is higher than what Thai rice is being sold at in the name of food security. Is that what you're saying? [It goes without saying that Bernas would help that farmer be more competitive on the way, and then he can reduce his prices further until it's competitive with Thai rice, since that's a benchmark we've chosen]

Nope. They should never have been given the SOLE right to import rice. Their job should be to improve the productivity of the local farmers so that they can produce rice as cheaply as the Thais. It's all about being COMPETITIVE. If you can be competitive, where's the need for regulation.. or even imports?