South Asia Investor Review

World raw sugar futures hit a 28-year high of 23.52 cents a pound last week as the fears of a bad sugarcane harvest grew stronger. The key background factor is the continuing scarce supply scenario in the global market because of weather factors, particularly in India, the second largest producer of sugarcane, according to the Wall Street Journal . While India is dealing with too little monsoon rain, the largest sugar producer Brazil is being hurt by too much rain. At 4.89 million tons of annual sugar production, Pakistan is the tenth largest sugar producer in the world, and yet it has to import sugar, exposing it to the effects of sugar shortages and rising prices in the world. Pakistanis consume over 25 Kg of sugar per person versus India's 20Kg. Sugar cost Rs 25 per Kg (30 US cents) at the start of 2009 and now costs more than Rs 50, says independent economic analyst A.B. Shahid. This doubling of the price is likely to further enrich the large number of sugar producing politic...

As South Asians, Americans and the rest of the world suffer the impact of doubling of the food and fuel prices in about a year, there is a strong desire around the world to understand and address the underlying causes driving this phenomenon. While conspiracy theories abound, the more serious reasons being explored include imbalances between supply and demand and market speculation by large financial players. Meanwhile, the people continue to suffer in countries such as Pakistan and India where the poor spend as much as 66% of their income on food and fuel. Increasing demand from the fast growing economies of the BRIC countries is usually acknowledged as a factor. Simultaneously, supply jitters have been caused by "peak" oil theories bandied about Saudi Arabia and crop failures in traditional breadbaskets of the world. In addition, the US and Japan have become the largest hoarders of oil. The Strategic US Petroleum Reserve (SPR) is an emergency petroleum store maintained by t...

Richard Spinks, a 41-year-old British entrepreneur, is going door-to-door, leasing small plots of land from hundreds of thousands of poor farmers in western Ukraine. His company, Landkom International PLC, has planted wheat, barley and rapeseed (aka Canola) on a combined 25,000 acres. Landkom expects to reap its first big harvest this fall, according to the Wall Street Journal. The Wall Street Journal believes that with the world food crisis becoming acute, entrepreneurs see opportunities to tackle it and make big money. Such efforts could give a much-needed boost to feed the growing population of the world. For years, big agribusiness companies have used new seed and fertilizer varieties to push yields higher. But as technology gains have slowed, the search for additional arable land has intensified. That's created an opening for entrepreneurs with visions of re-collectivizing the land in former communist countries and boosting production. The total combined arable land in Russia...

While the term "energy security" has been in vogue for many years, the term "food security" seems to be competing with it for an equal or higher ranking on the world agenda. Food Security is particularly high on the list for countries such as China with the world's largest population to feed and the Middle East nations such as Saudi Arabia and Libya who depend on imported food. So what are these countries doing? They are acquiring farmland in the nations considered world's breadbaskets. Countries in Africa, Latin America, and Eastern Europe who have plenty of farmland but not a lot of money. While these efforts will help increase food production, a downside of an aggressive policy for more farmland is that it will accelerate deforestation and hurt the environment. The Chinese agriculture ministry has drafted a proposal to support the acquisition of farmland, especially in Africa and South America, to help guarantee China's food security, the Financial Ti...