08/29/2012

A Swiss-based firm which could profit from food price rises

Links exist between aviation, drought conditions, biofuels, stock market traders, illegal economic migrants and (perhaps) climate change.


A recent news item reported that the body of an apparent stowaway was found in the landing-gear bay of a British Airways 747 as it arrived at London Heathrow from Cape Town. By all accounts, he would (if he had lived) have been an illegal economic migrant looking for a better life elsewhere?

But from Cape Town, part of a new post-apartheid régime in South Africa: why? Well, long ago I was told that the result of the end of apartheid would be that the blacks would run the politics, the whites would (continue to) run the economy and the leaders (black and white) would make lots of money whilst the poor people would see very little change.

The latter part of this forecast was confirmed by the awful pictures of striking miners of the Lonmin Marikana mine being shot dead by police when they demonstrated. Yes, they were armed (spears and machetes), but their true backwardness was revealed by the fact that they apparently believed that witchdoctors' spells could make them impervious to bullets. Thus, although resource-rich Africa makes money for many people, these miners, often migrant workers from elsewhere in Africa and living far from their family, are still living in poverty and ignorance. Their actions might possibly have an effect on international investment in South Africa, although I personally think that it will be soon forgotten.

So who are the whites who profit? Well, unsurprisingly, they are often of South African descent. Two particularly in the news at the moment, are Ivan Glasenberg (born in Johannesburg) and Mick Davis (born in Port Elisabeth). Glasenberg is CEO of Glencore, part-owner of the Lonmin mine, which has its headquarters in Baar, whilst Mick Davis is CEO of Xstrata, which is based in Zug. These two companies are hoping to merge, thus becoming a new super commodity trading and mining giant which would cause concern to competitors such as BHP Billiton, Rio Tinto and Anglo American. Both companies have ties with Lonmin.

Now let us turn to the food crisis which is resulting from severe drought conditions, the worst since the middle of the last century, in the MidWest arable lands of the USA and also in Russia and the Ukraine. You may or may not believe that Global Warming (sorry, I should have said Climate Change!), in which aviation emissions do play a rôle, is partly or wholly responsible for the current extremes of weather all over the world. However, the end result is that the price of basic food items is rising, a subject of great concern for the G20 nations. This might have terrible effects in countries whose population is poor (though their leaders are often rich!): rioting is not impossible to imagine.
 
There will, however, be affluent people who will profit from the misfortunes of the poor. Already there are credible stories of stock market traders who are pushing up prices simply by betting in the futures market of cereals. However, the big winners could be conglomerates like Glencore (they are no longer just a mining company). An article in the UK paper The Independent, today is headlined as follows :-

We'll make a killing out of food crisis, Glencore trading boss Chris Mahoney boasts

Drought is good for business, says world's largest commodities trading company

Thus, Switzerland will benefit from the taxes which Glencore pays (unsurprisingly, it has carefully chosen the place to put its headquarters) but will suffer some bad publicity when stories like that reported in The Independent appear in print. In other words, it may be not only Swiss banks which will be unpopular in some quarters.

A final remark, in part relative to aviation. The effect of the US grain shortage has been exacerbated by US Federal laws which have required that a certain percentage of grain crops should be converted into biofuels such as ethanol. There have been various publicity articles about tests of the use of biofuels for jet aircraft propulsion.

I would hope that at Geneva airport there is a clear declaration that any biofuels which may be stored there for aviation use should NOT have been produced from crops which could have been used for food.

 
 

 

 

08:06 | Permalink | Comments (0) | |  del.icio.us | | Digg! Digg |  Facebook

The comments are closed.