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Food and Oil Prices & Political Tamasha

The history of farmers has been tragic from the beginning of organized societies. In Mesopotamia city states like Sumer, Babylon, Ebla etc., the city was defended by its walls by which an invader could be stalemated. Limitations of materiel and space kept the farmers out of this safe perimeter. Agrarian land could not be enclosed, so those who tilled the land stayed out and often became the victims of marauding armies venting their fury or seeking means of sustenance during battle. The farmers who with their food surplus were the source of urban progress and the march of civilization were denied the city's safety and its cultural benefits. Evolving rules of war eventually minimized their suffering as best illustrated in the wars of ancient India and Europe in the age of chivalry.

By the middle of the second millennium of the Christian era in Europe, warfare had become more brutal and systematic. This is why the destitute and ignorant Indian fools who had received military training from the British and French and behaved as traitors to their own nation by enlisting in the invaders' armies, constituted a formidable invincible force, which was utilized or rented out by Clive and Duplaix, first in the south (Arcot) and later in the east (Oudh). Tipu Sultan had European trainers for his army as did Maharaja Ranjit Singh decades later in Punjab. With the invention of the machine gun (Gatling and Maxim), war reached a higher level of brutality. In Sudan, the British suffered less than fifty casualties as opposed to tens of thousands of the followers of the Mahdi, who like modern Indians believed that amulets could ward off evil, bullets and death. Air bombardment escalated killing to a new level and its use on civilians was initiated by France in Damascus (1920s), Britain in Iraq around the same time and Churchill and Roosevelt in Germany and Japan (WW2), Britain in Kenya and Malaysia (50s and 60s), and America in Korea, Southeast Asia, Panama, Iraq, Serbia, Afghanistan, Somalia and again Iraq in 2003. Farmers and civilians suffered the worst casualties.

Throughout the ages little has changed. The Zamindar atrocities on Indian and Pakistani farmers and sharecroppers, the plight of indigo farmers in Champaran due to the shameless greed of British landlords that led to Gandhi's resistance and the farmer suicides currently in Vidarbha span centuries. The corrupt present Indian government abandoned grain procurement to private grain traders including international behemoths like Cargill of America. Similar merciless exploitation led to the French, Russian and Chinese revolutions and even today the life of most Chinese farmers is nasty, short and brutal in a people's republic under communist rule. In America homesteaders (subsistence farmers) led a hellish existence, suffered in the war of independence and the civil war, were exploited by the robber barons who owned the railroads (by charging exorbitant freight rates).

The newest problem created by America is excessive printing of money, debasement of the dollar and the collapse of the financial and housing bubble. Large sloshing dollar funds of hundreds of billions have now landed in unregulated commodity markets exempt from regulation by the US Congress (law passed by bribes from Enron before it went belly up). A drought of the Australian wheat crop led to price of wheat going from under four dollars to over twelve dollars a bushel. America is the only developed country in the world with such an ignorant population and an idiotic government that still uses bushels, pounds, inches, feet , yards, miles as units of measure even after Britain and even India switched to the metric system. The standard lie that capitalist crooks use to justify a futures market is that it helps users and producers to hedge prices.

Wheat contracts on the Chicago Board of Trade are for 5000 bushels. At three dollars a bushel, the contract is worth 15,000 dollars. A farmer who wants to hedge his crop would have to put up about thousand dollars (6% per contract). It would be marked to market daily and he would need to put up an additional margin of fifty dollars per contract for every one cent increase in the price of wheat. American farmers often have farms of 300 acres or more and may produce 50,000 bushels of wheat per farming season. He would need to hedge with ten contracts to cover that. As the price of wheat rose to twelve dollars (by nine hundred cents), he would need to put up 45,000 dollars per contract. Since he hedged with ten contracts, he would need to put up 450,000 dollars. Very few American farmers have that kind of liquid money in the bank. He would therefore be compelled to buy back the contracts he sold at a huge loss, if unable to meet margin calls. After his losses, if the wheat price fell as it did to eight dollars, he would never recover much of his loss when the wheat is harvested and sold. Quite a few US farmers cannot hedge and have stopped doing so, leaving their livelihood at the mercy of speculators and the vagaries of the market.

This is why India stopped trading in grain futures, but it has no meaning because world commodity prices are not set by Indian futures markets but by US and London markets. Our stupid, corrupt and crooked Indian leaders should not have agreed to accepting the lopsided WTO rules and policies of the developed countries and insisted on abolishing their internal agricultural subsidies before agreeing to allow intellectual property rights, finance and insurance free trade and reduced tariff on their exports. It made medicines more costly for Indians just as the Dabhol deal with Enron by the Maharashtra government made electricity more costly.

Indian political leaders will sell their parents, children and spouses for a buck and to retain power. The current price freeze on petrol costing millions of rupees daily to Indian oil companies and refiners who pay a rising oil price while petrol, diesel and kerosene prices are kept fixed and low, will cause huge future budget deficits, higher inflation and eventual bankruptcy. This is the path India and America are headed on. The Congress government in India is not doing it for the benefit of farmers, but to improve their chances of reelection in 2009, which requires that urban voters be kept complacent and not alienated by even higher inflation than the government lies. The US government lowering of interest rates, tax rebates to everyone and bailing out big firms like Bear Stearns is like giving a heroin addict his fix on credit with delayed payment. This is what America did to Pakistan by rescheduling its debt and giving more loans, but Pakistan is once again in financial trouble after seven years.

The same will happen to America and India because of their leaders. What is needed is reducing demand by allowing petrol prices to rise. I haven't seen any farmers driving their cars in their fields in India. Diesel and kerosene may need a different approach. Cooking gas is being rationed by the gas companies. We have seen how fixed rents have created a massive shortage of housing and unrepaired buildings that fall down in the monsoons of if there is even a mild earthquake hundreds of miles away. It is a good idea to address our leaders not Fallane Sahib but Fallane Chor. It should be mandatory Indian Parliament protocol. Newspapers, radio and TV should report that the Finance Minister Chor read the budget and the Prime Minister Chor left to attend another junket abroad and returned without any meaningful achievement.


More by :  Gaurang Bhatt, MD

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