Category: Economics

Oh no! A global chocolate shortage

Surging consumption of chocolate in Asia is pushing cocoa-bean prices to the highest level in three years as buyers including Barry Callebaut AG expand their search for more supply.

While demand in the region ranked as the world’s lowest per capita in 2013, the market will grow at almost twice the global rate over the next four years, according to researcher Euromonitor International Ltd. Barry Callebaut, based in Zurich and the world’s largest producer of bulk chocolate, has doubled capacity in Asia since 2009 as Cargill Inc. and Archer-Daniels-Midland Co. added bean-processing plants.

Growth in Asian demand has contributed to a rally in cocoa, the key ingredient for chocolate, which climbed to the highest level since August 2011 in New York on July 3. Rising consumption in emerging markets including China and India may spur shortages that extend into the next decade, with the global bean deficit seen reaching 1 million metric tons by 2020, according to Hardman & Co., a London-based research firm.

“In the longer term, the scarcity of quality cocoa is a serious concern for our entire industry,” Barry Callebaut Chief Executive Officer Juergen Steinemann said by e-mail in reply to Bloomberg questions.

A serious concern for chocoholics, too!

I already checked. The climate here in high desert country is not amenable to growing cocoa trees. What will we do?

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The hardest places to live in the United States

Healthy & wealthy or struggling
Click for interactive map at article site

Annie Lowrey writes in the Times Magazine this week about the troubles of Clay County, Ky., which by several measures is the hardest place in America to live.

The Upshot came to this conclusion by looking at six data points for each county in the United States: education (percentage of residents with at least a bachelor’s degree), median household income, unemployment rate, disability rate, life expectancy and obesity. We then averaged each county’s relative rank in these categories to create an overall ranking…

We used disability — the percentage of the population collecting federal disability benefits but not also collecting Social Security retirement benefits — as a proxy for the number of working-age people who don’t have jobs but are not counted as unemployed. Appalachian Kentucky scores especially badly on this count; in four counties in the region, more than 10 percent of the total population is on disability, a phenomenon seen nowhere else except nearby McDowell County, W.Va.

Remove disability from the equation, though, and eastern Kentucky would still fare badly in the overall rankings. The same is true for most of the other six factors.

The exception is education. If you exclude educational attainment, or lack of it, in measuring disadvantage, five counties in Mississippi and one in Louisiana rank lower than anywhere in Kentucky. This suggests that while more people in the lower Mississippi River basin have a college degree than do their counterparts in Appalachian Kentucky, that education hasn’t improved other aspects of their well-being

At the other end of the scale, the different variations on our formula consistently yielded the same result. Six of the top 10 counties in the United States are in the suburbs of Washington…but the top ranking of all goes to Los Alamos County, N.M., home of Los Alamos National Laboratory, which does much of the scientific work underpinning the U.S. nuclear arsenal. The lab directly employs one out of every five county residents and has a budget of $2.1 billion; only a fraction of that is spent within the county, but that’s still an enormous economic engine for a county of just 18,000 people.

RTFA for details and differences. Poisonally, I think including Los Alamos is an anomaly. All it proves is the American way to achieve the highest per capita income is through a subsidy dedicated to death and destruction.

The broader implication of this study is that the end result of the ideology and bigotries of the Confederacy is poverty, ignorance and ill health. As expected.

BRICS nations found bank to rival Western-dominated World Bank and IMF

The so-called BRICS countries agreed to form an international development bank with aspirations to challenge the dominance of the World Bank and the International Monetary Fund.

Leaders of Brazil, Russia, India, China and South Africa said Tuesday that the New Development Bank will start with $50 billion in capital and $100 billion as a currency reserve fund for liquidity crises…

Still, the BRICS bank, which could add more member nations, represents a bid to expand the influence of the BRICS emerging markets and act as a counterbalance to institutions run by the U.S. and other developed nations…

As developing countries began playing a larger role in the world economy, their leaders repeatedly complained that they have not been given correspondingly larger voices in international financial institutions such as the World Bank and the IMF, both based in Washington. The U.S. typically appoints the World Bank president, and European countries appoint the IMF chief.

“International governance structures designed within a different power configuration show increasingly evident signs of losing legitimacy and effectiveness,” said the official statement signed by the BRICS leaders, who met in Fortaleza, Brazil, on Tuesday. “We believe the BRICS are an important force for incremental change and reform of current institutions toward more representative and equitable governance.”

Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Chinese President Xi Jinping and South African President Jacob Zuma hammered out some of the final details before signing the agreement Tuesday.

Among the terms are that the bank will be in Shanghai, its first president will be from India, and the first chair of the board of directors will be from Brazil…

Analysts expect that other countries – like Indonesia, Mexico or Turkey – will join the bank over time. Certainly, they and their neighbors have no shortage of conflicts with restrictions important to the fiscal bears directing the IMF or the World Bank.

I doubt anyone expects either of the banks under the thumb of the US [and to a lesser extent, the EU] to modernize, to actively support the developing nations in any goal beyond being a source of cheap labor, raw materials, for Western corporations.

US court overturns Obama’s decision that wind farm is a security risk

wind-farms-US

A US Federal Court has overturned a ruling backing President Barack Obama’s decision to block a Chinese-owned company’s from building four 10MW projects in Oregon.

The US Court of Appeal for the District of Columbia reversed the decision made in October by the Federal District Court, which said Obama followed correct procedure in refusing Ralls Co. permission to build the Oregon projects and forcing the company to sell them.

Ralls Co., which is owned by Chinese firm Sany Electric, sued the US government in 2012 after Obama’s decision. It was the first time since 1990 a US president blocked a foreign business deal.

The president ruled, in 2012, the location of the four projects near the Naval Weapons Systems Training Facility in the US northwest posed a threat to national security

Now, the Federal Court of Appeals has backed Ralls Corp and ordered the company be provided with the evidence the President used to block the application.

The lizard brains in Washington were afraid that airspace used for training naval aviators might somehow be compromised by wind generators producing carbon-free electricity.

Will our nation ever weary of hypocrites and paranoids in charge of our destiny? Populists on the Left and Right wail and whine about foreign investment in the United States as an appropriate alternative to American corporations offshoring jobs whenever and wherever they can save a couple of pennies on the dollar. But, when foreign investors happen to be the wrong political color, when folks roll ashore carrying dollars from the profits they made from your friendly neighborhood capitalist – the Cold War is somehow more appealing to the blivets sitting in air-conditioned DC offices. And, yes, there are other wind farms in the same area also operated by foreigners: one Danish company and another German.

There aren’t a whole boatload of elected officials dedicated to helping us out. Cripes, we can’t even get the leadpants brigade in Congress to ante up the geedus to repair our roads and bridges. But, we’re supposed to trust their history of dedication to job security when they disapprove of clean air from a project owned by the “wrong kind” of furriner.

Germany 1 – 0 Argentina

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Mario Goetze scores the winning goal, 111th minute, 2nd of double overtime

I’m exhausted. The end of one of the best World Cups I’ve watched since [I'd say] 1982. Plenty of real sports columnists, proper football fans will write pages of stuff I’ll appreciate as much as you may.

Let me congratulate the German team, their coach, the national coaching scheme that brought them to this victory.

Political animal I am, let me note in passing a completely unremarkable moment in the stands photographed at the beginning of the match. Vladimir Putin sits next to Sep Blatter, Dilma Rousseff next to Angela Merkel. With the exception of Blatter all leaders in their own nations, all preparing for the BRICS Summit which starts tomorrow morning in Brazil.

The agenda ranges from trade to the establishment of a $100 billion commercial bank for the BRICS nations. Xi Jinping will probably kick in the lion’s share from China.

The folks in the photo below realize they all have something to gain in sorting economic and political futures together. Most educated adults in the world outside the United States are aware of the same. Our government, our nation continues down the primrose path of a dying imperial nation, a standard we took up from the Brits after World War 2. Our nation, our people, the TweedleDee and TweedleDumb parties that represent our wishes, our “style”, haven’t any more clue about what’s going on in this crowd than Fox & Friends or some Tea Party candidate in Texas. Football, economics or foreign policy.

The folks in the photo – know that.

Job creation faster in states raising the minimum wage

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New Jersey arrived at the bottom after Christie vetoed the minimum wage increase

The experience of the 13 states that increased their minimum wage on January 1st of this year might provide some guidance for what to expect here in Washington, DC when the city-wide minimum wage increases to $9.50 on July 1.

At the beginning of 2014, 13 states increased their minimum wage. Of these 13 states, four passed legislation raising their minimum wage (Connecticut, New Jersey, New York, and Rhode Island). In the other nine, their minimum wage automatically increased in line with inflation at the beginning of the year (Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont, and Washington state).

As CEPR noted in March and April posts, economists at Goldman Sachs conducted a simple evaluation of the impact of these state minimum-wage increases. GS compared the employment change between December and January in the 13 states where the minimum wage increased with the changes in the remainder of the states. The GS analysis found that the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.

When we updated the GS analysis using additional employment data from the BLS, we saw the same pattern: employment growth was higher in states where the minimum wage went up. While this kind of simple exercise can’t establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases.

In this post, we can now bring these figures up to date with the data from April and May.

Reality has always intervened between conservative ideology and the day-to-day life of people who actually work for a living. All the crappola from Republicans about trickle-down economy, minimum wage, truly democratic elections, third-parties, resolves as turds on the bottom of history’s shoes. None of these inspires truth-telling or informed re-evaluation by Republicans or Blue Dog Democrats.

The consistency of wrong-headed politicos is another resolution of the inevitable political question – on behalf of stupidity rather than ignorance.

Think United States has the world’s best colleges — Wrong!

Americans have a split vision of education. Conventional wisdom has long held that our K-12 schools are mediocre or worse, while our colleges and universities are world class. While policy wonks hotly debate K-12 reform ideas like vouchers and the Common Core state standards, higher education is largely left to its own devices. Many families are worried about how to get into and pay for increasingly expensive colleges. But the stellar quality of those institutions is assumed.

Yet a recent multinational study of adult literacy and numeracy skills suggests that this view is wrong. America’s schools and colleges are actually far more alike than people believe — and not in a good way. The nation’s deep education problems, the data suggest, don’t magically disappear once students disappear behind ivy-covered walls.

The standard negative view of American K-12 schools has been highly influenced by international comparisons. The Organization for Economic Cooperation and Development, for example, periodically administers an exam called PISA to 15-year-olds in 69 countries. While results vary somewhat depending on the subject and grade level, America never looks very good. The same is true of other international tests. In PISA’s math test, the United States battles it out for last place among developed countries, along with Hungary and Lithuania.

America’s perceived international dominance of higher education, by contrast, rests largely on global rankings of top universities. According to a recent ranking by the London-based Times Higher Education, 18 of the world’s top 25 universities are American. Similarly, the Academic Ranking of World Universities, published annually by Shanghai Jiao Tong University, gives us 19 of 25.

But there is a problem with this way of thinking. When President Obama has said, “We have the best universities,” he has not meant: “Our universities are, on average, the best” — even though that’s what many people hear. He means, “Of the best universities, most are ours.” The distinction is important…

The fair way to compare the two systems, to each other and to systems in other countries, would be to conduct something like a PISA for higher education. That had never been done until late 2013, when the OECD published exactly such a study…Piaac…

Like PISA, Piaac tests people’s literacy and math skills. Because the test takers were adults, they were asked to use those skills in real-world contexts. They might, for example, be asked to read a news article and an email, each describing a different innovative method of improving drinking water quality in Africa, and identify the sentence in each document that describes a criticism common to both inventions. The test also included a measure of “problem-solving in technology-rich environments,” reflecting the nature of modern work.

As with the measures of K-12 education, the United States battles it out for last place, this time with Italy and Spain. Countries that traditionally trounce America on the PISA test of 15-year-olds, such as Japan and Finland, also have much higher levels of proficiency and skill among adults…

This reality should worry anyone who believes — as many economists do — that America’s long-term prosperity rests in substantial part on its store of human capital. The relatively high pay of American workers will start to erode as more jobs are exposed to harsh competition in global labor markets. It will be increasingly dangerous to believe that only our K-12 schools have serious problems.

The demand for H1B visas for degreed foreign nationals is not based solely on a lower cost of employment. You’re kidding yourself if you believe that. There were 4.5 million job openings in the United States at the beginning of June. It ain’t because all the skilled, well-educated professionals are driving tractors in Kansas and don’t want to move to Silicon Valley. Mostly, it’s because we haven’t folks trained and educationally equipped for those jobs.

LEDs to revolutionize hi-tech greenhouse farming

It won’t come as a surprise to discover that consumers all over the developed world are increasingly demanding seasonal vegetables all year round, even when the local climate simply doesn’t allow that kind of growth. Particularly sought-after are tomatoes, cucumbers, and leaf vegetables. Which is why greenhouse farming has become a major factor in the food supply of the developed world.

Consequently, the number of commercial greenhouses and the area they occupy is rocketing. In the Netherlands, for example, greenhouses occupy around 0.25 percent of the land area of the entire country. And the Netherlands isn’t even the largest producer of greenhouse vegetables in Europe. That position is held by Spain. And the largest producer of greenhouse vegetables in the world is now China…

So an important question is how to minimize the energy it takes to grow these crops. One obvious answer is to convert greenhouses from the traditional incandescent lighting, usually high pressure sodium lamps, to more energy-efficient LEDs.

That might seem like an economic no-brainer but the industry has been slow to make this change because of the high initial cost of LEDs. The question that farmers have pondered over is whether they will ever recoup the upfront cost of a brand-new system of lighting.

Today, they get an answer thanks to the work of Devesh Singh and pals at the Hannover Centre for Optical Technologies at the University of Hannover in Germany. These guys have compared the life-cycle costs of traditional high pressure sodium lamps against those of LEDs for greenhouse lighting.

And they say the advantages are clear. They calculate that the cumulative cost of high pressure sodium lamps surpasses that of LEDs after just seven years and that after 16 years the cumulative cost of high pressure sodium lamps is more than double the equivalent cost of LEDs.

It’s not hard to see where this saving comes from. Although high pressure sodium lamps are individually cheaper than LEDs, they have to be changed every year compared to every 19 years for LEDs. And, of course, LEDs use considerably less electricity, wasting little as heat.

But the most interesting part of Singh and co’s analysis is in the potential of LEDs to change the way that vegetables are grown. High pressure sodium lamps emit light across the entire visible part of the spectrum and well into the infrared where much energy is lost as heat. By contrast, LEDs can be adjusted to emit light in very specific parts of the spectrum.

Plant physiologists have long known that chlorophyll absorbs mainly in the blue, green and red parts of the spectrum but absorbs a little in the orange and yellow. So it makes sense to produce light only in these parts of the spectrum. That’s easy with LEDs, of course, but impossible with sodium lamps.

The strategy seems clear: convert to LED lighting as quickly as possible. Conversion will pay for itself in a few years and the advantages influencing yields and the quality of output start with flipping a light switch – and taking the resulting veggies to market.

RTFA for a few more ways in which crop quality is improved – while saving on the cost of production.

Climate change can ruin your beer

Water is beer’s primary ingredient, and brewers are worried about having enough.

In 2011, it took brewing giant Anheuser-Busch Inbev 3.5 barrels of water to produce 1 barrel of beer. Due to concerns over drought and shrinking water supplies, the world’s largest brewer set a goal to drop that number to 3.25 barrels by 2012. It met that goal, and this week, Pete Kraemer, the company’s vice president for supply said that they had shrunk that number down to 3.15 barrels, with plans to drop it still further. For context, their plant in Houston alone produces 12 million barrels of beer each year…

Most of the water used to make beer does not make it into beer bottles — it ends up as wastewater, which in turn requires energy to treat. Matt Silver was a NASA researcher who decided to use his knowledge of life-support systems in space to create a water treatment system that turns industrial wastewater into electricity. The water that comes out of a brewery, for example, contains too much in the way of organic compounds to be dumped down the drain — but those compounds can feed microbes that turn it into methane, which can be used to heat and power a factory. His company, Cambrian Innovations, received seed money from the EPA, NASA, and the Pentagon and has been selling systems that do this to breweries like Lagunitas in drought-parched California…

Large brewers are also concerned about barley, the second ingredient of beer.

In recent years, heavy rains in Australia and drought in England have damaged barely crops. That pattern of heavier downpours and drier droughts is likely to accelerate as greenhouse gases trap heat and warm the planet, according to the National Climate Assessment. Anheuser-Busch Inbev receives a lot of their barley from Idaho. Howard Neibling, a professor in the University of Idaho’s Department of Biological and Agricultural Engineering, told the Houston Chronicle that farmers see less water coming as snowpacks decline, and have tried to become more efficient with their water usage.

The third ingredient of beer is hops, which is also facing pressures from a warming world.

A study from 2009 suggested that the quality of Saaz hops from the Czech Republic has been falling since 1954 due to warmer temperatures. This is true for hops-growing regions across Europe. “If you drink beer now, the issue of climate change is impacting you right now,” Colorado’s New Belgium Brewing Company sustainability director Jenn Orgolini said in 2011. “Craft brewers — the emphasis there is on craft. We make something, and it’s a deeply agricultural product.”

Beyond adapting to the impacts of climate change, however, some breweries are directly trying to lower their carbon emissions that help fuel climate change. Many are finding it’s also saving them money…

New Belgium Brewing Company last year was recognized by the U.S. Zero Waste Business Council for putting in place systems that allow it to divert 99.8 percent of its waste from the landfill.

More examples in the article. And these are examples that can be repeated in industry after industry. Maybe it takes federal and local pressure to encourage corporate managers. Maybe it takes incentives. Either road, it’s our lives ultimately affected by turning our industries Green.

Thanks, Mike

Who actually earns the minimum wage?

Minimum-wage increases could appear on the ballot in as many as 34 states this year. President Obama has also proposed increasing the federal minimum wage to $10.10, from $7.25. Who makes the minimum wage, and who would be affected by any of the proposed increases..?

Minimum-wage workers are older than they used to be. Their average age is 35, and 88 percent are at least 20 years old. Half are older than 30, and about a third are at least 40.

These patterns are somewhat new. In 1979, 27 percent of low-wage workers (those making $10.10 per hour or less in today’s dollars) were teenagers, compared with 12 percent in 2013…

They’re split fairly evenly between full-timers and part-timers. Most — 54 percent — work full-time schedules (at least 35 hours per week), and another 32 percent work at least half time (20-34 hours per week).

Many have kids. About one-quarter (27 percent) of these low-wage workers are parents, compared with 34 percent of all workers. In all, 19 percent of children in the United States have a parent who would benefit from the increase…

A minimum-wage increase does much more to help low- and moderate-income households than any other groups. Households that make less than $20,000 receive 5 percent of the nation’s total earnings, for instance — but would receive 26 percent of the benefit from the proposed minimum-wage increase.

Most are women. Women make up 48 percent of the work force yet 55 percent of the would-be beneficiaries of the increase in the minimum wage.

Most are white, but minorities are overrepresented. Hispanic workers account for 16 percent of the work force but 24 percent of those who would be affected by the wage increase. For African-Americans, the comparable shares are 11 percent of the work force and 15 percent of those who would gain from the increase.

They’ve got some schooling, though less than other workers. Of those who would be affected by the increase, 78 percent have at least finished high school, about one-third have some college under their belts, and about 10 percent have graduated from college. By comparison, 91 percent of the total work force has at least graduated from high school, and 34 percent have completed college.

As with the population as a whole, low-wage workers are more educated than in the past. In the late 1960s, less than half had finished high school and only 17 percent had attended any college at all.

Their earnings are a big part of their family budgets. The average worker in this group brings home half of his or her household’s earnings; 19 percent of those who would get the raise are sole earners. Parents who would benefit from the increase bring home an even larger share of their families’ earnings: 60 percent.

They’re in every state, but are overrepresented in the South. Because most of the states that have raised their minimums above the federal level are outside the South, a national increase would have more bite there. Workers in Southern states make up 17 percent of the nation’s work force but 21 percent of minimum-wage beneficiaries; workers in Northern states make up about the same share of the work force but just 16 percent of those who benefit from the proposed increase.

While I tend to think of our elected officials as fitting snugly into the ignoranus class – especially regarding science, sophistication and world view – no doubt they know the real numbers even when they’re preaching populist gospel in a calculated soundbite. That’s a complex way of saying – the next time you hear a Tea Party senator or Confederate congressman spouting off that minimum wage is only for teenagers flipping burgers, he’s lying.