Whose plate is half full?

June 13, 2008 at 2:52 pm | In Economics, Environment | Leave a Comment
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The Financial Times has a lead article on India’s rising inflation. The wholesale price inflation today (June 13th, 2008 ) hit a seven year high of 8.77%. This figure has crossed the anticipated figures by most economists and has got most policy makers tied up in knots over the impact on the economy. The major cause people attribute to the inflation is the rise in crude oil prices and to the rise in food prices. The increase in food prices in India has followed the international trend with around a 30 to 50% increase in the prices of commodities like rice, lentils, vegetables and milk.  

The global food crisis which has been in the media for a while now has prompted many reactions from across the spectrum of observers. Policy makers in the government have gone on to increase price controls on food commodities to control the spiraling food prices leading to greater regulatory architecture coming into the market. Other reactions which have come to the media, mainly because of their comical nature, is the assertion of President Bush that food prices around the world are increasing as Indians are eating more!

One intriguing argument as a result of the increasing food prices, which has been popping up on the internet on many major blogs and news editorials, is the revisiting of the famous argument by Thomas Malthus. Thomas Malthus in his famous essay on the Principle of Population published in 1798 essentially argued that in a world where global population grows geometrically and the food production grows arithmetically, the math indicates towards an eternally damned human population which would in the future face massive food shortages. This argument had been proven wrong over the years after 1798 when the population grew at a geometric rate and food production thanks to improvements in technology also grew so as to make the world self sufficient in the matters of food. The current food shortage, along with the increased media awareness about the global warming (or as it is popularly known, Climate Change) which is also caused, most people theorize due to exponential increase in population, has reopened the debate on Malthus’ argument.

Malthus famously wrote, “The power of population is so superior to the power of the earth to produce subsistence for man that premature death must in some shape or other visit the human race”. Increasing exhaustion of cultivable land was one of the major facts which Malthus laid out to support his arguments. Is fertility of soil and availability of cultivable land one of the main reasons behind the increasing food shortage today? With many other articles talking about the critical population limit which certain economies can sustain mainly due to the access to cultivable land problem also gaining ground, the idea that lack of land could be one of the culprits.

This got me thinking; has the human population really grown to such an extent that there is no more cultivable land available now? A distribution of population around the world definitely does not seem to indicate a ‘lack of land’. A look at the population density map of the world seems to indicate that the population of the world is concentrated in certain regions and the world is vastly ‘empty’ in a majority of the place. Although I know that my idea might seem juvenile and without depth by agriculturists, what is lacking in the world is not the availability of land, but rather a lack of cultivable land. And this according to me is the critical flaw where Thomas Malthus’ famous essay falls short.

 

What was the problem of the age when Malthus wrote his famous essay was the lack accessibility for the famer to the cultivable lands. With the advance of technology has seen this problem increasingly disappear. Accessibility and communication is not a primary constraint in the world today. Similarly, I would like to think that with the increase in technology, if the availability of ‘cultivable land’ can also be made to increase, coupled with the already better accessibility infrastructure, land will not be a primary reason for shortage of food.

Now, I know that there an innumerable number of ‘holes’ that can be poked into this argument, even I can suggest a few. But hey! We optimists are accustomed to seeing a plate full of food! 

‘Green’ Marketing

March 25, 2008 at 6:05 pm | In Branding, Environment | Leave a Comment
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An idea which has come of age is that of ‘Green Marketing’. This consists of the marketing of products which are environmentally friendly. The scope of this includes not only the communication process which needs to be specially focussed on promoting the product as being environmentally friendly, but also the necessary product and process modification so as to actually make the product ‘Green’. Today, awareness about global warming and eco consciousness is at an all time high. With the massive deforestation of the rain forests and the rapidly eroding greenery in our cities and countryside the eco systems of our neighbourhoods are changing for the worse. Under such circumstances, ‘Green Marketing’ is a way for companies to at least partially follow a ‘blue ocean strategy’.

To quote an example, consider the case of electronic component manufacturers in India who are a part of a global supply chain. They are suppliers to various companies in Europe and America, where it is now illegal to have electronic items which have certain levels of hazardous chemicals. The electronic product manufacturers are governed by directives like RoHS which stands for Restriction of use of certain Hazardous Chemicals.  This law which came into effect on 1st July 2006 prohibits any electronic product to be sold in the market which fails to comply with the standards as described in the RoHS directive. In an industry that is dependent on the assembly of components sourced effectively by the diverse supply base, these laws have implications which are far flung.  These and other such laws also offer a unique opportunity for companies to gain competitive advantages over others by being the first to organize the supply chain to be able to cope with the requirements. Many Indian electronic component manufacturers, who previously found themselves in a tough position wrung by all the proverbial five forces described by Michael Porter, in the wake of stiff price competition from Chinese manufacturers, have used this opportunity to find themselves a ‘blue ocean’ to regain their market competence.

‘Green Marketing’ is essentially a way to create a point of differentiation for one’s products. Companies which can successfully brand themselves as a ‘Green’ company and at the same time successfully integrate their supply chains to cope with the requirements of producing a ‘Green’ product can gain a sustainable competitive advantage in the market place of the near future. This will require significant investment in research of both product development and supply chain integration and also in effective communication strategy. An example of this would be the investments made by Toyota Corporation in the hybrid cars division.

Unlike many horizon planning strategies which are followed by companies, where the investments in research for the future may not always be passed on to current customers, the scope and scale of investment required for ‘Green’ products may necessitate such a measure. Successful ‘Green’ marketers will be those who will be able to identify the opportunity costs involved and avoid making the current generation of customers bear the costs for those of the future; although it might be in the interest of the current generation of customers in the long run to do so!  

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