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Keeping China fed as inflation surges brings risk for commodity prices

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Higher costs and a shortage of labour threaten China's autumn harvest, which could have a knock-on effect on global food prices
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Bedevilled by high fuel and fertiliser costs, along with a labour crisis driven by Covid-19 restrictions, China risks a smaller autumn harvest that could supercharge demand for commodities just as the world can afford it least.

Global food prices have spiked since Russia’s February invasion of Ukraine, a major world producer of wheat, corn and sunflower oil, driving costs to record highs.

Moscow stands accused of pushing the globe to the brink of catastrophe by blockading Ukrainian ports and seizing commodity stocks, driving up prices and leaving the world’s poorest nations facing hunger.

China is relatively self-reliant, producing more than 95 percent of its needs in rice, wheat and maize.

But relentless Covid disruptions — caused by restrictions on the movement of goods and farm workers — on top of higher fertiliser and fuel costs and issues with access to equipment, threaten the autumn harvest of key crops such as soybean and corn.

Experts caution even a small rise in demand from the world’s most populous nation could drive global commodity costs up sharply.

“The last thing the global market needs right now is for China to become a more active buyer,” said Even Pay, an agriculture analyst with consultancy Trivium China.

Corn prices hit a nine-year high in April, while soybean prices traded near a 10-year high this month.

China is the last major economy to adhere to a zero-Covid policy.

How that manifests itself in the next harvest is uncertain, but Pay said “last-mile logistics” have been complicated by virus restrictions in rural areas afraid of the spread of the disease.

“Villages have been very resistant to letting outsiders in during Covid-control periods,” she added.

If China ends up going to the global market to fill any shortfall, there will be “a big impact” on prices, said Darin Friedrichs, co-founder of agriculture research firm Sitonia Consulting.

– Seeds of doubt –

For now, Beijing is keeping a close eye on the country’s wheat harvest.

At a meeting last month, Premier Li Keqiang said a strong summer harvest with manageable prices depended in part on “unimpeded” access of workers and machines to wheat-growing provinces from eastern Anhui to northern Shanxi.

China has harvested about 80 percent of its winter wheat crop so far, according to state media, although Friedrichs cautioned that prices are 25 percent higher than last year, at about 3,000 yuan ($450) per tonne.

While a decent wheat harvest is good news to world markets, “Covid-related disruptions haven’t gone away”, according to Pay, who added that prices of fertilisers and fuels were riding high.

China has “massively ramped up its wheat, corn, barley purchases” in recent years, from below 20 million tonnes a year around four years ago to some 50 million tonnes now, according to Andrew Whitelaw, an analyst at Thomas Elder Markets.

But global inflation and uncertainty will make it expensive for China to import more.

Already, China has bought newly harvested wheat for its reserves at sky-high prices this month.

The political dimension of feeding China’s vast population has not been lost on Beijing.

President Xi Jinping has said China should make “unrelenting efforts to ensure grain security”, state media reported.

The issue has grown in importance since 2020, when the coronavirus spread worldwide, said Friedrichs.

“There were worries about global disruptions to supply chains, and now we have the global food crisis — that’s redoubled focus on food security,” he said.

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VW faces Brazil hearing over dictatorship-era slavery claims

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A picture shows the Volkswagen logo in a vintage Volkswagen Kombi bus: the German carmaker faces an audience with Brazilian prosecutors over allegations of human-rights violations at a farm it ran during Brazil's military dictatorship
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German carmaker Volkswagen faces an audience with Brazilian prosecutors Tuesday over allegations of human-rights violations at a farm it ran during Brazil’s military dictatorship, including slave labor, rapes and beatings.

Prosecutors have assembled a 90-page dossier they say documents years of atrocities committed by Volkswagen managers and hired guns at a cattle ranch the company owned in the Amazon rainforest basin in the 1970s and 80s.

In the latest attempt to bring justice for abuses committed under Brazil’s 1964-1985 military regime, the federal prosecutor’s office for labor affairs summoned VW representatives to a hearing in Brasilia to answer for evidence of abuses including torture and killings at the property in the northern state of Para, known as Fazenda Vale do Rio Cristalino.

“There were grave and systematic violations of human rights, and Volkswagen is directly responsible,” lead prosecutor Rafael Garcia told AFP.

The audience will be an initial contact “to see if it’s possible to reach a settlement” without opening criminal proceedings, he said.

Volkswagen has declined to comment on specifics of the case, saying it first needs “clarity on all the allegations.”

But the company is “committed to contributing very seriously to the investigations,” a spokeswoman for Volkswagen Brasil told AFP by email.

In 2020, Volkswagen agreed to pay 36 million reais ($6.4 million at the time) in compensation for collaborating with Brazil’s secret police during the dictatorship to identify suspected leftist opponents and union leaders at its local operation, who were then detained and tortured.

– Crusading priest –

That settlement caught the eye of Ricardo Rezende, a Catholic priest who spent years compiling evidence of abuses at Volkswagen’s farm after moving to Para in 1977 and hearing what he says were horrifying stories from victims.

Rezende wondered if the company could also be held to account for that case, and decided to share his files with prosecutors, he told AFP.

“You can’t fix someone suffering torture by paying reparations. The suffering of the women whose sons and husbands went to the farm and never came back — there’s no reparation for that pain,” said the priest, now 70.

“But there could be a symbolic reparation. I think it’s necessary.”

Rezende’s hundreds of pages of testimony and other documents convinced prosecutors to launch a task force, which spent three years assembling evidence — boiled down to the dossier they will now present to VW.

In it, victims tell investigators of being lured to the 70,000-hectare (173,000-acre) farm with false promises of lucrative jobs, then forced to cut down the jungle under grueling conditions for Volkswagen’s cattle ranch, which became the biggest in Para for a time.

Workers were kept in “debt-slavery” by being forced to buy food and supplies from the farm at exorbitant prices, prosecutors said.

Those who tried to escape were beaten, tied to trees and left for days by armed guards who kept violent watch over the workforce, they said.

In one case, three witnesses said gunmen kidnapped a worker’s wife and raped her as punishment after he tried to escape.

“There were extremely grave abuses,” said Rezende, who estimates hundreds and probably thousands of workers were essentially enslaved from 1974 to 1986.

– VW in the jungle? –

What was a German automaker doing raising cattle in the Brazilian Amazon in the first place?

The story is a window on how the military regime saw the Amazon, and helps explain why the world’s biggest rainforest is threatened today.

It was a time when Brazil was urgently pushing to develop the rainforest, which the regime saw as backwards, luring settlers with promised riches and the slogan: “Land without men for men without land.”

The government also lured companies. Volkswagen benefited from tax exemptions and negative-interest loans for cutting down the forest to develop a farm, not to mention close ties with the regime, Rezende said.

“On the one hand, Volkswagen loved the dictatorship. On the other, it was a highly profitable business,” he said.

“It could have 6,000 people working almost for free.”

Authorities say such practices were widespread in the Amazon region, even after the dictatorship.

Holding other companies to account would depend on gathering sufficient evidence, Garcia said.

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US approves first pill for treatment of alopecia

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Alopecia, which is driven by the immune system attacking hair follicles, has recently come to the fore through high profile cases including Hollywood actress Jada Pinkett Smith, pictured here with her husband Will Smith
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The Food and Drug Administration on Monday approved a drug called baricitinib as the first oral tablet for  treating severe alopecia areata, an autoimmune disorder affecting more than 300,000 people in the United States every year.

Alopecia causes either temporary or permanent patchy hair loss that can affect any hair-bearing site of the body, leading to emotional distress. The condition has come to the fore recently through high-profile cases including Hollywood actress Jada Pinkett Smith and congresswoman Ayanna Pressley.

“Access to safe and effective treatment options is crucial for the significant number of Americans affected by severe alopecia,” said FDA official Kendall Marcus in a statement. 

“Today’s approval will help fulfill a significant unmet need for patients with severe alopecia areata.”

Baricitinib, which is made by US pharmaceutical company Eli Lilly and known by the trade name Olumiant, belongs to a class of drugs called Janus kinase inhibitors. It works by interfering with the cellular pathway that leads to inflammation.

Its approval for use against alopecia was based on the results of two randomized, controlled clinical trials involving a total 1,200 adults with severe alopecia.

Each trial split participants into three groups: a placebo group, a group that received a two-milligram dose every day, and a group that received a four-milligram dose every day.

After 36 weeks, almost 40 percent of those on the higher dose grew back 80 percent of their scalp hair, compared to around 23 percent of the lower dose group, and five percent of the placebo group.

Around 45 percent of people in the higher dose group also saw significant eyebrow and eyelash regrowth.

The most common side effects included upper respiratory tract infections, headaches, acne, high cholesterol, and increase of an enzyme called creatinine phosphokinase.

Prior treatments for alopecia included topical or oral drugs, but these have been considered experimental and none was approved.

Baricitinib was previously approved for treatment of rheumatoid arthritis, and during the Covid pandemic its license was extended to the treatment of hospitalized Covid patients.

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Amazon to start delivering by drone in California town

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Amazon plans to start flying some purchases to customers later this year, the e-commerce giant said Monday, announcing drone delivery that will debut in a California town.

Retail rival Walmart already offers drone delivery and in May announced it is dramatically ramping up the service, expanding to six states by year-end with the potential to drop off one million packages annually.

Amazon customers in the Northern California town of Lockeford will be able to sign up for free delivery by “Prime Air” drones, the company said in a post.

“Air-eligible” items ordered at the retailer’s website will be packed into drones that will fly to the delivery addresses, deposit packages outside from safe heights, then fly away, according to Amazon.

Amazon said it has created a sophisticated system to enable its drones to detect and avoid aircraft, people, pets and other obstacles.

“We designed our sense-and-avoid system for two main scenarios: to be safe when in transit, and to be safe when approaching the ground,” the company said.

Feedback from the service in California will be used to expand the drone service.

A variety of companies ranging from new startups to major tech firms such as Google-parent Alphabet are working on autonomous drone delivery.

Alphabet’s drone project Wing completed its first real-world deliveries in 2014 in rural Australia where they successfully transported first-aid supplies, candy bars, dog treats, and water to farmers, according to the company’s website.

Two years after that, Wing drones were used to deliver burritos to students at a university in Virginia.

“The logistics industry is abuzz with all-things drones,” the Amazon team said.

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