‘You are confusing two concepts: answering the questions and formulating them correctly. Only the latter is required of an author.’ Chekhov


A message for Halloween: let us not listen to the witches that tell us to walk into an age of scarcity and perhaps even into the next dying out by destroying the strategic natural resources our earth has been endowed with: air, food, water and energy sources which are intricately woven to form our environment from which we derive our basic needs.

Instead, let us resuscitate the voices of the fairies that were left drifting while we were only concerned with prices and that are telling us we need to avoid an impending disaster. They are telling us there is a problem and that a solution needs to be found as quickly as possible. So does the United Nations Environment Program which states in a recent report that if the right systems are implemented as of today, agriculture could feed 9 billion people AND become largely carbon neutral.

The alternative would satisfy the witches: the inability to produce sufficient food would lead to mass migrations, famines of an unprecedented scale and global social movements as prices skyrocket to unprecedented levels and the poor suffer even more.

The agro-industrial model, built over the last half-century, which sees the environment as a machine from which products must be extracted from unlimited resources with the help of technology; and the market as a global free-for-all arena, driven by price rather than quality – so as to reduce the percentage dedicated to food from our disposable income – is unable to sustainably feed a growing human population. We now consume more food than we produce, thus depleting stocks.

We need to rethink not only agricultural production but also the policies of retailers – who have driven the prices down to levels at which farmers can no longer concentrate on quality – and the expectations of consumers.

The very first step in any decision making process is becoming conscious of the problem and therefore of the need of a solution and this seems to have finally happened.

For a humanist, the alternative model to ‘us or the planet’ is one that sees humans as a component of a broad biological system – a complex dynamic model that links man and the earth’s resources.

Concrete steps to apply this model include stopping deforestation, in particular in tropical areas, as these prime biotopes are essential cogwheels in the water cycle and in reducing atmospheric carbon. Fertilizer addition to the soil needs to be reduced as it contaminates water tables and rivers. Methane release from animal manure, cattle in particular, also requires a substantial reduction.  

Land usage (including not only pasture but also land devoted to grain farming) to produce beef is colossal. Convincing consumers to eat other types of meat or, on a more technological vein, producing meat in the lab, would contribute to preserving our environment.

Investments in agroecology would represent a big step forard in solving the food issue as well as allowing a satisfactory management of the three other resources. These investments can only be made by governments as major food companies are not interested in systems that offer a lower productivity per hectare. Investments must include storage facilities to enable farmers to store product rather than selling at harvest when prices are lowest. Investments must also be made in educating farmers to use these techniques and laws must also allow small farmers ownership of the land.

Indeed, agroecology, by relying less on external outputs, offers the advantage of breaking the reliance of agriculture on energy which is required for fertilizers, pesticides and to drive agricultural machinery. Pests are controlled by a variety of methods, such as insect repellent plants or animals such as fish in the case of paddy rice.

Prioritizing local production, as against global supply chains, also reduces the energy required to process food and transport it over long distances. This will not reduce the need for infrastructure to avoid produce spoilage which is a major source of waste in developing countries.

Introducing such methods would cease making the small farmer ‘the global epicenter of extreme poverty’ as he is described in the Millennium Project.

The reduction of food wastage should also become a matter of interest to retailers and consumers – statistics show that up to 30 to 50% of food products are thrown away. A pick up and recycling system in France, in particular to use this wastage as an energy source, has been shown to be profitable.

Water scarcity, already a fact in many countries, and variability in rainfall (and let us not forget that 80% of crop-land uses rainfall as its water source) becomes less of a problem with new forms of agriculture, which includes better rain water harvesting, particularly if new varietals are developed which require less water. Small infrastructure building is essential to enable access of water for the poor living in arid areas.

Yields, and therefore farmer income is increased.

New desalination technology, using substantially lower amounts of energy, will enable countries to regulate water availability in periods of low rainfall.

Our planet has a unique atmosphere that allows life and regulates the climate. An increase in the content of CO2, as is forecast from developing countries, would induce major changes in the earth’s ecological and geological system. Power generation is a major contributor to this state of affairs.

We discussed above the importance of tropical forests as carbon sinks. On the supply side, agriculture is a major contributor of climate change as manure releases substantial quantities of methane.

Coal usage in OECD countries should be gradually replaced by natural gas as CO2 emissions are heavily taxed. This is unlikely be the case in the rest of the world, and in China in particular.

Transport also has a major impact as it consumes sizable quantities of energy essentially in the form of gasoline. While the number of vehicles is expected to increase sharply, particularly in Asia, more efficient engines and alternative energy sources, particularly in cars developed and sold in America, Europe and Japan, should contribute to slow the expansion of oil consumption. ‘Smart’ vehicles and roads could reduce consumption by up to 40%.

As the world’s energy consumption increases, alternatives to oil will inevitably have to be used particularly as reduced availability of ‘black gold’ will drive prices upwards – whether peak oil is due to dwindling reserves or to the enormous amounts of capital required to locate and develop new deposits, oil production is set to fall. Reduced energy consumption would contribute to cleaner air by reducing the amount of pollutants released.

Technology will be a major factor determining the choice of the substitute, whether it is by cleaning coal, developing advanced materials for solar energy or inventing groundbreaking technologies. Developing countries may well have considerable difficulties to access these new sources and remain contributors to atmospheric pollution and global warming.

Greenhouse gas emissions could also be reduced if meat was grown in the laboratory as experiments under way appear to make it a clear possibility.

For such programs to become reality, retailers must lend a hand by accepting products with a greater variability. Standardization is difficult, if not impossible, to achieve with sustainable agriculture.

Higher prices of oil would undoubtedly assist in making this change in the agricultural paradigm. Such price increases could be a result of conflicts in producing countries – such as has recently been the case in Libya – or of the ability of China and the US to each secure captive production sources leading other buyers to pay premium prices.

Major price increases in oil would lead once more to the transfer of wealth from consumers to producers, with the poorer countries, particularly in Africa, suffering most.  Turbulence in the currency market, particularly a weak US dollar, has negative long-term repercussions on oil availability and therefore leads to higher prices. A concerted action by Central Bankers would help stabilize currencies – perhaps with the introduction of a new global currency or the return to an indexation on gold.

The doorbell has just rung – children from the neighborhood were treat or tricking me. Having run out of sweets I offered them a ten dollar greenback which they turned down. Just like they turned down a 10 Euro bill. They asked for a gold coin, or a barrel of oil, but I did not have one. I am lucky to live in Switzerland and was able to give them a 10 franc note. They took it – no trick for me.

I hope the same applies to all those of us who live on this planet. Seven billion at the latest count.


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If China’s economic growth was essentially fostered by a large, and largely young, population, the demographic shift we are witnessing is a harbinger of more difficult times.

In the next ten years, 20% of the population will be over 60 years old and the number of the 20-24 years old will decrease by half.

Economic growth should stall unless the country can extend the retirement age now at 56, mobilize its rural workers to work in factories, for instance by inducing corporations to move their plants inland, and introduce productivity-boosting technology rather than relying on cheap manpower.

Unless these measures are taken, the Chinese economy will see its growth stagnate. Could this lead to social unrest?


Alors que la croissance économique de la Chine a été essentiellement alimentée par une population importante et jeune, les changements démographiques auxquels on assiste font entrevoir des périodes plus difficiles.

Dans dix ans, 20% de la population avait plus de 60 ans et le nombre des jeunes de 20-24 ans aura diminué de moitié.

La croissance économique devrait prendre un coup d’arrêt à moins que le pays ne puisse reculer l’âge de la retraite qui est aujourd’hui de 56 ans, mobiliser la main-d’œuvre rurale afin qu’elle travaille dans les usines, par exemple en encourageant les entreprises à délocaliser leurs usines vers l’intérieur du pays, et introduire des technologies permettant d’améliorer la productivité plutôt que de s’appuyer sur une main-d’œuvre bon marché.

A moins que de telles mesures soient prises, la croissance de l’économie chinoise stagnera. Cela pourrait-il conduire à des mouvements sociaux ?


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Demographic growth, increased needs of both agriculture and industry are putting increased pressure on water resources in Asia where water variability and scarcity have always been important. Importantly, the issue concerns three of the nuclear powers of the continent: China, India and Pakistan. Indeed, the big river systems of the Indus and of the Ganges-Brahmaputra-Meghna flowing into India and, for the former into Pakistan, originate in the Himalayas and the Tibetan plateau.

It is important that these shared resources create a positive interdependence leading to a good management rather than rivalry for access.

Hydrology projects and water diversion by China and Nepal are a major cause of worry by India.

The net result is that, in a number of Asian countries, the supply chain of a variety of products, not least of which those of the food industry, will increasingly be threatened and will lead to higher prices and even total disruption.

If water availability is not better managed, countries that will have better access to water will dominate the food industry and Asia will become fully dependent on imports.


La croissance démographique, les besoins sans cesse croissants de l’agriculture et de l’industrie, sont des facteurs importants sur les ressources en eau du continent asiatique, où la disponibilité des ressources hydrauliques a toujours été variable. Il est important de noter que le problème de la gestion des ressources hydrauliques concerne trois puissances nucléaires : la Chine, l’Inde et le Pakistan. En effet, les grands bassins fluviaux que sont l’Indus et le Ganges-Brahmaputra-Meghan coulent en Inde et, pour ce qui concerne le premier de ces fleuves, au Pakistan, mais on leur origine dans la chaîne de l’Hymalaya et dans le plateau tibétain.

Il est important que le partage de ces ressources soit le fruit d’une interdépendance positive conduisant à une bonne gestion plutôt qu’à une rivalité pour accès à ces réserves.

Les projets hydrologiques et la diversion des ressources aquatiques par la Chine et le Népal sont une cause importante d’inquiétude de la part de l’Inde.

Le résultat final est que, dans un nombre de pays asiatiques, la fourniture d’une variété de produits, en particulier de l’industrie agro-alimentaire, sera de plus en plus menacée, et conduira à une hausse des prix, voir à des pénuries.

Si les ressources hydrauliques ne sont pas mieux gérés, les pays ayant un accès plus favorable à des ressources hydrauliques domineront l’industrie agro-

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 Product complexity, specialization and the lowering of duties and transport costs – these last two being vital elements of the globalization process -, has atomized the supply chain, and consequently the knowledge detained by the inventor and marketer of the product.

 Most products today are assemblies of components that have been produced by different companies in a variety of countries. The knowledge required for the manufacture of each of these components is disseminated through the value chain. This, in turn, increases complexity.

 Complexity increases risk as well as the need for innovators to rely entirely on external holders of knowledge.

 The question now is whether innovators can continue to innovate if knowledge is so finely divided and how does such a thin division of labor affect economic growth, or rather transfer of wealth from one country to another.


 La complexité des produits, la spécialisation et la réduction des droits de douane et des coûts de transport – ces deux derniers étant des éléments déterminants du processus de mondialisation -, a atomisé la chaîne d’approvisionnement et, par conséquent, la connaissance détenue par l’inventeur et mercaticien du produit.

 Aujourd’hui la plupart des produits sont assemblés à partir de composants qui ont été produits par diverses entreprises dans plusieurs pays. La connaissance requise pour la fabrication de chacun de ces composants est disséminée à travers la chaîne de la valeur. Cela augmente la complexité.

 La complexité augmente le risque et le besoin pour l’innovateur de ce fier entièrement sur des détenteurs externes des connaissances requises.

 La question est de savoir si les innovateurs peuvent continuer à innover si la connaissance est si finement divisée et comment une si mince division du travail affecte la croissance économique, ou plutôt le transfert de richesse d’un pays à l’autre.


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 Both the OECD and the FAO forecast that prices of wheat will increase by up to 40% in the next 10 years as compared to the prices in the period 1997 – 2006.

 Since Asia already harbors 1 billion poor, these price increases are likely to lead either to famines or to social movements of vast proportion. Food insecurity is one of the major drivers of social unrest.

 There are ways to avoid these events from happening.

 Governments should invest, or encourage private investment, in agricultural research and agricultural production and infrastructure in both primary and secondary agriculture, including in urban areas. They must also avoid large multinationals from total control of the food supply chain to the detriment of small farmers who are then displaced.

 The alternative is the development of rapid emergency response measures and increased funding of relief aid.

 The path chosen by Asian governments will determine the stability of the area and its continued economic growth – or a major setback with global effects.


 L’OCDE et la FAO on toutes deux prévu que le prix du blé subira une augmentation pouvant atteindre 40% par rapport aux prix de la période 1997 – 2006, et ce dans les 10 ans à venir.

 Etant donné que l’Asie compte 1 milliard de pauvres, cette augmentation des prix pourra vraisemblablement provoqué des famines ou des mouvements sociaux de grande importance. L’insécurité alimentaire est un des principaux facteurs de troubles sociaux.

 Il y a plusieurs façons pour éviter de tels évènements.

 Les gouvernements devraient investir, ou encourager l’investissement privé, dans la recherche et la production agricole, ainsi que dans l’infrastructure liée à la production et au mouvement des produits. Ces investissements devraient toucher l’agriculture primaire et secondaire, y inclus dans les zones urbaines. Les états devraient aussi éviter de laisser les grandes multinationales de contrôler la chaîne alimentaire au détriment des petits paysans qui sont alors déplacé.

 L’alternative réside dans le développement de mesures de réponse rapide aux urgences et d’augmenter l’aide alimentaire en cas de pénurie.

 Les choix que feront les pays asiatiques détermineront la stabilité de la région et la continuation de sa croissance économique  – ou un sérieux recul de celle-ci avec des conséquences globales.



McKinsey’s recent report ‘Urban World: Mapping the economic power of cities’ points to the urban centers that will represent growth opportunities corporations in the coming 15 years. These cities, which mostly today have populations of less than 10 million, are forecast to represent 50% of global GDP growth. Per capita GDP growth and population growth are taken as the most important factors determining urban growth.

 Included in this list of top performing middleweight cities – some of which will become megacities – are 15 cities in China, 4 African cities, and 2 cities in South America. It is also in these middleweight cities that there will be a sharp increase in households with a PPP-adjusted annual income of over USD 20 000.

 China is forecast to contribute to 30% of the world’s increase in GDP.

 These are major potential markets for infrastructure, housing, household durable goods and consumer products.

 This study confirms the apparently unstoppable economic shift to Asia particularly considering that some cities in Europe and North America will see their importance decline.

 While the report does insist on the continued importance of urban markets in the UK, the USA and South Korea, it does stress the importance for companies to be present in China, India, Brazil and Mexico.

 In large countries such as China and India, the report recommends a strategy of concentrating on clusters of cities so as to cover, cost efficiently, smaller cities in the vicinity of the growing and sprawling urban centers.


 Un rapport recent de McKinsey Urban World: Mapping the economic power of cities’ souligne l’importance des centres urbains qui offrent des possibilités de croissance aux entreprises ces prochains 15 ans. Ces villes, dont la plupart ont aujourd’hui une population inférieure à 10 millions, devraient représenter 50% de la croissance du PNB mondial. Les deux facteurs les plus importants dans la détermination de la croissance urbaine sont la croissance du PNB par habitant et la croissance démographique.

 On trouve dans la liste des villes performantes de taille moyenne – dont certaines deviendront des mégapoles – 15 villes chinoises, 4 villes africaines, et 2 villes en Amérique du Sud. C’est aussi dans ces villes de taille moyenne qu’aura lieu une augmentation importante du nombre de ménages ayant un revenu annuel moyen, ajusté pour le pouvoir d’achat, supérieur à USD 20 000.

 Le rapport prévoit que la Chine contribuera à 30% de l’augmentation mondiale du PNB.

 Cette évolution devrait créer des marchés importants pour la construction d’infrastructures et de logements, ainsi que pour les biens de consommation durable et les produits de grande consommation.

 Cette étude confirme le déplacement, apparemment impossible à freiner, vers l’Asie ; ce d’autant plus qu’elle prévoit un déclin important de certaines villes en Europe et en Amérique du Nord.

 Si le rapport souligne l’importance continue des marchés urbains en Grande Bretagne, Etats-Unis et Corée du Sud, il souligne l’importance, pour les entreprises, d’être présentes en Chine, en Inde, au Brésil et au Mexique.

 Dans des grands pays tels la Chine ou l’Inde, le rapport recommande une stratégie de concentration autour de certaines villes, afin de pouvoir couvrir, avec des coûts relativement faibles, des plus petites villes voisines des centres urbains en pleine croissance.


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 In a well researched IMF paper, its authors, Rabah Arezki and Marc Quintyn, show increases in international food prices lead to a deterioration of democratic institutions in Low Income Countries – although, with a few exceptions, they are not key players in determining food prices on an international level. Food price increases also raise the incidence of intra-state conflict expressed as anti-government demonstrations, riots and civil conflict.

 This means that the present democratic movements are actually driven by external factors.

 While the majority of these countries are in Africa or in South or Southeast Asia, several Central Asian countries are present in the list, including Kyrgyzstan, Tajikistan and Uzbekistan.

 This study shows that we must pay particular attention to how well the authoritarian regimes in this country will fare over the coming months.


 Dans un papier du FMI, ses auteurs, Rabah Arezki et Marc Quintyn, montrent, au terme d’une recherch approfondie, que les augmentations du prix international des produits alimentaires mènent à la détérioration des institutions démocratiques dans les Pays à Faible Revenu – alors que, à quelques rares exceptions près, ces pays ne sont pas des acteurs importants dans la fixation des prix des produits alimentaires au niveau international. L’augmentation du prix des produits alimentaires augmente aussi l’incidence de conflits à l’intérieur des états, qui se traduit par des manifestations contre le gouvernement, des émeutes et des guerres civiles.

 Cela veut dire que les mouvements démocratiques actuels ont eu pour point de départ des facteurs externes.

 Alors que la plupart de ces pays se situent en Afrique et en Asie du Sud et du Sud-Est, plusieurs pays d’Asie Centrale figurent sur cette liste, y inclus le Kirghizstan, le Tadjikistan et l’Uzbekistan.

 Cette étude montre que nous devons suivre avec une attention particulière les développements dans ces pays dans les prochains mois.


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 Let us try to understand the balance between food supply and demand.

 On the supply side:

–         farmers will have to produce ten times more food than in the past

–         new types of seeds are being developed that increase yield significantly

–         but we may have reached a biological limit in plant and animal yields

–         farmers are learning to use resources more efficiently

–         there is a shortage of water

–         the use of fertilizers is already at maximum optimization levels

–         climate change will take its toll of farmland.

 On the demand side:

–         there will be another two billion mouths to feed over the coming 40 years

–         we eat more meat than ever before

–         we use agricultural products to produce biofuels

–         there is a staggering amount of food wasted.

 How each of these parameters will evolve over the present decade will define whether we will have famines or if the world’s population will be able to fill in their nutritional requirements – and perhaps not much more.


 Essayons de comprendre l’équilibre entre l’offre et la demande des produits agricoles.

 Du côté de l’offre :

–         les agriculteurs devront produire dix fois plus que dans le passé

–         des nouvelles variétés seront développées pour augmenter les rendements de manière significative

–         mais nous avons peut être atteint une limite biologique dans le rendement des végétaux et des animaux

–         les agriculteurs apprennent à utiliser les ressources de manière plus efficace

–         il y a un manque d’eau

–         on a déjà atteint un niveau optimal dans l’utilisation des engrais

–         les changements climatiques vont avoir une répercussion sur les sols.

 Du côté de la demande :

–         nous devrons nourrir 2 millions de bouches supplémentaires sur les 40 prochaines années

–         nous mangeons plus de viande que par le passé

–         nous utilisons des produits agricoles comme matières premières énergétiques

–         nous gaspillons des quantités invraisemblables d’aliments.

 L’évolution de ces différents paramètres dans la décennie à venir décidera si nous aurons à subir des famines ou si la population du monde pourra remplir ses besoins nutritionnels – et peut être à peine cela.


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 The market did not know what to make of the Japanese earthquake and tsunami. While obviously economic activity will be reduced, the fact that two major smelters shut down and that there should be an important rebuilding activity militates in favor of a sustained price over the coming weeks and months.


 Le marché ne savait pas trop s’orienter suite au tremblement de terre et au tsunami qui a eu lieu au Japon. Alors que, bien entendu, il y aura une réduction de l’activité économique, le fait que deux importantes raffineries ont été fermées et que l’on assistera à une importante activité de reconstruction milite en faveur de prix soutenus dans les semaines et mois à venir.


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 Unconventional gas resources are embedded in coalbed methane, tight sands (embedded in sandstone), and particularly shale gas which lies buried at levels of 2 to 3 km underground. At present consumption rates, unconventional gases could cover our needs for 100 years. If their price is not indexed to that of oil – as a large number of conventional gas contracts are – they would offer an attractive substitute to oil.

 Forecasts by the International Energy Agency show that unconventional gas could represent up to 35% of all gas usage by 2035, while overall gas consumption should increase by 45%.

 While, perhaps even more so than for other hydrocarbons, reserves and extraction yields are difficult to estimate, major deposits have been identified in North America, Russia, China and Central Asia.

 In the US, unconventional gas production accounts for half of total gas production in the country. It is mostly centered on Texas where a number of independent producers are active.

 They are presently attracting the interest of some of the majors and takeovers are in the air, offering arbitrage possibilities.

 We like Talisman Energy, a Canadian company, not only because of its international diversification and its top-tier shale deposits, but also because of its partnership with Sasol that may well end with an acquisition by the latter. Talisman Energy is quoted on the NYSE.


 Les gisements de gaz non conventionnels sont les gaz de houille, les gaz de réservoir compact enfermés dans des grès et les gaz de schiste qui sont enterrés à 2 ou 3 km sous le sol. Au rythme de consommation actuelle, les gaz non conventionnels suffisent à remplir nos besoins pour les 100 prochaines années. A condition que leur prix ne soit pas indexé sur celui du pétrole – comme de nombreux contrats de gaz naturels le sont – ils sont un substitut attrayant au pétrole.

 Les prévisions de l’Agence Internationale de l’Energie indiquent que les gaz non conventionnels représenteront jusqu’à 35% de l’ensemble de la consommation de gaz en 2035, alors que la consommation totale de gaz augmentera de 45%.

 Bien plus que pour les autres hydrocarbures, les réserves et les taux d’extraction sont difficiles à estimer mais des gisements importants ont été identifiés en Amérique du Nord, en Russie, en Chine et en Asie Centrale.

 Aux Etats-Unis, la production de gaz non conventionnels représente la moitié de la production gazéière du pays. Elle est centrée sur le Texas où de nombreux opérateurs indépendants sont à l’œuvre.

 Ces sociétés attirent beaucoup d’intérêt des majeurs de l’industrie et on parle beaucoup d’acquisitions, ce qui offre des possibilités d’arbitrage.

 Nous aimons Talisman Energy, une entreprise Canadienne, non seulement à cause de sa diversification internationale et de la qualité de ses gisements en gaz non conventionnels, mais aussi à cause de son partenariat avec Sasol, qui pourrait bien mener à une acquisition par cette dernière. Talisman Energy est quoté sur le NYSE (New York Stock Exchange).