Codling Moth - True or False?

 There is an insect called the False Codling Moth - true or false?

True!

An insect that goes by this name is now at the centre of an an international trade dispute between South Africa and the European Union. The False Codling Moth (henceforth FCM) infects a range of fruits, especially citrus and is perfectly adapted itself to Global Warming (unlike the original Codling Moth) and a range of climatic zones.  It is the fear of FCM infestation that has recently driven the EU to put up stricter measures to prevent its spread into Europe.

About 3.2 million cartons of citrus worth about 605 million rand ($36 million) is now rotting in European ports because of a change in rules that happened even while the fruit containers were on their way to the northern hemisphere. In face of a growing apprehension that its own horticulture may be affected by this moth, EU wants all citrus consignments from South Africa to go through a freeze treatment - an expensive add-on in the supply chain that makes the exports more expensive, and perhaps economically unviable for the African farmers. 

This is not very different from the dilemma faced by Indian mango exporters. Different  countries demand different post-harvest treatments before they allow imports of mangos - hot water treatment, vapour heat treatment or irradiation. Japan, UK and EU countries do not allow import of mango without vapour heat treatment - again an expensive process for small farmers. 

So ultimately, the irony - countries that produces that produce the best variety of citrus or mangos are unable to export it to the very markets that pay the best rates.

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REFERENCES & LINKS

* SA oranges to EU  - https://www.euractiv.com/section/agriculture-food/news/tonnes-of-fruit-stranded-in-eu-south-africa-battle-of-oranges/ 

* Constraints in mango exports from India -  http://indianecologicalsociety.com/society/wp-content/themes/ecology/volume_pdfs/1651904681.pdf

* https://www.sun.ac.za/english/faculty/agri/conservation-ecology/ipm/Documents/FCM%20fact%20sheet%20ENG.pdf

* https://www.thehindu.com/sci-tech/science/managing-fruit-fly-in-mango/article7130611.ece

* https://en.wikipedia.org/wiki/False_codling_moth

* https://en.wikipedia.org/wiki/Codling_moth

An Appetite for Steel

Recent newspaper headlines proclaimed that India is now poised to overtake Japan as the “second largest producer of steel in the world”. This sounds quite impressive - until you see the numbers in perspective. The largest producer of steel in the world - China - produces over 800 million metric tonnes (mmt) while India’s 'record production' was less the 90 mmt in 2015.

The current situation is like that of a huge kitchen that needs to keep itself busy. Excess production capacity is now at odds with low appetite. Over the past 40 years there has been a massive increase in global steel production - especially in China. A country that produced just 37 million metric tonnes (mmt) in 1980 produced more than 21 times that amount - 803 mmt in 2015!

Similarly, on a much more modest scale, India which had been producing 9.5 mmt in 1980 , increased its production to about 90 mmt in 2015.

China’s domestic appetite has been a bit satiated now, so now we are seeing a sharp increase in its steel exports. As with numerous other Chinese products its prices are super competitive, and this is triggering “anti-dumping” measures from other countries, including India. About two years ago, India’s DGFT set a Minimum Import Price (MIP) for 66 types of iron and steel products, while at the same time, imposed duties up to 20% on a number of steel products.

The main countries affected by these measures were China, South Korea and Japan, which accounted for 63.6% of total imported steel volume, and 54.6% in terms of value. As expected, Chinese imports are the largest at over 37%.

Yet, strangely, it is not China or South Korea, but Japan that is at the forefront of the campaign against the restrictions imposed by India. It has threatened to take India to WTO over the import restrictions, and various interpretations of the provisions of GATT 1994 and the Agreement on Safeguards.

What explains this unusual stance?

Some commentators claim that for Japan, India is  just the proxy country used to fight a larger war against MIPs and other border taxes. According to others, this is just a reflection of political clout wielded by steel exporters in Japan. Either way, one thing is clear - higher steel prices is not good news for downstream industries, or for the consumers who end up paying more for cars and cooking utensils.

Lobbies like the Indian Steel Association (ISA) and their counterparts in Japan will always try their best to influence governments for their own benefit. Ultimately, it is for the government to strike a balance between the long term costs and benefits of bowing to the pressure of industry lobbies. And that, unfortunately, is linked to election funding...

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LINKS & REFERENCES

https://www.investing.com/analysis/india-and-japan-take-their-steel-row-to-the-wto,-but-it%E2%80%99s-really-a-proxy-200173645

(26Jan17-BL) - http://www.thehindubusinessline.com/economy/policy/russia-says-steel-exports-to-india-dipped-by-a-third-due-to-curbs/article9503240.ece

(25Jan17, BT - India to be global no.2 steel producer by 2020) - http://www.businesstoday.in/current/corporate/india-closes-japan-second-largest-steel-producing-country/story/244963.html

Reuters (23Jan17) - http://www.reuters.com/article/us-japan-india-steel-idUSKBN1541DX

Forbes (23Jan17) - http://www.forbes.com/sites/timworstall/2017/01/23/japan-threatens-india-with-wto-action-over-steel-good-it-should-to-benefit-indians/#561e021a53ae

(22Jan17 - Taiwan) -- http://www.thehindubusinessline.com/economy/policy/taiwan-wto/article9496340.ece?ref=relatedNews

Hindu (22Jan17): JAPAN THREATENS TO DRAG INDIA TO WTO ON STEEL AS TRUMP ERA HERALDS TRADE TENSIONS

DGFT Notification on MIP (4Aug16) - http://dgft.gov.in/Exim/2000/NOT/NOT16/noti2016.pdf

(4Dec16, IE) - Indian Steel Association (ISA) for extension of MIP for 6 months - http://indianexpress.com/article/business/business-others/extend-mip-on-steel-products-for-six-months-indian-steel-authority-4409972/

(30Mar16 - VCCircle - Timeline on MIPs) - http://www.vccircle.com/news/engineering/2016/03/30/india-extends-safeguard-duty-steel-imports-till-march-2018l

COKE

* http://asia.nikkei.com/Business/Trends/Japanese-steelmakers-switching-to-lower-grade-raw-materials?page=2
- Japanese steelmakers (Nippon, Sumitomo) use better technology to lower costs. They process cheaper, low grade coke to better quality before replacing 50% of high-grade imported coke...this keeps their steel competitive in the world markets.

(2Dec2016) - http://www.infracircle.in/indias-coke-import-financial-year/
> India imported ~ 3 million tonnes of metallurgical coke in 2015-16 --- of which 2 million was from Chine alone!...Metallurgical coke, a key raw material for the steel sector, is used for smelting iron ore in the blast furnace. Around 0.7 tonne of coke is required to produce 1 tonne of steel and it constitutes 40-50% of the total cost of crude steel.
The government on 25 November imposed anti-dumping duty in the range of $16.29-$25.2 per tonne on imports of low ash metallurgical coke from countries such as China and Australia for a period of five years.

Textiles and Terror

Last month a terror strike at the Holey Artisan Cafe in Dhaka, Bangladesh, left 21 people dead, along with two police officers and four terrorists. Among them were nine Italians, seven Japanese, one Indian, three Bangladeshi's and one US citizen.

More than half the number of victims were closely linked to an industry that is critical to the country's economy: Textiles.

What has been the impact of this terror attack on Bangladesh's textile sector?

The textile sector constitutes around 80% of Bangladesh’s total exports providing direct employment to 4 million people. This $19 billion-a-year, export-oriented ready-made garment (RMG) industry accounted for 45% of all industrial employment in the country, and yet, only contributed 5% of the Bangladesh's total national income.

Over the past few years, Bangladesh had surpassed India in the export of RMGs - thanks to cheaper labour, better support from the government and a favourable global trade-quota system. In India around 12 percent of exports are from the textile sector and it employs more than 38 million people. Since there are nearly 10x more people in India dependant on the textile sector any change in trends was bound to have a cross-border impact.

This point hit home when I ran into a neighbour who works with an RMG export firm. He was unusually upbeat. "Things are now looking up", he said, grinning happily, "Our industry is not getting the attention it deserves!" INR 6,000 had been allocated in the latest Budget for financial incentives, along with a move towards flexible labour laws. "Now, with the Europeans and Americans getting wary about Bangladesh, we sure to bounce back!"

It seems the global textile-RMG market is not very different from the local subzi-mandi's (vegetable markets). Frequent meetings and the perception of safety, and the assurance of having a glass of chai in peace and quiet, are all confidence builders for both buyers and sellers...

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LINKS & REFERENCES

- Dhaka - The Attack Victims (CNN - 6 July 2016) - http://edition.cnn.com/2016/07/02/asia/bangladesh-dhaka-attack-victims/
- http://www.iipnetwork.org/CaseStudy_Compendium.pdf2

- ET, 23 Jun., 2016) - http://economictimes.indiatimes.com/news/economy/finance/cabinet-clears-rs-6000crore-package-for-textile-sector/articleshow/52876601.cms

- (IBT 23 June 2016) - http://www.ibtimes.co.in/cotton-production-holds-key-textile-policys-multi-billion-dollar-export-push-684011#6FoGIRr5mbh5L9mf.97

The Power of QA

How far will you go to buy a quality product?

According to the Economist, Chinese tourists are flying in droves to markets in Tokyo to purchase... toilet seats!

On the face of it this may seem a trivial or even whimsical thing to buy. But to those who have used to this piece of working art, it is difficult to see the regular plastic and ceramic contraptions as anything but retrograde.

However the point of interest is not the art or electronics but the fact that many of the seats the Chinese buy from Akihabara and carry back home, actually carry the label "Made in China".

Aparently, many Chinese consumers do not trust the reliability of such items sold at home—and refuse to pay the often higher prices charged for export-standard goods. Prime minister, Li Keqiang, has told Chinese firms to raise the quality of their own seats. “At least that could save consumers the price of a plane ticket,” he said.

Saving plane tickets is besides the point. It took a Chinese reader to hit the nail in the head:

I bought many stuffs in Japan even it says Made In China, but nothing in China itself because I know if the Chinese want to sell their stuffs in Japan, they must go through the rigorous Japanese quality assurance procedure, whereas there is none in China.

How do companies, and countries, acquire a reputation for accepting and delivering nothing less than the highest possible quality?

The Japanese embraced the ideas of an American guru, Edward Deming, to pull itself out of the morass of exporting poor quality umbrella's, matchboxes and textiles.

In India it appears that many outward looking, export-oriented companies have grasped the importance of perception, and understood the power of QA. There are also exceptional organisations like Aravind Eye Care and Narayana Health/Hrudayalaya that have blended high quality with affordability and public access.

What will it take for this idea to seem through our government and the vast network of institutions it controls?

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LINKS:

* http://www.economist.com/news/china/21647299-rush-buy-japanese-toilet-seats-prompts-soul-searching-china-race-bottom