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The Rising Price of Oil: Not A Valid Excuse To Explain Food Crisis In African Countries

By Bienvenu-Magloire Quenum

Hunger riots are daily occurring since end of 2007 worldwide and particularly in sub-Saharan African countries. Previous deliveries [1, 2] discussed the matter.

Pundits link the crisis to the ever rising cost of purchasing crude oil. Indeed, oil price increased ten fold since year 2000 - from US$10 to averaging US$100 since January 2008. So at first glance, due to the fact that oil is the main raw material to generating power and producing other products such as chemicals, plastics and gas oil, it seems that the rising cost of oil is having a heavy impact on the cost of production of goods and services worldwide.

However, one has to keep in mind that one barrel of oil contains 159 liters and that therefore the cost to purchasing one liter of crude oil is around 69 cents US dollar. The fact that resulting refined oil products reach astronomical prices (particularly at gas stations) is subject to endless discussion.

The reason why taxes and levies applied by governments - in developed and developing countries alike - to refined oil products are not (sufficiently) modulated to balancing the "negative" impact on goods and services production's costs, is a mystery the author of this text and many other people cannot decipher.

All this to state that the impact of oil price over the production costs of goods and services had been (purposely?) exaggerated. We do not have space in this delivery to further discuss the matter. But the point is made.

- Agriculture is in archaic state in African countries

In most African countries, black farmers received no assistance whatsoever - technical, logistical or financial - to shift from archaic traditional method of cultivation to using modern agricultural techniques. African governments have not devised coherent rural development schemes to modernize agriculture and train farmers. Scientific researches were not systematically undertaken to improve existing crops, diversify cultural produce, increase crop yields and animals' production. In the rare instances such researches were undertaken, the results remained “confidential” and not systematically promoted at large. Logistics assistance was not provided to farmers for the purchasing of vital inputs such as fertilizers, seeds and pest-control. No technical assistance network had been established for soils preparation. Financing support to purchasing equipment was not available. And of course distribution channels were missing.

African farmers have, in spite of such handicaps, produced (till the end of the 1990s) - in countries that were not engulfed in civil wars - food staples in quantities to assure self-sufficiency.

However, WTO Globalization’s rules to which African nation adhered to in mid 1990s are severely biting since the beginning of the new millennium. And consequently the situation had deteriorated to such a point that now, at the beginning of year 2008, not a single African country is self-sufficient anymore. Worse, common (imported and locally produced) food staples's prices are daily skyrocketing triggering hunger riots throughout the black continent.

- Industrialization is in an embryonic state in African countries

In sub-Saharan African countries, there is no sustained interactivity or link between agriculture, industry and services. Striking examples are countries, which produce cash crops (coffee, cocoa, tea, cashew nut, timber, and cotton). They had few processing industries for manufacturing value-added products for the local and export markets. For instance, Ivory Coast and Ghana are listed as the world’s biggest producers of cocoa; yet African countries import chocolate bars from Europe - including Ghana and Ivory Coast.

Both countries have not established industrial plants to process big tonnages of cocoa beans into chocolate paste for the export market and for national consumption. Ninety-seven percent of both countries’ cocoa bean production is still sold as bulk raw materials in the international market – for 70 years running.

The lack of interactivity between agriculture, industry and services in sub-Saharan African countries contributes, doubtless, to the low performance of the economy as here briefly exposed.

Indeed, at the dawn of Independence in the1960s, manufacturing accounted for 9 percent of GNP in sub-Saharan countries. To most observers’ surprise that share increased only slightly to reaching 11 percent from 1960 to 2000. Today, there are only few small and medium scale industrial units owned and managee by Africans. And when they do exist, they are located in the vicinity of capital cities. The hinterland of most African countries are bare of industrial units. Further, these industrial units rely on imported raw materials. Therefore, they operate most of the time under-capacity because raw materials's stocks are short; and they often break down for lack of spare-parts.

- African countries are net importers in any line of business

Above chapters explain why African nations are net importers in all line of business. They heavily import (most of the time up to 100% of the demand) wheat, wheat flour, rice, canned tomato paste, canned peeled tomato, milk powder, canned condensed milk, pasta and noodles, cement, iron threads for reinforced concrete, meat, poultry equipment and machinery. The list is endless.

Therefore, no wonder if African nations are now severely hit when those commodities, goods and services's prices are submitted to international speculators whims; and particularly to geostrategic international policy hazards such as the war in Iraq, which is doubtless driving up the cost of oil. Remember, at the beginning of the invasion in March/April 2003, oil price was "stabilized" at US$18.

So if one can evoke energy supply's cost to justify the rising cost of food stuffs and other goods and services in developed countries (with a nuance, as explained at the beginning of this delivery, with regard the real purchasing price of one liter of crude oil - 69 cents), it is a bit thinking over the top of the roof to consider that the same apply to African nations.

Energy cost is not responsible for food crisis in Africa as energy input in productive economic activities is nil. In other words, economic activities in African countries do not produce goods and services. Everything is heavily imported.

Shedding huge amount of money to subsidy imported goods will not help. Increasing salaries also is not the solution if local productivity of goods and services are not promoted and developed. Billions of money in local currencies used to cool down the social atmosphere and granting subsidies could be better used promoting real agricultural development in African countries together with processing of resulting crops as here advocated.

Concerning energy crisis in Africa, please consult following links: [1, 2]

Dr. Bienvenu-Magloire Quenum is the principal/ managing director of Dr. Quenum & Associates, IBC. He is an experienced Investment & Business Planner with 25 years consulting practice in African countries. He is the editor in chief of Africabiz Online

MORE ON LOGISTICS MANAGEMENT
1- Project Management: A Systems Approach to Planning, Scheduling and Controlling By Harold Kezner 2- Effective Project Management Traditional, Adaptive, Extreme - Third Edition By Robert K. Wysocki and Rudd McGary 3- The Complete Project Management Office Handbook By Gerard M. Hill 4- A Guide to the Project Management Body of Knowledge - 2000 Edition By Project Management Institute	5- The Complete Idiot's Guide to Project Management By Sunny Baker, et al 6- Project Management: The Managerial Process with CD-ROM for Student By Clifford F. Gray, Erik W. Larson 7- Achieving Project Management Success Using Virtual Teams By Parviz F. Rad 8- Strategic Planning for Project Management Using a Project Management Maturity Model / By Harold Kerzner

"CONTRIBUTOR'S GUIDELINES" are available here. We invite you to contribute to AFRICABIZ ONLINE MONTHLY ISSUE - with articles related to "How Africa Could Bridge The Developing Gap".

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Many thanks for subscribing to Africabiz. See you here on May 15, 2008.

  Dr. B.M. Quenum
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Business Opportunities

LIVESTOCK & GAME DEVELOPMENT - PART V: - A MEDIUM-SCALE CATTLE FATTENING OPERATION - C- ECONOMICS

This delivery This delivery is a continuation of the previous ones [104, 105, 106, 107 ] that laid down the basics for animal feed formulation.

Broad fattening trade's principle reads as follows: “Buy the cattle low. Fatten them cheaply. Sell them high.” Thus three main questions: (1) Where to buy; (2) How to fatten, and (3) How to sell

At following link are listed livestock breeds of the African origin
Wilkipedia provides here a long list of breeds worldwide
The following linked-site provides comprehensive description of African breeds

Let us consider a medium scale operation to fattening cattle, which at full gear delivers 100 animals every month to the slaughterhouse. That is an operation that produces 1,200 fattened animals in 12 months-period, after 25 months-period of fattening - as shown on this graphic.

Items	US$
INVESTMENT
Total investment	170,750
PRODUCTION COST PER ANIMAL
US$60,000 divided by 1,200 fattened cattle heads / weighting 150kg each and fattened from a initial weight of 75kg	58.33
GENERATED REVENUES *
1,200 fattened cattle heads sold at US$350 - weighting 150kg each and fattened from an initial weight of 75kg	420,400
Gross Profit: US$420,000 (selling price) minus US$300,000 (purchasing price)	120,000

The opted selling price of US$350 per cattle head, puts the kilogram of good quality meat at the highly competitive price (for African marketplace) of US$2.33 per kg. Return On Investment is short in the range of four years. The business is a profit making venture if the operation is vertically integrated to include a slaughterhouse, meat transformation (smoking and salting for instance), skins preparation, blood collection for animal feed and bio-gas production.

For more on the matter click here

MORE ON LIVESTOCK & GAME DEVELOPMENT

1-Handbook of Livestock Management by Richard A. Battaglia (Paperback - Jul 21, 2006) 2- Raising Small Livestock: A Practical Handbook by Jerome D. Belanger (Paperback - Feb 11, 2005) 3- The Homesteader's Handbook to Raising Small Livestock Goats, Chickens, Sheep. Geese, Rabbitts, Hogs, Turkeys, Guinea Fowl, Ducks and Pigeons by Jerome D. Belanger (Hardcover - April 1974) 4- Backyard Livestock: Raising Good, Natural Food for Your Family, Third Edition by Steven Thomas and George P. Looby (Paperback - Jan 2, 2007) 5- Keeping Livestock Healthy: A Veterinary Guide to Horses, Cattle, Pigs, Goats & Sheep, 4th Edition by N. Bruce Haynes (Paperback - Nov 1, 2001) 6- Alternative Health Practices for Livestock by Michael Keilty and Thomas Morris (Hardcover - Jan 1, 2006)

7- A World Dictionary of Livestock Breed Types, and Varieties by V. Porter and I. L. Mason (Hardcover - Jun 6, 2002) 8- Livestock waste facilities handbook (Paperback - 1985) 9- Raising Small Livestock: A Practical Handbook by Jerome D. Belanger (Paperback - Feb 11, 2005) 10- Livestock Feeds and Feeding (5th Edition) (Hardcover - Jun 8, 2001) by Richard O. Kellems and David C. Church 11- Raising Game Birds by Lessiter Publications (Paperback - Jun 1986) 12- Livestock Production in Unfavourable Economic Environments: Strategies for Attaining Sustained Competitive Advantage by P. G. A Jennings (Hardcover - Mar 30, 2007)

Click here to read more about the matter

Control Your Desktop

SOME COMPUTING TIPS TO SAVE YOUR DAY

Maintenance is the key to smooth computing experience. That is running a stable computer, that does not advertantly crach and hung up. Operating systems previous to XP/ Vista were more enclined to suffer from former listed troubles. Even XP/Vista, depending on the number of installed applications can also have problems.

In any case, whatever maybe your windows operating system, the only way to avoid trouble, is to practice maintenance on a regular basis. Some people do that performing regular defragmentation.

However, that is not enough, as several applications' installls followed by uninstalls leave wastes (drivers, Dynamic Link Libraries and temp files, etc.,) on the hard disk, bloating the operating system's brain (the Registry) - dispersing broken chunks of files all over the hard disk, and finally slowing down the loading of the operating system and or applications.

When you notice that the operating system loading times is "abnormal" and that applications take lengthier time to load, you know that your system needs urgent maintenance. But, why wait for that to happen before taking action, while it is better to prevent than to cure - exactly as for a human being.

To do that, one can purchase applications (such as System Mechanics) that features a centralized dashboard with a long list of maintenance tools, or simply use freeware (which has light fingerprint and very low resources consumption) that do the same job and most of the times perform faster.

For more on the matter visit this link

Freebie Of The Month

ACTIVE IN INTERNATIONAL BUSINESS? GET VALUABLE INFORMATION FROM THE INTERNATIONAL LAW LIBRARY

In the international business one needs to have accurate information about Law practices and regulation in countries one is dealing with. Further, it is also an asset to know about ruling leaders names and governments' ministries. There is one place to visit to get all that and it is LAW & RESEARCH website that has links to an amazing string of directories: International governments by regions; International Imports & Exports; International Non-Governmental Organization; International Taxation. Etc. Click here to visit the website