Nirmal Kumar Betchoo
24 October 2007
Port Louis — The shortage of powdered milk has boosted up its price with a direct impact on lower classes.
Boasted since the mid 1990s as the new world economic order, the global economy looks in a broad sense as a system which has favoured unequal parallels between the developing and the rich countries. To consider the world as a global village with greater commonness and lesser differences has so far revealed a dubious scenario.
Mauritius, in its present state of economic reform, faces unfair pressures to conform to the changing economic climate. The exogenous forces that compel the country to abide by certain conditions are already giving a headache both to the government and the population.
In the first instance, the price of oil and related commodities has increased two-fold from its precedent historical figure of $40 per barrel enough to make all the economies shiver under inflationary pressures along with the difficulty of managing such a basic resource in their domestic markets. Merrill Lynch, the international institutional investor, voices that there are reasons to believe that the oil price can reach $95 in a short time.
The dependence on oil has not really triggered affirmative responses from developing economies. Mauritius is busy prospecting alternate areas like the production of ethanol and the use of tidal energy to sustain its energy requirements. However, these options remain at a primal stage without real development taking place in such areas. Paradoxically, the upward price shift in "light sweet crude" is not basically an influence of demand and supply conditions blown up by China but rather, external pressures like the Iraq crisis, natural calamities in the USA and consumption imbalances caused by the supply of lower priced oil by Venezuela and Nigeria.
Inaptness to adapt and change
Next comes, the dependence of essential commodities known as consumer goods. The milk saga has caused enormous inconvenience both to buyers of milk powder and the local distributors. The plausible reason for the milk shortage coupled with a 50% increase in the price of different milk brands has been attributed to the low milk production level in Australia and New Zealand under a drought season characteristic of an Indian summer.
In this case, the importance and value of milk powder have been boosted up as luxuries, which directly impact upon the lower classes of people overly dependent on imported milk in Mauritius. This has been the trend since the termination of cattle rearing in rural areas and the near closure of milk production units in Palmar and Wolmar.
From all the corners, business people stress upon the fatality of rising prices and our inaptness to adapt and constantly change to the price inflation. As a developing economy, Mauritius now lifts up from its myopia to discover that it should have shed off its dependence on essential commodities by really inventing itself around the production of essential commodities. Infinitesimal 2% milk production in the country and the pilot stage in the production of ethanol have powerfully stamped Mauritius into a servile economy tormented by winds of change from the global environment.
But where stands the unequal parallel of the global economy? While Mauritius has to make adjustments concerning an upward pressure on imported goods which finally make it inevitable to increase prices, the global environment remains unfair and disproportionately daunting. For example, the 36% reduction in price of sugar exports to the European Union is lesser perceived as an inevitable adjustment than the protectionist approach of the European continent.
Europe pursues its individual policies of economic reform by better subsidising European farmers of the beet and synthetic sugar and also relieving the confederation from the disaster of the mad-cow and the foot and mouth spectres. In this way, it also nurtures the significance of the already tattered European Referendum (2006). In this new economic climate, the EU has made adjustments while disregarding the frail economic structures of ACP countries, among which, several are still subsistence economies with meagre monocrop cultures.
The EU Commission on Agriculture now states that "the writings were on the wall" as a means of stopping any further negotiation on the price cut concerning cane sugar.
The international market further puts undue pressure on developing economies. Under the dismantling of the Multi-Fibre Agreement, importers of textile products can choose their suppliers basing on the lowest price structure. This strategy directly hits Mauritius which gradually shifts to the "haut de gamme" position by committing itself to high value-added production. Recently, there were moves to develop design and styling in Mauritius as part of our value-added tactic through forward integration of the textile sector.
However, just claiming that Mauritius remains an expensive supplier with exceeding high production costs in Africa should be considered as injustice done to the local manufacturers.
Another inequality comes from the fact that aid no more reaches Mauritius in a similar way to poor African nations. Already devoid of food aid since two decades or more, under the School-Feeding project, Mauritius now has to struggle in order to benefit from slice preferences from the Africa Bill. In this case, Mauritius opted to integrate its textile production backward in order to benefit from the "Third Country Fabric" exemption.
As a developing country with a Gross Domestic Product per capita soon to reach $6000, Mauritius is a good example of an independent nation which suffers from inequalities of a global economy. Earlier sung as the new world economic order which would shed off disparities between the rich and the poor while making resources within the reach of the vulnerable people of the global village, the glorified global economy creates unequal parallels.
To survive is not enough in the same way to say that nobody owes us a living. Economic inequalities point out that it's the unjust, possessive and cruel global environment which makes poor countries worse off in the middle of growth which fuels the rich nations. Mauritius has been no exception, so far.
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