Agriculture – the new focus for chemical demand

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A first visit to Cambodia. I’m here en route to our Asian Conference in Bangkok, and the picture shows the famous line of Buddhas at Angkor Wat. But the main topic of conversation when talking to local people is the high cost of food and energy. With wages averaging $30 – $35 a week, these costs now account for up to 65% of income. Other expenses, such as schooling and healthcare, have to be cut back if people are to survive. This is not good for the future of the country, which risks slipping backwards in the development stakes as a result.
Coincidentally, the Financial Times reports today that Western leaders are finally waking up to the threat that these higher prices also pose to stability in many developing countries. It quotes Josette Sheeran, executive director of the World Food Programme, as saying that recent ‘riots in more than 30 countries were stark reminders that food insecurity threatens not only the hungry, but peace and stability itself’.

But it is not easy to see what can be done in the short-term. As people reminded us in Cambodia, growing rice is hard, back-breaking work. Our guide felt no wish to return to the country and take over his parents’ farm. Nor did anyone else we met. They all wanted to escape from this traditional way of life by moving to the town. And who can blame them?

In recent years, of course, this influx of people into towns has been good news for consumer demand. Service-sector jobs have paid higher wages than farm labouring. Demand for the ‘building block’ chemicals has therefore grown. But in the medium to longer-term, this trend is unsustainable. As the New York Times reports today, even India’s famous ‘Green Revolution’, that saved millions from starvation, is now stalling. Agricultural chemical demand may well need to be the focus of growth for the future.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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