A loose disscusion on Linkedin, today "on onion, beer and petrol" prompted me to write this blog.
I am sure that the title would have got your imagination, atleast to some extent. Can there be link between the two? Are the high prices of Onions, fruits, vegetables and industrialization connected in some way.
Lets see, if they are.
Lets start with some facts and figures.The world population till the beginning of the 20th century was only 1 billion. Yes, only 1 billion. Today India's population is more than 1 billion and so is china's. Today the world pop is close to 6.5 billion. Which means the world pop. has increased 6 times over in just 100 years.
Therefore it leads us to the question: what happened so dramatic, so conducive that our fertility levels shot up this much. What prompted us to do what we couldn’t do in last 1900 years and were able to do in just 100 years.
Well, for starters industrialization took place only in 18th and the 19th century. It began in the UK and then rest of the Europe and spread to America. The Industrial Revolution marks a major turning point in human history; almost every aspect of daily life was influenced in some way. Mainly from manual labour we switched to machine based manufacturing. The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries.
The human population was deployed in various factories in the key sectors. This brought about major economic and social changes in our environment. People starting having regular and better incomes and the standard of living started getting better. Industrial revolution also created a large number of doctors and lawyers and therefore a large working middle class.
Basically things started getting better overall (or we thought) for majority of the population. Better incomes also meant higher purchasing power and the desire to want more out of life. That is where our beloved banking system and the credit system came into play. People started taking more and more credit to fulfill their desires, needs and wants. So there was finance available for housing, which led to urbanization, finance available for automobiles which led to building more and more roads, finance available for everything and anything one to imagine. But isn’t it good? We can own houses and provide shelter to our families. Infact,we can buy anything we desire with the help of a bank loan and pay it back in installments. Sure, its damn good only if we don’t consider that economics like the US consumer debt is close to $ 14 trillion. That’s how may zeros, I don’t know, u tell me.
Any way, coming back to onions. Industrialization did us a lot of good. We have seen countries like China in last 20 years and the way their economy has growth and millions have been lifted above the poverty line. But, these millions and billions in turn are putting a lot of pressure on our existing resources. More housing has meant cornering of more and more land by the real estate and housing cos. More industries have also meant the same.
What does that lead to? You guessed it right, lesser and lesser land left for farming and agricultural produce. So what do we have here, from 1 billion population to 6 billion with lesser farming land and pressure on every possible natural recourse. Now lets go back to our most basic economic lesson of demand and supply. When demand of goods will be higher than the supply the prices will only go one way, and that’s up north.
At the same time I acknowledge the fact the farming techniques and better equipment have helped us to milk every inch of our farming land. I also acknowledge that there are gaps in the supply chain system and we need to have better warehousing facilities for our produce to plug the gaps. But at the same time the population is projected to go higher and there will be more mouths to be fed and many more humans desires to be fulfilled.
So, my fellow onions lovers, lets be prepared to pay more for chicken do piazza and onion rava dosas. But we have the banks to finance all that, don’t we??
I am sure that the title would have got your imagination, atleast to some extent. Can there be link between the two? Are the high prices of Onions, fruits, vegetables and industrialization connected in some way.
Lets see, if they are.
Lets start with some facts and figures.The world population till the beginning of the 20th century was only 1 billion. Yes, only 1 billion. Today India's population is more than 1 billion and so is china's. Today the world pop is close to 6.5 billion. Which means the world pop. has increased 6 times over in just 100 years.
Therefore it leads us to the question: what happened so dramatic, so conducive that our fertility levels shot up this much. What prompted us to do what we couldn’t do in last 1900 years and were able to do in just 100 years.
Well, for starters industrialization took place only in 18th and the 19th century. It began in the UK and then rest of the Europe and spread to America. The Industrial Revolution marks a major turning point in human history; almost every aspect of daily life was influenced in some way. Mainly from manual labour we switched to machine based manufacturing. The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries.
The human population was deployed in various factories in the key sectors. This brought about major economic and social changes in our environment. People starting having regular and better incomes and the standard of living started getting better. Industrial revolution also created a large number of doctors and lawyers and therefore a large working middle class.
Basically things started getting better overall (or we thought) for majority of the population. Better incomes also meant higher purchasing power and the desire to want more out of life. That is where our beloved banking system and the credit system came into play. People started taking more and more credit to fulfill their desires, needs and wants. So there was finance available for housing, which led to urbanization, finance available for automobiles which led to building more and more roads, finance available for everything and anything one to imagine. But isn’t it good? We can own houses and provide shelter to our families. Infact,we can buy anything we desire with the help of a bank loan and pay it back in installments. Sure, its damn good only if we don’t consider that economics like the US consumer debt is close to $ 14 trillion. That’s how may zeros, I don’t know, u tell me.
Any way, coming back to onions. Industrialization did us a lot of good. We have seen countries like China in last 20 years and the way their economy has growth and millions have been lifted above the poverty line. But, these millions and billions in turn are putting a lot of pressure on our existing resources. More housing has meant cornering of more and more land by the real estate and housing cos. More industries have also meant the same.
What does that lead to? You guessed it right, lesser and lesser land left for farming and agricultural produce. So what do we have here, from 1 billion population to 6 billion with lesser farming land and pressure on every possible natural recourse. Now lets go back to our most basic economic lesson of demand and supply. When demand of goods will be higher than the supply the prices will only go one way, and that’s up north.
At the same time I acknowledge the fact the farming techniques and better equipment have helped us to milk every inch of our farming land. I also acknowledge that there are gaps in the supply chain system and we need to have better warehousing facilities for our produce to plug the gaps. But at the same time the population is projected to go higher and there will be more mouths to be fed and many more humans desires to be fulfilled.
So, my fellow onions lovers, lets be prepared to pay more for chicken do piazza and onion rava dosas. But we have the banks to finance all that, don’t we??
