Few days back, I was visiting one of these Super stores, which sell almost everything from a toothpick to Refrigerators. On any day, these Mega stores always have super deals for some item or another. That day, the offer was for their ‘Own house brand’, blue Jeans at a rock bottom price of US$ 16(About 750/- Indian Rupees). As I knew that one of the largest weaving mills for blue Denim is located in India, out of curiosity, I asked a friend of mine to check the price of Denim cloth manufactured by this weaver and the price of Blue Jeans, manufactured by him for Indian market. I was astounded to learn that the prices in India, for this cloth and the garments, were much higher than the super deal offered by this Mega store. Even assuming, a large trade commission, it was obvious that the blue Jeans were being offered at very low profit or may be even at a marginal loss.
How can these stores sell these items as such low prices? Was the first question that came to my mind. To increase sales, was an obvious answer. How would it increase sales? Why should anybody buy large number of Jeans just because the prices are very low? The answer lies in a buyer’s mind. People do buy unnecessary things just because these are cheap and stock on them. A pair of Jeans, according to my experience, can easily last 3/ 4 years. I might think of having a couple of extra pairs in reserve. Would I buy any more at regular or even discounted prices? The answer is surely NO. However, what would happen if I could get some extra pairs dirt-cheap? No doubt, I would be tempted to buy. This is the way, our mind works. These Mega-store guys surely know it. If they can offer things dirt-cheap, people would be tempted and their sales volumes would shoot up astronomically.
To sale anything cheap, one needs to buy it cheap. To find out, I did some research on the net. The facts were astonishing and I found that I was very wrong. To give you exact figures, a pair of jeans is offered to a whole seller in a price range of US$ 4.80 to US$ 7.80 (225/- to 350/- Indian rupees).The same pair is retailed to the consumer in a price range of US$ 16.00 to US$ 43.00 (750/- to 2020/- Indian Rupees). This means that no retailer is selling anything at loss or marginal profits. Even at the price of US$ 16.00, they made handsome profits. As a consumer, I am happy. Retailer is happy with his profits and increase in sales turnover.
I felt it was too simple. There has to be a catch somewhere. I decided to look at the cotton prices. I found out that one pair of jeans requires about 0.75 Kg of raw cotton. Which meant, that at the lowest purchase price of US$4.80, retailers purchased processed cotton (i.e. Blue Jeans) at US$ 6.40 (300/- Indian Rupees) per Kilogram and retailed the same for US$ 21.30(1000/- Indian Rupees) per Kilogram. However, average international price of raw cotton, hovers around just US$ 0.32(15/- Indian Rupees) per kilogram. Even after processing, same cotton was sold to spinning mills, for US$ 1.32(65/- Indian Rupees), per kilogram. Somebody was making huge profits here.
Why were prices of cloth and garments much higher in India? The results were even more surprising. India is third largest raw cotton producer in the world and still imported about 170 thousand tons of raw cotton. Domestic demand therefore remains much higher than production and local procurement prices for raw cotton are controlled by the mechanism of minimum procurement price by the Government. This ensures that farmers and processors are not squeezed and yarn or Garments are sold at fair price to the consumer. Even then, picture is not rosy in India. Increasing number of cotton farmers are killing themselves, as they cannot get out of debt.
I took Indian prices for raw cotton, yarn and garments as sort of fair reference prices, and then looked at international trade. I soon realized that the whole cotton garment scenario was an environmental black hole, gobbling up our resources, destroying our environment at an unbelievably fast rate and creating unprecedented miseries for cotton producers, processors, and garment factory workers in the process. In short, the whole thing just stinks.
Let us consider first, the human misery part. United States of America, which is world’s largest producer of cotton, pays an annual subsidy of 3 billion dollars to cotton farmers in US to sell their produce at a loss. This keeps the international cotton prices suppressed at current levels. These prices are hurting the producers in China and Africa to the point of starvation. Even the mighty Chinese Government is not of any help; as they require bulk of the imported American raw cotton for re-export of garments. The cotton processors are almost bankrupt because of low margins. The garments are produced in sweatshops in China, Bangladesh, Turkey and some other South American countries. The workers are paid very poorly here. There is high degree of human exploitation in the garment factories. As a result of all this, a very low priced garment, finally reaches the shores of USA or first world. Now the big retailers make huge profits and the branded shops make unimaginable gains. In effect, the subsidy paid by US Government effectively goes to Mega retailers and brand shops. Consumers like me, are cheated and made to feel elated at a super deal. This cotton scenario is squeezing worldwide, farmers, processors and sweatshop workers by pushing them to poverty and misery.
The environment damage however, is far more serious. Worldwide production of cotton is around 26 million metric tons. Each kilogram of cotton grown requires on an average 150 Gms. of chemical fertilizers. This means, that we are dumping about 4 million metric tons of these hazardous chemicals in our soil every year. Cotton crop requires heavy irrigation. To produce 1 kilogram of raw cotton, we need to put 10 cubic meters of water in the soil. Which means that worldwide requirement of water for cotton crops is 260 million cubic meters of water. In effect, we are ruining our soil and diverting precious water sources to produce cotton, which generates losses or marginal profits for everyone except big retailers in western world.
To consider the environmental damage done by cotton crops, let us just have a look at one example. Uzbekistan in central Asia is the third largest exporter of cotton worldwide. They export about 440,000 tons of cotton every year. Uzbekistan has the world’s largest inland Sea within her borders. Two major rivers, Amu Darya and Syr Darya carry their water flow to this Sea. In the year 1950, Soviets decided to divert the river water for cotton production. As a result, Aral Sea started shrinking. In last 25 years, this sea has shrunk by half and the day is not far off when instead of Aral Sea we may see Aral desert. This has caused immense damage to eco system of the region. Salinization of soil has rendered vast tracts of land utterly useless for any agriculture use. The situation is further aggravated by heavy use of chemical fertilizers. Cotton is the major exchange earner for Uzbekistan and the Government is forced to divert more and more resources for cotton production.
Cotton farming is fast turning into a major disaster for mother earth. It is a real winner takes all, situation. Unfortunately, only winner here is the big retail business of the western world.
Last year, my daughter brought a wooden chest of drawers, which she thought could also be used as a changing station for the baby. The cabinet was very elegant with matching handles and smooth cherry coloured finish. She was rather pleased about the price, which was quite low, considering the quality of workmanship. Few months later, the elder sibling of the baby, who incidentally was just 3 years old then, decided that the nice handles on the drawers could as well be used as some sort of gymnastic gear. I am sure that there is nothing unusual in this story. Unusual happened later, when the wooden drawers, on which the kid was swinging and stretching, just broke into two pieces. My daughter was very irritated with this and contacted the supplier. He was rather philosophical and regretted the event. He felt that since the drawers were made from MDF and were to be used for storage and not for gymnastics, even when the performer was a 3-year-old amateur, his warranty does not cover this misuse. There was nothing else to do except throw that junk into garbage.
This is how I found MDF (Medium density Fiberboard). When my daughter told me about the incident, the investigative journalist inside me woke up and I started looking for information about wood substitutes. During my search, besides MDF, I also found Particleboards, chipboards and block boards, a whole range of products, which look like wood. I already knew about Plywood, which has been around, for quite a few years now. Out of these various substitutes for wood, a Plywood sheet is essentially made by gluing together, number of thin wooden slices, under pressure and high temperature. This in fact improves, over some characteristics of real wood, like elasticity. Plywood, in spite of processing, remains real solid wood. On the other hand, particleboards, chipboards and block boards all are essentially sandwiches. Manufacturers fill all kinds of waste wood, mixed with glue, between these two slices of wood. MDF is made from wood pulp. Small wood chips are actually cooked into pulp and later mixed with urea formaldehyde or even melamine resins. Both these chemicals are highly toxic and could cause health problems for carpenters. The material then is formed to look like wood.
All these substitutes show extremely poor physical characteristics compared to wood. Two important parameters here are Modulus of Rupture or MOR and Modulus of Elasticity or MOE. The MOR and MOE of MDF are just quarter of that of wood and MOR and MOE of particleboard are just about one eighth of that of wood. It is no wonder that my Grand daughter could easily break the chest of drawers. However, we shall leave this aspect of these materials, aside. The main advantages of MDF and other composites are the fabulous looks they have, ease of working on these and very low cost, compared to wood or even for that matter, plywood.
When I learned about these wood composites, my initial reaction was very positive. I thought that wide spread use of these materials, would certainly bring down the consumption of wood, worldwide. This would reduce logging and rate of denuding of the forests would surely go down. Unfortunately what has happened is just the opposite.
If we visit any of the big stores in any country, we would be amazed at the wide range of wooden products available from small kitchen accessories like towel holders to household furniture. A separate class of products for building industry like wooden flooring, wooden panels and doors are also available. All these products have super finish. All products are so well manufactured that these are usually available in a kit form. The consumers can assemble the furniture with few tools and it would still look factory made. Even with all these plus points, the prices are incredibly low.
One outcome of this mini revolution in furniture industry has been the utilization pattern. Remember the furniture of old days. It was expensive and used to be a proud family possession. It was handed over from generation to generation and used for long periods. The new furniture comes with a new mantra, Assemble-Use-Throw. The durability of this new furniture therefore, is quite low. This creates sustained demand for the products. For the consumer, it is a good bargain. Get stylish furniture at bargain prices. Use it and just throw it when not required any more. So why am I complaining?
There is a small problem however. The demand for this modern furniture is growing at a very rapid rate worldwide. In the year 2006, total world production of wooden furniture was US$ 270 Billion. Moreover, for the last decade it has been growing at a rate of about 30%. This is a very bad news for the forests on the earth. Moreover, in the earlier days, the demand for wood for furniture- making was limited to a few types of wood such as Teak, Pine, Walnut or Mahogany. With the advent of new technologies like MDF, the demand now is for all types of wood.
Let us now travel to Zhangjiagang City in China. This city, located on the southern bank of the lower reaches of the Yangtze River, is a part of Jiangsu Province with Shanghai, Nanjing, Suzhou, Wuxi and other cities in the vicinity. Last year, entire processing industry output from this city was around US$ 12 Billion. A part of this output was the wooden products, as this city hosts a very large number of wood products industry. Total Chinese wood production in 2005 was estimated to be worth US$ 51 billion with exports touching US$ 13 Billion. Wood production from Zhangjiagang City is therefore a major part of total Chinese output and is a good representative of the total picture.
Zhangjiagang City also has a modern port nearby and is called Zhangjiagang Port. As per statistics published by customs, during first half of year 2008, 1.642 million cubic meters of wooden logs valued at US$ 410 million, were imported into the country through this port only and are obviously legal imports. According to one report however, total Chinese imports of logs have grown to about 45 million cubic meters by now. Much of the imports have come as unprocessed logs from developing countries. China also imports huge quantities of sawn wood and wood chips.
Most logs imported into China, are effectively stolen, with no payment of government royalties to exporting nations or environmental control over harvest operations. At least 80% of Chinese timber imports from Brazil, Cambodia, Cameroon, Congo-Brazzaville, Equatorial Guinea, Gabon, Indonesia, Myanmar, Papua New Guinea, and the Solomon Islands are illegal, with somewhat lower values (50 to 60%) for Malaysia and Russia.
When I saw this scale of imports, I realized that I was looking at another Environmental Black hole with its center in Zhangjiagang City. How fast this black hole is going to gobble up forest cover of the earth? was the question that came immediately to my mind. It is obvious that at this rate of consumption, and rate of growth, our forests are surely not going to last for very many years. Many a times, a picture is worth thousand words. Those who are still not convinced, may have a look at some images on these links.
Unfortunately, developed countries are playing a key role in the destruction of forests. It is their demand for cheap wood products, which is fueling China’s wood products industry. As long as this demand exists, Chinese wood products industry would continue to grow.
A report in National Geographic Magazine says that Island of Borneo has already lost half of its forest cover and lowland forests, which produce all the timber, would vanish by 2010. What prevents the same thing happening in Brazil, Cambodia, Cameroon, Congo-Brazzaville, Equatorial Guinea, Gabon, Indonesia, Myanmar, Papua New Guinea, and the Solomon Islands?
Nothing! would be my answer. However, if you ask me when? Well! A rather difficult question to answer. I feel that it may happen sooner than we think. It could also be within our lifetimes.
Can you recollect the lunch & dinner menu, your mother made for you, about thirty or forty years before? It must have been a very simple fare but full of nutritional values. One thing that surely was missing from the menu was any kind of sweet dish. Common people enjoyed sweets only during festivals and special occasions like birthdays. If a child had a sweet tooth, at the most he might get a fruit or mango slice conserved in sugar syrup. However, all this was before the ‘Amul’ milk revolution in India. As milk production went up, milk processors started coming out with many new products. Major varieties of these happened to be very enticing kind of sweets. With better cold storage facilities, the availability went on improving. Even your street corner grocer, started stocking on these. Well! I am not complaining about the sweets any way. I have a sweet tooth myself. Why I have given this example at length is to illustrate how improved availability of a delicacy improves its popularity and skyrockets its consumption.
Something similar happened in the Nineties, for the connoisseurs of seafood. To be specific, I mean for lovers of Prawns or Shrimps. This common seafood in earlier days was not very meaty. A common shrimp has too much of shell and very little meat. In Nineties, a new variety of prawns, called ‘Black Tiger Prawns’, hit the market. These were huge, as big as a lobster, and very meaty. The best part was that they were very cheap and availability was getting even better and better. This Tiger, hit the gastronomes of the western and developed world like a storm. Prawn dishes started appearing in all restaurants, bars and as ready to eat packaged food. Prawn consumption kept growing at the rate of 9% every year and has now reached US$ 50 to 60 Billion. Where do these wonder crustaceans come from? Almost all the production comes from tropical waters, not only of Thailand, Vietnam, Indonesia, Pakistan, and Bangladesh, but also from Latin America – from Ecuador, Honduras, Guatemala, and Mexico.
However, this ballooning production of Tiger Prawns does not come from Sea. These are grown in ever-increasing numbers of prawn farms, mushrooming along coasts of these countries. Total world production of Tiger Prawns had crossed 500 000 tons by year 2002 itself. For many poor countries, prawn export has already become one of the top export items, bringing in much needed foreign exchange and employment for the poor. It is an often-repeated scenario. Affluent nations get something at very low cost and poor nations earn dollars plus employment for the poor. Unfortunately the cost of all this is excessively heavy for the environment as well as for humans involved in the trade. It is clear that another environmental black hole has formed here. Gobbling up resources on earth, destroying its eco-system and social fiber of producing countries.
We shall look at Bangladesh as a prominent example of this eco- destructing trade. Bangladesh exported 33560 tons of Prawns in 2004-2005 worth about US$ 300 million. The export target was set at US$ 1 billion for 2008. Fishing sector here is the second largest employer with more than 13 million people employed, mostly in Prawn farming, with exports to Europe, Japan and America. A small part of the trade is that of the marine catch netted by a small trawler fleet in Bay of Bengal. This catch is usually processed on the fishing trawlers themselves and is very bio sustainable. Rest of the Prawn produce, comes from Prawn farms, spread along coastal waters and also inland to certain extent. These farms are destroying the paddy fields of poor farmers and coastal mangroves on an unprecedented and massive scale.
Mangroves are the coastal equivalent of tropical forests on land, and are called “salt water forests”. The Sundarbans, the world’s largest coastal mangrove forest, stretches for almost 6,000 square miles across India and Bangladesh. It is a natural barrier, against tsunamis and frequent cyclones, which blow in from the Bay of Bengal. With roots that tolerate salt water, the forest’s mangrove trees grow 70 feet or more above islands of layered sand and gray clay, deposited by rivers, that flow more than a thousand miles from the Himalayas to the Bay of Bengal. Any ecologist would tell you that mangroves are the basis on which entire ecosystem of coastal regions is built. The Prawn farms are destroying the Mangroves not only in Bangladesh but also along entire South East Asian coastal belt.
These Prawn farms are slowly extending their reach inland, sometimes as much as 80 Km from the sea. To cite one example, trees on 18000 acres of land were chopped down to clear land near Chittgong to make way for Prawn farms. The major damage to land and environment, from the prawn aquaculture, comes from the pond’s waters. Fresh seawater needs to be pumped regularly into the ponds to keep the prawns healthy. At the same time, pond’s fouled waters have to be pumped out. These waters contain toxic concentrations of prawn excrement and the chemical additives used in the prawn feed and for water treatments. This water is just dumped around and contaminates, surrounding land, ground waters, and the coast itself. In addition, salinization is poisoning the ground water, as well as the once productive farmlands. This wastewater from Prawn farms is completely ruining the coastal ecology, killing off the sea life and destroying vital fisheries. The prawn ponds destroy themselves over time as seawater gets contaminated and the ponds are closed. The rich and fertile coastal lands of Bangladesh, where paddy fields existed before, are being converted to poisoned wastelands.
Prawn farming also depends upon getting good Prawn seeds. These seeds are in reality eggs, hatched by wild female prawns. Natural habitat of these wild prawns is amongst coral shelves on the seabed near the coastline. While collecting these seeds on the vast scale required, major damage is being caused to the corals. Sometimes, methods like scrapping the seabed are even utilized. Coral beds are one of the key areas for maintaining marine eco-systems. We can just imagine the cost to the eco-system by this reckless destruction of the environment.
What is worst is that this entire operation is being run as a true mafia style operation. Poor marginal paddy farmers are often beaten by gangs of thugs and then evicted from their farmlands. They are paid pittance and loose their only means of survival. Some of these farmers become prawn growers in a small pond. They hardly make any money from the business as all the inputs are controlled by big land sharks and the price they get for their produce is very low. The capital required to run this operation is also often loaned by same big guy, who takes major share of the profit. The produce after going through many middlemen, reaches processing plants. Here, to maintain hygienic conditions demanded by buyers, the workers have to suffer horrible work conditions such as continuous presence of extremely foul smell and hot enclosed environment. Processing workers again are mostly young girls recruited from nearby villages and are very poor. They agree to work on a very low wage of about US$0.50 (24 Indian Rupees).
The tribal in the Mangroves, faces another kind of hazard. Since prawn farms have destroyed the coastline, he is forced to move deeper into forests for his subsistence. He faces new dangers such as Tiger attacks, which are becoming serious.
Research in this Prawn business made me sad. There is no easy solution. If rich countries cut consumption, thousands of poor people employed in the trade would be driven in further poverty. Many poor countries would loose their source of income.
Meanwhile this environmental black hole continues to destroy coastal and seabed ecosystems and spreads misery and poverty in poor marginal farmers.