Word: drought
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...India's drought is drying up consumer demand in rural areas, and the entire economy is feeling thirsty. It begins with people like Kalu Singh. A prosperous farmer in the northern state of Uttar Pradesh, Singh has built a tiny empire - a microcosm of the Indian economy - around him. He owns 144 acres of vegetable plots and paddy fields and last year earned almost Rs. 2.2 million (about $45,833). That's enough to employ more than 1,500 people and for him to live well, spending about $625 a month buying clothes, food and comforts for his family...
...says. "I have had to cut back on many things. I felt really bad when I couldn't even buy my grandchildren new clothes for a family wedding." Salim and Ahis Ahmed, two brothers who lease about half an acre from Singh, have also seen the drought shrink their usual income of Rs. 20,000 ($416) for every three-month growing season by half. "We were saving up for a motorcycle," says Ahis Ahmed. "It would have made our trips to the markets easier. Now it's not possible anymore...
...grocery store in Barola, another village in Uttar Pradesh, and their customers are mostly farmers. "People are not buying in bulk anymore. They come and buy things in limited quantities," Ombati says. That change has reduced their daily earnings from Rs. 2000 ($42) to Rs. 600 ($12.50). "In a drought, where is the money to buy things?" (See pictures of the deadly 2007 monsoon floods...
...Indian companies who make those products, and their shareholders, will soon ask themselves the same question. A recent report from analysts at Bank of America/Merrill Lynch in Mumbai projects "a 10 to 15% pullback in equities led by drought-led growth cuts." Every major drought in India has a pervasive impact on the economy, which is unlikely to meet the government's projected 7% GDP growth this year. (Analysts expect 6% or less.) With crops failing, food prices will go up everywhere, pushing up inflation. Mohammed Nadim, a vendor in Hoshiarpur, says the wholesale price of his cartful of sweet...
...Ethiopia's rain-fed agriculture is "shockingly vulnerable" to small variations in the patterns of rainfall, says one Western diplomat, and the country has no chance to recover from the last drought before the next one hits. "The impact of last year works through this year," says Jolanda Hogenkamp, the World Food Program's Deputy Head of Programs in Ethiopia. "The picture we see now is more or less the same as last year. Largely the same numbers and same areas." (Read: "Famine: Hunger Stalks Ethiopia Once Again...