Thought Workers

KERALA PSUs: Demonstrating the Alternative Path

2010-05-17T01:32:00.000-07:00

The global financial meltdown, unveiled in the third quarter of 2008, once again proved the shallowness of capitalist development and reiterated the relevance of public sector enterprises in the national economy. It was generally agreed that the impact of global recession on the Indian economy was not as disastrous as in the developed capitalist countries mainly due to the existence of public sector in the crucial sectors of economy. However, paradoxically, the United Progressive Alliance (UPA) Government has not withdrawn from the programme of disinvestment of the shares of the public sector companies. On the other hand, they are fervently taking it forward and the Union Budget for 2010-11 has forecasted receipts of Rs. 6000 crores from the disinvestment of public sector shares. Although disinvestment of the Central public sector undertakings (PSUs) was in the agenda of the first UPA Government, they could not implement it due to strong opposition from the Left parties supporting the government. With no resistance from within, the present Union Government has a free hand to privatise the PSUs and they will be doing it in a phased manner. The Union Government has not learnt any lesson from the recent financial crisis.

The present Left Democratic Front (LDF) government in Kerala assumed office in May 2006. It was the commitment given by the LDF in the election manifesto that the state level public enterprises would be protected, revived and modernised. Having well understood the role of state owned enterprises in the economy of a society, the LDF Government has taken a pro-PSU stand and in the initial period itself outlined a detailed project for revival, development and modernisation of the units. It was necessary to act immediately as the state of the public sector was pathetic under the immediately preceding United Democratic Front (UDF) government led by the Congress Party. They were vehemently implementing the policies consistent to the neo-liberal capitalist plans of the union government.
To put in a nutshell, the policy of the UDF government was “Close down, Privatise and grant VRS to the workers” (VRS stands for voluntary retirement scheme). In order to implement this policy at the official level, an Enterprises Reforms Committee (ERC) was constituted and the report, which throughout has taken an anti-PSU stand, was accepted by the government without any modification. The ERC has neither probed into the reasons of the sickness of the companies nor explored the possibilities of their revival or modernisation.
The ERC Report categorically stated that the PSUs had become a huge liability on the state exchequer and such undertakings should be immediately closed down or privatised. On the basis of the ERC Report, government orders were issued for closure/disinvestments of 25 companies. Hundreds of workers were given voluntary retirement. (But in many cases the dues to the workers so retired were not paid properly and the LDF Government had to take the responsibility of making payments to such workers. There was strong public opinion against the anti-PSU stand of the government and employees of these companies, irrespective of their political affiliation, rallied behind the save-PSUs agitation. The strong protests by the workers and the left parties had prevented the UDF government from selling out the public properties. However, many companies became dormant due to massive VRS and deliberate management inefficiency.
Immediately after assuming the office, an industrial policy was declared wherein an action plan for the revival of PSUs was contained. For the last four years, all out efforts were taken by the industries department to execute this policy and the consistent growth in the public sector is the result of this uncompromising stand. The deliberate actions aiming at the growth and development of PSUs are taken as part of the struggles against neo-liberal capitalist onslaught in which everything public is destined to be perished.
There were 65 PSUs under the industries department of the state government out of which, 17 were closed down for long periods, 5 were welfare corporations and 4 were developmental agencies. 39 companies were directly engaged in manufacturing activities. Out of these 39 companies, one was handed over to Brahmos Aerospace and another one was shifted to the administrative control of excise ministry. In 2009-10, four companies in the electronics sector were merged into one making the latest figure as 34. Sector wise numbers of the companies as on 28/02/2010 are given
in Table I.
Table I
State Level Public Enterprises
Sl.No Category No. of Units
1 Chemical 6
2 Ceramics and Refractories 2
3 Developmental and Infrastructure 3
4 Electrical equipments 4
5 Electronics 3
6 Engineering 6
7 Textiles 7
8 Traditional and Welfare 5
9 Wood and Agro based 1
Total 37

Performance Overview

In 2005-06, i.e. during the last year of UDF rule, majority of the PSUs were making losses. Only 12 out of 44 companies were making profits. These units together made a loss of Rs.69.64 crores. All the nine sectors except the development and infrastructure sector, which is mainly operating in the financial area, were making losses. The loss incurred by all the loss making units during that year was Rs.125.87 crores. Sector wise analysis shows that there was not even a single sector where all the companies had made a profit. In the case of electronics, traditional and textile sectors the situation was pathetic. All the six companies in the electronic sectors were in running in losses and during that year the total loss made by these units was Rs. 45.71 crores. All the eight companies in the textile sector and five out of six companies in the traditional sector were making losses. These are the areas where maximum workers are engaged and indirect employment is highest.
From 2006-07 onwards the situation started changing. In 2006-07 there was a considerable leap both in the case of turnover and profit. The total turnover was Rs. 1763.74 crores against Rs. 1540.40 crores in the previous year and the total profit was Rs. 91.18 crores. The number of profit making companies increased to 24. All the companies in ceramics & refractories, developmental and infrastructure, electrical equipment, and wood & agrobased sectors became profitable. Only three sectors (engineering, textiles and traditional & welfare) made losses. One company in the textiles sector and two companies in the traditional and welfare sector made profits. In 2007-08, the number of profit making units was increased to 27 and the total profit was Rs. 80.30 crores. Although there was an increase in turnover to Rs. 1811.50 crores the profit was reduced from the previous year. This was mainly due to reduction of profits in the chemical and Development & Infrastructure sectors and the increase of losses in the Textiles sector.
In 2008-09, in spite of global economic recession and corresponding shrink in demand, the companies presented extremely impressive results. By this year the number of companies under the industries department was reduced to 41 due to handing over of Kerala Hi-Tech Industries to Brahmos Aerospace Ltd., and by change of administrative department. Out of the 41 companies, 28 companies became profitable. Total turnover was Rs. 2105.01 crores and total profit was Rs. 169.45 crores. There was an increase of 16 percent in the turnover and 111 percent increase in profit compared to previous year. Turnover of seven companies crossed Rs. 100 crores, fourteen companies achieved all time high turnover and six companies achieved all time high profits. All sectors, except textiles and traditional & welfare became profitable. In the traditional and welfare sector, four out of six companies became profitable.
In 2009-10, the number of units has become 37 as four companies of Keltron subsidiaries at Kannur were merged into one and the accounts of HANTEX was not considered as it is the apex body of co-operative societies. Out of the 37 companies, 32 companies became profitable. The total turnover is Rs.2190.73 crores and the total profit is Rs.239.75 crores. Details of the financial performance of the companies are given in Table II.

Table II
DETAILS OF FINANCIAL PERFORMANCE (Rs. In lakhs)
Turnover (without Sl.No. Company Profit /Loss Taxes and duties)
1 The Kerala Minerals and Metals Ltd 51907.00 9010.00
2 Malabar Cements Ltd 16804.08 3105.91
3 Kerala State Industrial Development Corporation Ltd 3279.00 2450.00
4 Transformers and Electricals Kerala Ltd 22088.00 2311.00
5 Travancore Titanium Products Ltd 13659.85 2121.04
6 Kerala State Electronics Development Corporation Ltd 22830.92 1100.33
7 Alleppey Co-operative Spinning Mills 462.44 1014.92
8 Steel and Industrial Forgings 6400.02 910.00
9 Kerala State Industrial Enterprises Ltd 1920.00 660.00
10 Traco Cable Company Ltd 7970.85 546.43
11 Travancore-Cochin Chemicals Ltd 11615.70 218.48
12 Steel Industrials Kerala Ltd 2875.81 211.86
13 Kerala Clays & Ceramic Products Ltd. 675.00 210.60
14 Kerala Electrical & Allied Engineering Company Ltd. 10375.48 139.70
15 Kerala State Bamboo Corporation Ltd. 1497.76 89.00
16 Kerala State Textile Corporation Ltd 4131.30 79.42
17 Steel Complex Ltd 3489.17 76.14
18 Handicrafts Dev Corporation (Kerala) Ltd 1282.63 70.96
19 The Kerala Ceramics Ltd 681.11 62.82
20 The Trichur Co-operative Spinning Mills Ltd 1256.34 50.62
21 Autokast Ltd. 1426.87 37.92
22 Kerala Small Industries Development Corporation Ltd 9307.00 37.00
23 Kerala State Drugs & Pharmaceuticals Ltd 1491.43 26.54
24 Keltron Component Complex Ltd 4827.70 21.33
25 Forest Industries (Travancore) Ltd 797.34 14.99
26 Kerala State Handloom Development Corporation Ltd 1340.00 13.00
27 United Electrical Industries Ltd. 2742.99 12.15
28 The Metal Industries Ltd 245.39 10.41
29 The Travancore Cements Ltd 2805.00 3.00
30 KELPALM 8.82 2.06
31 Kerala Automobiles Ltd 2133.00 2.00
32 Kerala Artisans Development Corporation Ltd 680.39 0.26
33 The Malappuram Co-operative Spinning Mills Ltd. 2132.33 -46.40
34 Sitaram Textiles Ltd 982.44 -72.20
35 The Quilon Co-operative Spinning Mills Ltd 1096.90 -97.87
36 Keltron Electro Ceramics Ltd 511.29 -168.00
37 The Cannannore Co-op.Spinning Mills Ltd 1341.41 -260.33
GRAND TOTAL 219072.76 23975.09
The loss incurred by the five loss making units is Rs. 6.45 crores. Out of these five units four are from textile sector and one from electronic sector. Three units in the textile sector have become profitable in this year and the loss by the other four units is only Rs. 4.77 crores. This sector is in the path of revival. There is an increase of 4.07 percent in turnover and 41.48 percent in profit from the previous year. An amount of Rs. 340.57 crores was remitted to the exchequer as commercial taxes, excise duty and electricity charges. 5850 new appointments were made in this sector during the last four years, out of which 1647 were in 2009-10.
Major Initiatives
When the revival of PSUs was planned in 2006, it was sure that the task was not going to be an easy one. All the important fields like management, financial, technical, marketing, human resource, administrative etc., demanded a new approach. It was important to develop a result oriented action plan and to execute it in a time bound manner. In order to prepare such an action plan, lot of deliberations were held with experts in the relevant fields. Dialogues were initiated with various government departments, PSUs under other administrative departments, banks, similar units under central government, media etc. Trade union leaders were specially invited and interactions with them were held for identifying the crucial problems in this sector and for gathering inputs for solving them. On the basis of these deliberations an action plan for the growth and development of PSUs was prepared. A road map with specific milestones was developed and clear targets were fixed for the implementing agencies. Systems were established for meticulous monitoring and follow up actions. Some of the important steps taken for revamping of the PSUs are given below.
a. Reorganising the Management
The weakest part of the PSUs was the totally unprofessional and unaccountable management. Appointments of chief executives in these organisations were mainly on political considerations and their management expertise was never considered. Nepotism and corruption were rampant in such appointments. We were very sure that unless this issue is addressed all the other steps to revive and modernise the PSUs will not be fruitful since they are the people to implement the policies of government. But there were serious constraints in getting capable and people who with considerable expertise for such posts. Lack of credibility, fear of excessive interference, scarce potential for growth and unattractive remunerations were some of the issues. In the case of second line management also there were severe gaps. The majority of experienced and efficient people in these units deserted the PSUs due to the massive VRS implemented during the UDF rule. The skill and ability of the left out lot was terribly low. There were two important issues before the government: (a) attract management experts at the senior level and (b) improve the skills of the existing officers.
In order to get experts at the top level the appointment system itself was changed. A selection board was constituted for this purpose and appointments were made through open advertisement and interview. Search committees were also constituted to identify experts of various sectors and some good and efficient people were selected through this way also. For providing suitable remuneration to the chief executives thus appointed, the companies were categorised into four and the salaries were enhanced to a very attractive level. The current salary range of the chief executive officers (CEOs) varies from Rs. 60000 to Rs. 1.25 lakhs per month in additions to other perks and facilities available to them.
Appointments are made on a continuous basis. For capacity building of second line management, training programmes are being implemented. Under the aegis of Revitalisation and Internal Audit Board (RIAB), an annual training calendar is prepared and the officers are given training with the help of outside subject experts. State Level Training Programmes were arranged on topics like “Best Practices in Industries”, “Leadership Development”, “Financial Analysis and Project Appraisal” etc. These training programmes were in addition to the shop level on job training and other company wise capacity building sessions.
b. Settlement of Dues to the Banks and Financial Institutions
Many PSUs owed short term and long term loans from banks and other financial institutions, the pay back of which was not timely and proper which resulted in huge arrears and strained relations with the lenders. Consequently, these agencies withdrew from financing the PSUs and their operations were adversely affected. Moreover, the debts were mounting and the balance sheet positions of many companies were becoming bad. In some units, the modernization packages could not be implemented due to scant resources.
In 2006-07 the dues to banks by seven companies were too high and their financial operations were badly affected. Total amount to be paid by these companies was Rs. 359.66 crores. The government has taken special steps to settle this issue once for all. High-level discussions were held and the dues of Rs. 359.66 crores were settled for Rs. 89.39 crores payable at equal instalments. With budgetary support, seven major defaulting companies settled their dues fully. By 2010-11, all long pending dues to the banks and other financial institutions would be settled. The one time settlement has brought a big change in the financial positions of these companies as they could bring their balance sheets to a clean slate and managed to restart operations with the banks.
c. Periodical Monitoring of Performance
For the last four years, monthly review of performances of the PSUs is being conducted every month. The minister, secretaries, chairman and secretary of RIAB have attended these reviews. The monthly review has proved to be an effective tool for improving the performances of the companies. The details of performance of these units for a month are collected by RIAB by the 10th of the following month and the same is analysed by them and the report is presented in the review meeting. Detailed analysis of the performance is done in the meeting focussing on the implementation of the decisions in the previous meetings, achievement of production vis-a-vis target, financial position, implementation of modernisation /development projects, if any, etc. Decisions taken are furnished to them by the end of the meeting itself. RIAB makes a meticulous follow up and offers assistance for the execution of the decisions.
d. Annual Budgeting
There was no proper budgeting system for the PSUs although they were statutorily and technically bound to make one for each year. Operations were planned more or less on an ad hoc basis or as a matter of expediency. This practice was to be dispensed with if they had to organise and streamline their production. 2007-08 onwards, a correct practice of presenting the budget in advance was implemented. In the month of February itself the companies were directed to submit their budget in prescribed format and the same was evaluated by RIAB and discrepancies, if any, were pointed out. On the basis of suggestions made by RIAB the companies were able to prepare a realistic budget and fix quarterly and monthly targets. The Annual Budget meets are organised in March in which the companies present their final budget. These exercises have helped the companies to streamline their operations and strengthen their internal systems to ensure that the production is carried on as per the budget.
e. Auditing of Accounts
It was a matter of serious concern that there were huge arrears of auditing of accounts in the PSUs. Some companies had not audited their accounts for more than ten years. There existed no financial planning and the figures reported were not factually correct. The internal auditors in many companies had not brought out the real issues and at least in some companies they were giving tacit consent to the wrong practices of the management. To address these issues Government prepared a panel of chartered accountants and directed the companies to appoint internal auditors only from this panel with a direction to change them after three years. A fast track system was adopted to complete the pending audits. This has proven very effective. In almost all operating units the internal audits are up to date and statutory audits are pending in some companies mainly due to procedural problems.
f. Mutual Support and cooperation
The government initiated special steps to harness the synergy of PSUs and to organise their operations on terms of mutual benefits. Since many companies are operating in similar fields, combined sourcing of raw materials, providing technical support and avoiding competition between the companies could be achieved. Financial assistance is being provided by well off companies to those, which are in need of money. Preferences were always given to other PSUs in case of sale/purchases of products and services. Support from the government departments also was ensured. The health department has earmarked around 35 medicines to be purchased exclusively from Kerala State Drugs and Pharmaceuticals Ltd. Kerala State Electricity Board has placed orders worth crores of rupees to United Electrical Industries Ltd., Tracco Cable Company Ltd., Kerala State Electricals and Allied Engineering company Ltd., and Steel Industrials Kerala Ltd. In 2006-07 a PSU conclave was conducted at Ernakulam wherein the idea of mutual support between PSUs under all the departments and Central PSUs was mooted which was well received. Memorandums of Understanding for business tie-ups were signed between the companies and their government customers. These steps maintained a continuous supply chain and ensured markets.
g. Budgetary Support
The ministry of finance has extended a very strong supporting hand for the rejuvenation of the PSUs. It has taken a very supportive stand and had made financial provisions in each year’s budget. During the last four years there was a budgetary support of Rs. 210.81 crores for the rejuvenation and modernisation of PSUs. Utilisation of this amount is given in Table III.
Table III
UTILISATION OF BUDGETARY SUPPORT (Rs. in crores)

Sl.	Particulars	2006-07	2007-08	2008-09	2009-10	Total No
1	OTS with banks/ FIs	11.18	28.39	20.88	17.71	78.16
2	Settlement of balance VRS	14.30	9.59	5.91	1.58	31.38
3	Modernisation /revival	12.73	5.93	24.53	19.56	62.75
4	Working Capital	14.80	4.62	8.12	10.98	38.52
Total		53.01	48.53	59.44	49.83	210.8

In the budget for 2010-11, Rs.54.80 crores has been earmarked for the
rejuvenation and modernisation of PSUs.

h. Best PSU /CEO Awards

From 2006-07 onwards, awards are given to exemplary performing CEOs. They are selected by an award committee under the chairmanship of the principal secretary, industries department. The PSU that is taking notable steps to reduce pollution and reduce persons who have made contributions in industrial reporting is also awarded.

i. Strategic tie-ups with Central PSUs/Government

It was an innovative idea of the government to associate with Central PSUs for the revival and modernisation of state enterprises for technology up-gradation and better professional management of these companies. The state government has a limitation on investing huge amounts in new projects for modernisation and technology up-gradation. We could overcome this by tying up with central PSUs that could provide synergy. Four companies have so far been put forward to go for tie up with central PSUs or central government agencies. They are TELK-NTPC, SCL-SAIL, KEL-BHEL, and SILK-AUTOKAST-RAILWAYS. KELTEC, a company primarily doing machine work was taken over by M/s Brahmos in 2007.

TELK, a power transformer company entered into strategic tie-up with NTPC and 44.6 percent of government share in the company was transferred to NTPC in June 2009 and the new Board of Directors by including representatives of NTPC has been constituted. The joint venture is heading for massive expansion and the business plan is ready where, in the first phase, the company hopes to achieve the full manufacturing capacity of 4,500 MVA. With this 10-12 high capacity EHV Transformers can now be manufactured and 2-3 Transformers can be repaired per year. In the second phase increase transformer m a n uf a c tu ri ng capacity of 10,000 MVA including 1,500 MVA of service capability. Keeping this in view, a total number of 20 high capacity transformers can be manufactured and 6-7 transformers can be repaired per year. The previous government had decided to privatise TELK.

The government has signed a joint venture agreement with Indian Railways to start a rail bogie manufacturing company using the facilities of Steel Fabrication Unit and Autokast Ltd. The new company, named as “Kerala Rail Components Ltd.”, will have equity holding pattern of 51 percent and 49 percent to Indian Railways and government of Kerala respectively. The approved share capital and paid up share capital of the new company will be Rs. 100 crores and Rs. 36 crores respectively. Within three years after the formation of the new company, the assets and the employees of Autokast Ltd., will be absorbed in phased manner. When assets of Autokast are transferred to the company, the Indian Railways will make proportionate investments a s we ll. However, there is an inordinate delay from the ministry of Railways in implementing this project.

An Agreement has been signed between Steel Complex Ltd., and SAIL to form a joint venture and the steps are being taken to complete the statutory formalities by November 09. The project report for commissioning a re-rolling mill of 60000 Ton annual capacity is being prepared by SET Ranchi. SAIL and the government of Kerala will have 50 percent share each in the proposed joint venture. SAIL has already provided financial assistance to SCL for streamlining the production. The joint venture will be for manufacturing steel bars and special steel billets.

A business collaboration agreement was signed between Kerala Electricals and Allied Engineering Company (KEL) and BHEL for setting up a joint venture at Kasaragod using the facilities of KEL unit there. The assets of KEL Kasaragod will be transferred to the proposed joint venture as shares of KEL and BHEL will be invested proportionately. The valuation of the property is to be done jointly and the steps are being taken for that. The technical team is identifying the products that can be manufactured in the Joint Venture. A c ore c ommittee with members from the Govt. of Kerala and BHEL has been constituted and that committee is following it up. It is expected that the joint venture can be formed in this year.

In addition to the above, business relations are being developed by Keltron with Indian defence, BEL, ECIL and ISRO. Steel Industries Fabrication Ltd. has long standing tie-ups with ISRO. The government is looking for more strategic tie-ups with the central government and central PSUs.

j. Merger and Amalgamation

A proposal to merge companies of similar line of production and to harness the synergy is under serious consideration. This will reduce the overhead expenses; improve cooperation in sectors of technology, manpower, marketing and finance. Moreover, a bigger organisation will be more capable to meet the challenges of markets. Initially it can be by way of acquisition / transfer of shares. This is a time consuming process as a lot of procedural formalities are involved. Moreover, this process can be initiated only with the consensus among trade unions. However, the government has already taken steps to merge the following companies and appropriate orders have been issued. The Kerala State Industrial Products Trading Corporation is merging with Travancore Titanium Products Ltd. Accounts of both the companies for the year 2008-09 are getting finalised and the merger can be completed by the end of the current year. The Sitaram Textile Mills and Trivandrum Spinning Mills are being merged with Kerala State Textile Corporation Ltd. Four subsidiaries of Kerala State Electronics Development Corporation Ltd., at Kannur viz., Keltron Component Complex Ltd., Keltron Magnetics Ltd., Keltron Crystals Ltd., and Keltron Resistors Ltd., are being merged as a single company.

There are plans to amalgamate electrical and chemical Companies. Similarly, there are plans to transfer part of the government shares in certain PSUs to other PSUs. The modalities are being worked out.

k. Re-opening of Closed Units and Regaining of assets

When the present LDF Government came to power in 2006 May, 17 units had remained closed for a very long time. Some were ordered to be liquidated by the BIFR. Government prepared a plan to regain the assets of these companies, which were under liquidation, and to make use of such assets for industrial purposes. Trivandrum Spinning Mills, that was handed over to the official liquidator was released through the High Court and the same was transferred to the Kerala State Textile Corporation Ltd., to start as an open-end spinning mill. Modern machinery w a s installed there and full commercial production have commenced. Kerala Soaps and Oils Ltd., (KSO) a premier unit in manufacturing soaps, detergents and edible oils was closed down during the period of previous UDF Government. A soap manufacturing unit is set up in the premises of KSO by Kerala State Industrial Enterprises Ltd., at a cost of Rs. 7.05 crores. This unit started the functioning from January 1, 2010. The land of Keltron Counters Ltd., another company under liquidation was utilised for starting Gulati Institute of Finance and Taxation. Keltron Power Devices Ltd., and Keltron Rectifiers Ltd., are also under liquidation. Steps are initiated to release the property of these companies and the petitions for the same are under consideration of the High Court.

l. Fresh Recruitment

The majority of companies are facing acute shortage of qualified executives and workmen owing to the massive VRS during the previous UDF rule and lack of proper succession planning. During the last four years, above 5000 fresh appointments were done in the companies. The majority of companies have prepared their human resource plans and are going in for recruitments.

m.Wage Revision

Wage revision was implemented in almost all the companies and in some companies discussions are going on. Average increase of 25 to 35 percent of the salary was given to the workers and officers. KMML, Keltron, KEL, Kerala Ceramics Ltd., SILK, Kerala Clays and Ceramics Products Ltd., and Steel Complex Ltd., were some of the major companies where the wage revision was implemented during 2009-10.

National Conference on State Owned Enterprises

A major event in 2009-10 was the National Conference on “Resurgence of State Owned Enterprises: The Kerala Experience” that was held in New Delhi on 16/11/2009 to highlight the achievements of Kerala PSUs before the political leadership, prominent academics and senior bureaucrats at national level. It was also intended to initiate a dialogue on the role of the State Owned Enterprises in the context of global economic recession. The conference was inaugurated by Prof. Prabhat Patnaik, renowned economist and Vice Chairman of the State Planning Board. A galaxy of prominent personalities attended the meeting and the deliberations were of very high standard. Com. Mohammed Amin, General Secretary of CITU, Prof. Amiya Kumar Bagchi, Director, Institute of Development Studies, Prof. P.J. Kurien, MP, Dr. Y.R.K. Reddy, Academy of Corporate Governance, Nitish Sengupta, Chairman, BRPSE, Trilok Singh Papola, Development Economist, Abani Roy, MP, Com. Sukumol Sen, General Secretary, All India Government Employees Federation, T.K.A. Nair, Principal Secretary to the Prime Minister, K. M. Chandrasekhar, Union Cabinet Secretary, and Abhijit Sen, Member, Planning Commission attended the meeting. Many other prominent political / trade union leaders, academicians, CEOs of Central PSUs and media persons were also present. The minister for industries, Shri. Elamaram Kareem presided over the function and the Principal Secretary (Ind) Shri. T. Balakrishnan made the presentation on the Kerala achievements. The participants appreciated the steps taken by the Government of Kerala to revive the PSUs and there was unanimity on the point that such initiatives should be followed by other state governments and also by the Union Government. The central theme of the conference was well received especially in the background of the Union Government’s decision to privatise up to 49 percent of shares of the central PSUs. There was wide media coverage and some national magazines published special articles on the conference.

Similar conferences were held in Trivandrum and Ernakulam. It is planned to conduct the conference at Kozhikode on 14/05/10. The conferences could highlight the importance of PSUs in the productive sector and the political commitment of the LDF Government in protecting and developing them.

Expansion, Modernisation and New Projects

In the budget for 2010-11, Rs. 54.80 crores is allotted for the development and modernisation of the PSUs. During this year it is planned to implement expansion programmes to the tune of Rs. 275 crores in the following companies.

a. KMML - Modernisation of the plant. (Rs. 100 cr)
b. Autokast - Steel Casting Line in (Rs. 10 cr)
c. KSDP - Total renovation and new production line (Rs. 34 cr)
d. Trivandrum Spinning Mill - Doubling the capacity (Rs. 5 cr)
e. Kerala Soaps – New production Unit (Rs. 5 cr)
f. TTPL – Modernisation (Rs. 25 cr)
g. TCCL – Modernisation of the plant (Rs. 51 cr)
h. Malabar Spinning and Weaving Mill –Doubling the capacity (Rs.15 cr)
i. KEL – Modernisation and new product lines (Rs. 30 crores)

In addition to the above, the following eight more units are going to be started in this year. The proposed budget is given in the bracket.

1. Komalapuram High Tech Spinning and Weaving Mills (Rs.36 cr)
2. High tech weaving mill at Kannur (Rs. 20 cr)
3. New Textile Mill at Kasaragod (Rs. 16 cr)
4. Tracco Cable Unit at Kannur (Rs. 12 cr)
5. Tool Room of SIDCO at Kozhikode (Rs. 12 cr)
6. Machining Unit of SIFL at Shornur (Rs. 12 cr)
7. United Electicals Industries new Unit at Palakkad (Rs. 5 cr)
8. Tool Room and Training Centre of Keltron at Kuttipuram
(Rs. 12cr)

For implementing the above projects, the surplus funds of the PSUs will be utilised. It is proposed to collect Rs. 100 crores from KMML and Malabar Cements Ltd. Some of the projects will be funded by the
Kerala State Industrial Development Corporation, banks and other financial institutions.

- K. GOPA KUMAR

Lenin: The Lodestar

2010-05-15T05:06:00.000-07:00

Prakash Karat, People's Democracy April 25, 2010

APRIL 22, 2010 marks the 140^th anniversary of the birth of V I Lenin, the revolutionary leader who creatively developed the scientific theory set out by Marx and Engels. Lenin was the architect of the world’s first socialist State, the Soviet Union.

When we are commemorating the life and work of Lenin, we are not just paying homage to a great leader who led the world’s first socialist revolution. No other person after Marx and Engels has contributed to the development of Marxist theory as much as Lenin did. Lenin’s entire theoretical work constitutes the advancement of the concept of scientific socialism that equipped the working class movement to conduct the proletarian revolution.

Lenin took a giant step by analysing the nature of imperialism and capitalism in the 20^th century. He characterised the development of monopoly capitalism as the highest stage which is imperialism. Lenin creatively developed Marx’s analysis of the capitalist system when it was the rising mode of production to the stage of imperialism. Any analysis of contemporary imperialism and world capitalism today has to have as its starting point the theory of imperialism formulated by Lenin. Without the Leninist methodology it is not possible to understand global finance capital and the finance-driven globalisation that it has spawned.

It is this Leninist understanding of imperialism which led him to conclude that world capitalism will break at its weakest link from which the strategy and tactics in the socialist revolution in Russia were worked out in which the worker-peasant alliance played a key role. Parallel to this flowed the Leninist understanding of integrating the national and colonial question to the strategy and tactics of world revolution. This was a sharp break from the understanding of the prominent European Marxists. Lenin showed how the national liberation struggles in the colonies are part of the worldwide struggle against imperialism and how these forces are allies of the world proletariat struggling for socialism. The events of the 20^th century leading to the success of the national liberation struggles against colonialism and imperialism and the victories of the Chinese, the Vietnamese, Korean and Cuban revolutions were intrinsically the breakthrough achieved by this Leninist strategy.

The other important contribution of Lenin was to the understanding of the State and its class character which became the basis for all the Communist Parties in their struggle against capitalism and the ruling classes. Class struggle is not the struggle on economic issues alone but achieves its full scope when it challenges the State power of the exploiting ruling classes.

Lenin will forever be associated with the revolutionary theory of organisation which he expounded. The building of the party of a new type which is equipped to lead the working class and other toiling sections is uniquely a Leninist contribution. The principle of democratic centralism based on inner-party democracy, strict discipline and criticism and self-criticism, provided the working class with their own form of organisation as against the organisational methods of the bourgeois and social democratic parties. Subsequently, every party which made the revolution has found the Leninist form and method of party organisation to be indispensable for developing the revolutionary movement. The Leninist organisational principle drew the strongest attacks of the non-communists and from those within the Left fold. But Lenin firmly held that in the fight against the bourgeois State, the proletariat has only one weapon, that is, organisation. Our experience of building the Party in India under varied and diverse conditions confirms this Leninist principle.

Lenin survived as the leader of the Soviet Union for only six years after the 1917 revolution. In this period, he grappled with many of the stupendous tasks of creating a new society out of the ruins of the old. During four out of these six years, the bitter civil war raged and had to be won. From the period of War Communism to the New Economic Policy, Lenin constantly changed and adjusted policies with the single aim of facilitating the building of socialism. Lenin was conscious of the arduous and long road to socialism ahead. He said:

"The more backward the country, which, owing to the zigzags of history has proved to be the one to start the socialist revolution, the more is it difficult for that country to pass from its old capitalist relations to socialist relations".

Though it is futile to speculate how the Soviet Union would have built socialism, if Lenin had lived longer, it is necessary to draw lessons from how Lenin creatively tried to hew a path to socialism in an underdeveloped country while keeping the interests of the international Communist movement in mind.

Nearly seven decades after Lenin’s death, the Soviet Union disintegrated. Since then, in the past two decades history is sought to be rewritten. The entire revolutionary content of Leninism is being negated. One set of critics who throughout had maintained that Lenin’s theoretical and political significance was confined only to Russia now went further to claim that it had proved to be a failure in Russia itself. All varieties of bourgeois philosophies and theories deny the existence of imperialism. Some of them claim that liberal capitalism is eternal. That Marxism and Leninism were the products of their times and in the postmodern era they have no relevance.

Much of the claptrap about the end of history and the eternal verities of capitalism have ended abruptly. The two years of severe global recession have once again highlighted the volatility and predatory nature of capitalism. Out of the 7 billion people in the planet, half are poor and 1.2 billion people go hungry. Imperialism continues to wage wars and plunder the resources of the planet. If they continue to do so, the world environment and life itself will be destroyed.

Marxism is the only scientific outlook and method which can provide a coherent world view and guide to action to change the iniquitous order that prevails in the world today. Just as Lenin developed the theory and practice of Marx and Engels, today Marxist theory and practice has to be developed and extended from the base that Lenin created. Lenin himself had pointed out that Marxism is not a static theory. It needs to be enriched and developed further.

"We most certainly do not look upon the theory of Marx as something permanent and immutable; on the contrary we remain convinced that it has merely laid the foundation stone of the science which socialists must advance in all directions if they want to keep abreast of life".

In our quest to develop the theory and practice of Marxism further, Lenin will remain the lodestar for all our endeavours.

Of Cars and Corn: The ominous redistribution of grains between man and machine

2010-05-14T05:47:00.000-07:00

Thu, 2010-05-13 10:55 | Arindam Banerjee

The contemporary world is witnessing certain critical changes in the domain of grain utilization. With the ongoing efforts to substitute fossil fuels with bio-fuels, there has been a rise in the importance of fuel-use of cereals. This adds a new dimension to the food-feed competition that emerged in the 20^th century and characterised the world’s use of grains after the World War II[i]. The last few years have witnessed a large scale diversion of corn in the US to feed the ethanol distilleries. While the corn used for ethanol grew by around 60 percent in the nineties, the annual diversion of corn for ethanol production in 2008-09 was roughly six times that in 2000-01 (calculations based on data from the FeedGrains Database, USDA). The corn-ethanol industry has also undergone a massive expansion during the same time period[ii]. This phenomenal expansion of corn-based ethanol production in the current decade probably has more dramatic implications than what meets the eye.

While concerns over climate change and the urge to reduce carbon emissions have served as a motivation to replace gasoline with bio-fuels, the surge in crude oil prices in the current decade has also played its role in this transition. The history of the evolution of bio-fuels production points strongly towards the primacy of the role played by the oil prices[iii]. There has always been a strong urge to reduce dependence on crude oil and directed the energy of policymakers to search for alternative and economically viable energy sources. The recent trend of ethanol production from corn in the US since 1980 reveals that the linkages crude oil prices have with bio-fuel production are currently stronger than ever it has been.

In this context, it is worthwhile to investigate the impact of large scale grain-based fuel production on the overall grain-use equilibrium, particularly in developed nations. This has widespread implications for the entire world and in particular, the global south where hunger is an everyday reality of life even today. The global food crisis in 2006-08 also stands testimony to the fact that the integration of oil and grain prices has been reinvigorated in recent times with the emergence of the ‘new’ demand linkages. This brief primarily makes an effort to comprehend the theoretical tenets of the food-feed-fuel competition which has emerged following the emergence of grain-based bio-fuel production, an occurrence almost exclusive to the US economy.

Income classes and the competition for grains

In a sense, the use of grains for ethanol production ‘externalizes’ the grain-use equilibrium that had evolved over the last century. The transition from a food-feed to food-feed-fuel competition for grains implies that the grain-use equilibrium comes to be intricately linked with the movement of oil prices. Given this new facet in the utilization of cereals, it would be useful to revisit the theoretical foundations of the grain-use equilibrium. In a seminal article written in 1985, Yotopoulous had theorized the relationship between the food use and feed use of grains and how it unfolds with rising incomes and the graduation of people from the lower to the higher income classes.

He identified the growth of population and the growth in incomes as the two sources of rising demand for grains in the world. This is expressed by the following relation-

Ḋ = Ṅ + eẏ ……………………………………………. (I)[iv]

where Ḋ, Ṅ and ẏ are the growth rates of the total demand for grains, population and per capita income over time. ‘e’ is the elasticity of food demand with respect to income. The elasticity of demand for food with respect to population was assumed to be unity. Figure 1 illustrates the relation of food and feed demand with income.

Figure 1: The Food-Feed Competition

Source: Yotopoulos, 1985

There are two basic tenets of the Yotopoulos hypothesis. First, the elasticity of demand for food by the middle income classes is higher than that of the lower classes due to the high indirect consumption of grains in the form of animal products by the former. As income rises, the middle income classes consume more diary products and meat leading to a much higher demand for grains given the poor conversion ratios between grains and animal products[v]. The demand is even higher when people graduate into the middle income classes with rising income. The income elasticity of food demand for the middle income classes is even higher than the richer classes. This is so as with very high levels of income and food consumption, the uppermost classes in the society increase their expenditure on food consumption relatively much lesser with any rise of income. The consumption on non-food items and savings increase much faster for these classes with rising incomes.

This behaviour of different income classes with the rise in income was cited by Yotopoulos to explain the very high per capita consumption of grains in the developed countries with high per capita incomes. The higher the average income in a country and larger the size of the middle and rich income classes, the higher is the demand for grains, indirectly as feed in the form of animal products. As a result, the total demand for grains, both directly and indirectly, is much higher in the high income countries compared to the rest[vi].

The other major theoretical aspect of the competition for grains is the linkage that operates between food and feed markets and the ensuing food-feed competition. The food-feed competition essentially operates through an adjustment of prices and can have different outcomes under varying circumstances. In high income countries, where animal products formed a significantly large component in the average diet and correspondingly the livestock herd was also large, it was observed that the livestock herd played the role of a cushion which could absorb minor or major shocks arising due to grain production shortfalls in the short run. This cut-back in livestock feeding releases grains supply for direct consumption as food, which is important for the low-income classes. In the early seventies when feed prices abruptly increased, steep reductions in livestock feeding were observed in the US.

However, along with this, there is another phenomenon that occurs over the long run. A competition among food and feed emerges in an income differentiated society with time. If the income of the middle-classes rise at a fast rate over a period and consequently the demand for animal products also increases, there is a rise in the prices of feed grains. As a result, the prices of soft grains normally used for direct consumption, also rises in the long run due to the linkage between the food and feed grain markets (as soft grains are also fed to livestock and there is an increased diversion of these grains for livestock production). This increase in food prices deflate the real income of the poorer classes relatively more than the middle and richer classes as the poorer classes consume larger proportions of grain directly compared to the others.

This leads to the onset of the food-feed competition and the emerging levels of food and feed consumption in the economy depends on the respective price changes and respective demand elasticities of the different income classes. Whether the consumption of the poorer classes are actually depressed (or ‘crowded out’, according to Yotopoulos) depends on the relative income elasticities of food and feed consumption of the different classes. The extent of the rise in food price depends on the income elasticity of feed grains demand on the middle and richer classes. In case the middle classes are not very large in size and the bulk of the demand for feed mainly originates from the rich elite classes, the overall elasticity of feed demand is low in the economy. In such cases, a much greater price increase in required to release feed grain for food use such that any production shortfall in grains can be mitigated. In the process, this has a more adverse effect on the real incomes of the poorer classes, who may end up finding it difficult to maintain their subsistence level grain consumption. This food-feed competition can be envisaged to be occurring within the boundaries of a country as well as in the world as a whole.

Food-Feed-Fuel Competition: What happens to the poor?

Let us now come to the changes that occur when grains are also used for producing bio-fuels. Our study reveals that in the subsequent period between 1980-81 and 2000-01, the feed component of grain-use has played the important role of adjusting with the fluctuations in the overall supply of grains. Figure 2 exhibits these trends in the per-capita grain-use in the US along with the different components. However, unlike what Yotopoulos estimated for market developed countries in the period 1966-80, the elasticity for feed demand was lower than that for food in the US in the subsequent two decades. The elasticity for food demand was 0.3 during this period much higher than that for feed (0.01)[vii].

This was due to a number of reasons. The period which Yotopoulos studied was one characterized by a high growth of world cereal output. The annual growth rate of total grain output in 1966-80 was 2.9 percent which was much higher than the 1.3 percent in 1980-81 to 2000-01. For the US, these figures were 3.3 and 0.9 percent respectively for the two periods[viii]. This, along with the introduction of subsidized production of ethanol from corn, meant that there was much lesser space for feed demand to grow without jeopardizing the demand for food in an absolute sense. The use of corn for ethanol production grew at an annual rate of 8.7 percent during this period. There has also been some effect of the substitution of animal products by processed cereals/foods in the average diet in the US since the mid-seventies[ix]. However, what is important from our point of view is the fact that feed demand continued to play the role of a cushion adjusting to changes in the supply of grains and preventing any decline in the demand for food.

Figure 2: USA Per Capita Domestic Grain Use: 1980-81 to 2008-09

Source: Calculated by the author using WASDE data on grain use (various years) and FAO Population figures (various years)

Note: The food and fuel use variables are plotted on the LHS while the Feed and total domestic grain supply are plotted on the RHS. The unit of measurement for all variables is kg.

The more dramatic fallout of corn-based ethanol production for grain-use competition is witnessed in the current decade with the surge in crude oil prices. Between 1980 and 2001, the production of ethanol was mainly sustained by the subsidy provided by the US government. The price of production of an energy-equivalent litre of ethanol was higher than the retail price of one litre of gasoline when the Federal and State taxes on the latter are removed[x]. Ethanol production moved into the competitive zone once the crude oil prices crossed the $55 per barrel mark in the current decade. While the demand for ethanol increased at a fast rate in the earlier period, as evident from the high growth rate of corn use for feeding ethanol distilleries, there was an incomparable and brisk increase in ethanol demand in the current decade when it emerged as a cheaper alternative to gasoline. The corresponding annual growth rate of fuel-feed use of corn between 2000-01 and 2008-09 was a staggering 24.5 percent.

This brings us to the impact of bio-fuels on the grain-use equilibrium. There is a crucial transformation that occurs in the character of competition for grains. The food-feed competition that existed hitherto was based on the changes in dietary patterns which occurred along with rise in incomes. This meant that the pace of growth in the demand for animal products and hence for feed was linked to the growth rates of income. This growth in feed demand does not occur overnight as it takes time for the middle classes to expand and change their food consumption patterns. Even for fast growing economies, this transition may take a couple of decades to occur. In other words, the use of grains as feed is largely constrained by the demand for it.

This is clearly not the case with the fuel-use of grains. The immense demand for fuels is already present in the economy even before the production of bio-fuels starts. No change in consumption pattern of any income class is required for generating demand for ethanol. It is just a matter of substitution of gasoline with ethanol when the latter is a cheaper alternative. Therefore, once oil prices cross the threshold price at which ethanol becomes competitive, there is immediately a massive demand for ethanol and hence an enormous fuel-use demand for grains. This enormous demand virtually appears overnight. Unlike feed use, the actual ex post use of grains as fuel is actually constrained by supply and not demand. The supply-constraint character is vindicated by the fact that even after more than five-fold increase in ethanol production in the US between 2000 and 2008, it barely accounted for 6 percent of the total motor fuel use (i.e. ethanol plus gasoline use) in the economy. In highly motorized countries like the US, where the per capita per day gasoline use was as high as 4890 litres in 2002 (precisely the time when the surge in ethanol production started), there seem to exist an endless demand for ethanol[xi]. The arrival of fuel-use of grains relegates the linkages of grain competition with income levels to a secondary sphere and gives primacy to the linkages with the oil prices.

This transformation has a couple of important implications for the competition for grains. First, the transition from food-feed to food-feed-fuel competition establishes a strong demand-side linkage between the grain markets and the oil market. This linkage comes into operation once oil prices rise above the threshold level rendering ethanol production as a competitive option. Although, the government subsidies or concessions to ethanol production perform the same role of making the latter a viable energy source, there are fiscal limits to which such support can be extended. Hence, we witness that the rise in ethanol use, when it is supported by tax exemptions, is not as fast as when there is a surge in the oil prices.

What this means for the grain market is that from now on the food and feed prices will increase even without any production shortfalls, either due to a fall in output or a sudden rise in income levels and demand, but due to ‘external’ developments like price surges in the oil markets. Oil prices, which earlier ‘pushed’ grain prices upwards from the cost or the supply side only, will henceforth, also ‘pull’ grain prices to higher levels from the demand side. This is exactly what occurred during the recent food crisis where the oil prices have had an amplified impact on food prices. The result has been the increase in the number of hungry people on the globe even as the per capita grain supplies have increased since 2002-03.

The second implication is more critical in nature. In the competition between food and feed, when feed prices and meat prices rise, grains are released for consumption directly as food in accordance with the income elasticity of feed demand. Feed plays the role of a cushion in the manner we described earlier and maintains food consumption in case of occasional supply shortfalls. This is facilitated by the fact that animal products can be substituted by direct consumption of grains in the human diet. The case with fuel-use of grains is clearly not similar. Even if corn prices rise driving up the ethanol prices in turn, direct consumption of grains are not a substitute for ethanol in the diet of the vehicles. Hence, grains are not released for food or animal-feed use through a reduction of fuel-feed consumption unless the price of ethanol exceeds that of gasoline.

In that sense, fuel does not play any cushioning role like feed. Also, the share of fuel-use in total grain supplies increase and correspondingly the share of feed decreases. The share of fuel-feed in total use of grains in the US in 2008-09 was already 29.9 percent. This again undermines the capacity of feed grains to play the role of a shock absorber in case of any decline in supplies. In fact, our analyses reveal that both the food-use and feed-use declined between 2000-01 and 2008-09, by average annual rates of 0.78 and 1.7 percent respectively. Feed-use is actually less adversely affected when we consider the fact that a part of the grain used in ethanol distilleries comes back as animal feed in the form Dried Distillers Grain (DDG)[xii]. However, even after adjusting for DDG, the ex post feed-use still declined by 0.08 percent annually.

Both these implications follow from the fact that factors outside the grain market and the domain of the dynamics of human diet are playing an important role in determining the contours of the competition for grains. The movement of crude oil prices as well as the dynamics and trends in the automobile markets have emerged as crucial factors in determining grain prices and demand. This is what we can term as the ‘externalization’ of the grain-use equilibrium. The voracious demand for fuel-use of grains that appears actually crowded out both the food and feed use in the current decade in the US. While a developed country like the US with low levels of hunger and under-nutrition can afford such experiments, a similar development at the global level will prove to be ominous for the poor, particularly in the developing nations. The low-income classes will increasingly lose access to their subsistence food requirements in the wake of dramatic increases in food prices caused by competition from empty gas tanks of automobiles.

The political economy of this briskly expanding ethanol production suggests that the US is forced to facilitate the substitution of gasoline by ethanol primarily to reduce its strategic dependence on fossil fuels and at the same time support the high levels of motorization and fuel consumption in the economy. In the process, the food consumption in poor and middle-income food importing countries is jeopardized; the most recent example of this is the Mexican corn crisis in 2007. The high intensity of motorization that the US economy has undergone in the past has reached us to a phase of development where the competition for bio-energy generated from grains is occurring between human beings and machines. No doubt that the latter’s demand for bio-energy is far greater than human beings, given scientific design and technology. The machines can also win this battle for energy by paying the higher price for it. Markets cannot resolve this crisis as commodities will naturally flow to that market which pays it the highest price, given there are no other technical barriers. However, unlike the fictional world of science where machines can use artificial intelligence to rule over man and earth, in the real world, there is scope for human intervention to address these imbalances given that machines are still owned and controlled by human beings.

Clearly, the high-value consumption baskets that the capitalist philosophy of consumerism has encouraged for decades now in the developed world have caused a situation where competition for the world resources has become more intense than ever. The food-feed-fuel regime is marked by the antagonism between vehicle-owners and the rest of the population. High motorization in the US means that vehicle-owners are a sizable group in the population. However, at the global level, they form a minority. Portentously, this minority is now cornering disproportionately large shares of grains that otherwise could have provided nutrition to the billions of hungry and under-nourished in this globe.

[i] While the cultivation of livestock products and its consumption has been existent for a long time, large scale operations in this sector first emerged in the 20^th century. The horizontal and vertical integration in agriculture, the emergence of large Transnational Food Corporations in the second half of the 20^th century and the faster growth of income in large parts of the world, post WW-II, caused the genesis of the modern-day food-feed competition (Warnock, John W. 1987. The Politics of Hunger: The Global Food System. Methuen, Toronto).

[ii] The production of ethanol in the US, which barely doubled in whole of the nineties, surged in the current decade. The annual ethanol output in 2007 was more than five times that in 2000 (based on data from the Renewable Fuels Association, USA).

[iii] Both Brazil and the United States, the leaders in ethanol production, had triggered their initiatives for ethanol production in the second half of the seventies after the oil shock (Brown, Lester R. 1980. Food or Fuel: New Competition for the World’s Cropland. Worldwatch Paper 35. March).

[iv] See Yotopoulos, Pan A. 1985. Middle-Income Classes and Food Crises: The "New" Food-Feed Competition, Economic Development and Cultural Change, 33(3): 463-83 for a detailed derivation of this relation.

[v] The calorie equivalent grain-meat conversion ratios for poultry in 2:1 i.e. 2 kg of grain has to be fed to the chicken to produce poultry meat that provides the same amount of energy as 1 kg of grain when directly consumed. For beef, this ratio is high as 7:1 (Yotopoulos, 1985).

[vi] The per capita consumption of food grains in a developing region like South Asia was roughly 166 kg in 1980. In the same year, the same figure in the USA was nearly 739 kg and in the European Union (EU-15) was around 485 kg of food grains (based on World Agricultural Supply and Demand Estimates (WASDE), published by the USDA).

[vii] We have estimated the growth rates of real per capita income (at 1980 prices) for the US between 1980 and 2000 by using income data from the World Development Indicators (WDI) database maintained by the World Bank. The growth rates of per capita food, feed and fuel use in the US can also be estimated from our data on disaggregated grain use. Using these growth rates in relation I, we have estimated the income elasticity of food, feed and fuel demand for the period. The data for corn-use as fuel feed has been taken from the Feedgrains database, Economic Research Service available at (http://www.ers.usda.gov/Data/FeedGrains/

[viii] All growth rates of grain production are calculated based on USDA’s WASDE estimates.

[ix] See Popkin, Barry M., Anna Maria Seiga-Riz and Pamela S. Haines. 1996. A Comparison of Dietary Trends among Racial and Socioeconomic Groups in the United States, The New England Journal of Medicine, 335(10): 716-22 for the dietary transition.

[x] One gallon of ethanol provides roughly two-third the energy provided by a gallon of gasoline.

[xi] Worldwatch Institute. 2007. Biofuels for Transport: global potential and implications for sustainable energy and agriculture. Earthscan. London