Forget Greece, an acrimonious dispute over the origins of the
bacterial disease that has claimed 16 lives in Northern Europe has worsened the
already fragile relationship between Germany and Spain. Cucumbers grown in
greenhouses in southern Spain were initially identified by German officials as
the source of a deadly strain of the E.coli bacteria, believed to be behind an
out outbreak of severe illness in North Germany.
The accusations, which were unproven and now appear unfounded
according to the FT, have not only damaged the important Spanish and Dutch
horticultural export industries but increased political strains! Spanish
Ministers were incensed when Angela Merkel, the German Chancellor, suggested in
a speech this month that people in countries such as Spain took too many
holidays, did not work long enough hours and retired too early. The “cucumber
crisis” has contributed to this sense of resentment as supermarkets have taken
down signs insisting they have NO SPANISH PRODUCE or the Financial Times
Deutschland wrote, “We are in a pickle” on Wednesday.
Seriously though, the Political framework in Euroland is
fragile at best. The peripheral countries of Greece, Ireland and Portugal are
slow moving train wrecks and restructuring (default of some form) of their
government debt, not band aid rescues, is required to remove uncertainty and
allow all parties to be “equally unhappy”. As we have written many times in
2010, the debt to GDP ratios are getting worse with austerity and the sooner the
default is handled the better it will be for investors in the long run.
The other more serious issue from the “cucumber crisis” is
the increasing potential serious outbreak of a food disease epidemic. The
American Novelist Barbara Kingsolver has recently written a book entitled,
“Animal, Vegetable, Miracle” which is a true story about her family’s endeavour
to eat only locally produced food for 12 months. One of the startling facts in
the book for me is the risks involved in the genetic modification of seeds, to
ensure foods can travel around the world for consumption, notwithstanding the
effects on the oil price.
In a meeting with the Sarasin AgriSar fund manager last week
he showed us the following chart which highlights how a Wheat Rust disease that
started in Uganda has spread, with the lighter shaded areas now high to medium
risk (see photo this page). Food has evolved over thousands of years to adapt to
certain circumstances; the genetic modification of this process may also be
putting a band aid over a long term problem for short term gain.
The “cucumber crisis” may not help the Europeans create a central finance
ministry as proposed by Jean-Claude Trichet recently but will help the price of
organic produce within his zone.
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more information please contact Graham Macdonald on email@example.com