FSSAI’s Delhi Belly Bull Run

The Food Safety and Standards Authority of India (FSSAI) seems to be extremely busy and for good reason, I guess, considering that we have a billion bellies to fill. There is literally a bull run going on when one looks at the noodles of media mentions that this august institution has been garnering ever since it came into existence in 2006. The first chart below shows this uptick in popularity. If you are a technical chartist, I am sure you will see some pennant patterns getting formed. Pennants of waving authority in the name of food safety. Authority indeed! FSSAI Bull Run in MediaThe “Authority” has quite authoritatively stamped its seal of disapproval on more than 400 food products between Aug’12 to Apr’15 (see chart on the right, below). This is based on the list of product applications that were rejected by the FSSAI. This list is available on FSSAI’s website.FSSAI Food Products Banned

When I look at the list of the food items banned by the FSSAI, I realize that I have consumed around 20 of them myself. Is that why I am suddenly feeling queasy? I miss my “meri blog post karne wali Maggi“?

I obviously do not understand anything about food safety and regulations apart from the fact that food items, while being agents of nourishment are also implements of commerce, livelihood and international relations. In that context, and bereft of any finer nuances of information, some of the actions of the FSSAI seem to be out of balance. And it personally hurts as well – especially if they work again to keep my beloved Glenfiddich, Glenmorangie, Aberlour [oh, yes!] et al out of India. 😦 The FSSAI’s apparent objection to the import of the bottles of these ambrosia is that their manufacturers have/had not mentioned “water” as an ingredient in the product labels.  Lindt, makers of chocolate since 1845, have/had reportedly dropped their business plans in India since they could not explain some finer
points of “composite chocolates” to the Authority. FSSAI was also reportedly ‘cheesed off’ at the fssai basketimporters of Parmegiano Reggiano because it is made of milk that is not pasteurized. Huh! I consume P. Reggiano regularly and I don’t care whether it made of pasteurized milk or not considering that this King of Cheeses is a Protected Designation of Origin (PDO) food and has always been made this way since the Middle Ages. There are accounts of green olives being allowed into India but black olives being ‘black’ listed since it may have been surmised that black olives are green ones gone bad! At least that’s the story being trolled around in the Internet. The picture on the right is my attempt at creating a food basket of some of the foodstuffs which have earned the attention of the FSSAI over the years.

It’s imperative to “build a healthy India with safe food”, but not at the cost of logic and good business order. Outliers do tend to get noticed, reported and talked about. The 2013-14 annual report of the FSSAI does show that the organization cleared 99.79% of shipments for import FSSAI Budget vs Food Industryclearance, but I guess parties connected to the balance 21 basis points make a lot of noise and complain. So I think there is some PR work that needs to be done by the FSSAI to maintain and improve its image amongst the intelligentsia. There is indeed a Facebook page, which has some really useful food safety information amid all the clutter of the automated feeds of their periodic notifications and circulars. Their isn’t much traffic on their Facebook page though – they need to solve for that. There is also the question of whether the organization is staffed adequately (both in terms of the number and quality of employees) and if it has adequate testing and admin facilities. If one goes by the steady stream of adverts for open jobs put up on its website, it does appear that the organization is looking to hire aggressively. The mandate of FSSAI is extremely large and my hunch is that the proficiency and sufficiency of the testing labs will lag for a very long time. According to the BCG [link], India’s food market is a staggering 23 lakh crore in 2014 and is expected to grow to 42 lakh crore by 2020 (13% CAGR). To monitor a 2,300,000 crore industry, the FSSAI spent 42 crores during 2013-14 doing stuff. Thoroughly inadequate.  The white dot in the picture on the right is the FSSAI – sitting as it is in the center of an industry which is approximately 55 thousand times its annual spend. The picture is scaled down to 20% – at it’s full size the black circle would not fit your computer screen.

All Fall Down

Back after a gap of more than a year. A lot happened in the interim. Completed my 40th turn around the sun, have been reading a lot (all non-fiction) and struggling to overcome my writer’s block. I guess a few of you literally kicked me out of my slumber to start writing again. Another motivator to post is what I have been reading lately:

That the markets may be getting ready to fall big this fall. All over the world stock markets are crashing. Even The Telegraph has started talking about doomsday and other apocalyptic messages. Do read the link if possible – has a lot of charts and explanations in a (hopefully) simple to understand manner. The Chinese devaluation of their currency was a shocker (in more ways than one). Not that I was long on the Remnimbi Yuan but some things happened. I had to down myself a couple of pegs even as our neighbours downed their currency a peg or two down. So I looked up the performance of some world equity indices and their corresponding currencies during the trailing twelve months to develop a personal view on what’s happening.

The chart below shows a scatter of the % change of a country’s representative stock index plotted against the corresponding % change in its national currency vs. the USD. A few outliers like Venezuela (stock market up 500%?) and Ukraine (equity down 27% and currency down 60%) were left out to bring the other data points into comparative focus. The worrisome point is that while we may not think much about a Ukraine being an outlier (due to relatively lower market cap) but then what would you say to a Russia with a currency devaluation of 77%? The other thing of note in the chart below is the bunching up of the green dots. They represent the various Eurozone countries, most of them falling in a common “y-band” due to the pegs that they have on the Euro. The question of entropy and equilibrium that I am asking is: How can a -40% to +40% range in equity returns sustain itself on a foundation of such a narrow difference between the movements of their respective national currencies. Doesn’t this portend to the Euro equilibrium going out of balance?

All Countries Stock Index vs CCY correl

While the above chart has data corresponding to 85 countries, the chart below shows the top 20 countries. Look at the golden quadrilateral formed by the points represented by the BRICS. Clearly each of the BRICs have followed unique paths to get where they are on this chart. Already fewer than 20% of Emerging Markets are trading above their 200 DMA levels (link, link). My hunch is that China will quickly begin moving towards the left on this chart. Smart Chinese money has already moved out of equity (link). My hunch is that China and Russia will move left the most. India will certainly move left but perhaps not to the extent that China will fall. That’s my hunch. I may be wrong, but I think soon enough a time will come when it will pay to be ready with your shopping bag. Hopefully the stock market will go ON SALE!!!

Major Countries Stock Index vs CCY correl


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