(Delhi)

As hundreds of millions of Indians attain middle class status, their ability to afford more luxurious products is growing, and this impact is starting be felt in the upscale foods market. The dairy market, in particular, is seeing strong growth and a movement towards direct “farm to table” companies. This New York Times piece chronicles this movement and shows how a backlash against low-quality, mass produced milk has lead to a boom in local milk producers offering high quality products taken from pampered cows. At present, the new organic milk movement only accounts for 1% of India’s total dairy market share, but it is expected to grow 20% year on year. Dairy is the principal source of animal protein for the bulk of Indians, so the industry has a particularly strong significance throughout the country. However, the boom in organic products is not just limited to dairy, as new high-end grocery stores have opened across major metropolitan areas which offer loads of imported and high quality foods.

FINSUM: This is a sign of how prosperous India’s middle class is becoming and it is interesting to see that the “local and organic” movement so prevalent in the West is starting to take off in the developing world.

(Tokyo)

Bank of Japan governor Haruhiko Kuroda has announced that the bank is sticking to its plans to maintain its massive asset purchasing program for the foreseeable future, saying it is simply too early to abandon the program. Kuroda believes Japan is only “half way” to its inflation target, and will not get there until some time in 2015. Some analysts have speculated that the BOJ might be set to wind down stimulus, while others have speculated that they may boost it. For now, both are wrong, however, as the government will press ahead with the status quo. So far, the economy has seen minor inflation, hitting 1.5% in April, and has weathered the sales tax increase well. However, wages dropped at their fastest pace in 15 months this April, highlighting the difficulty the BOJ is having in boosting real incomes. The bank argues that as inflation becomes the norm, firms will become more comfortable boosting wages.

FINSUM: While many may consider “Abenomics” to be a moderate success, it seems in reality that the policies have done little other than exacerbate wealth inequality through asset price increases and erode working class spending power through inflation.

(Mexico City)

As the US’ ties with China have continued to devolve and labour costs have soared there, American companies have been fleeing manufacturing in China in favour of Mexico. Prices, quality, and speed are the major motivating factor for companies looking to move their manufacturing out of China. Over the last three years, Mexico has seen its trade with the US grow by 30%, a pace not seen since the introduction of NAFTA in the 1990s. Overall, Mexico’s share of the US import market reached 14% in 2013, while China’s declined. Interestingly, American companies shifting business to Mexico also comparatively boosts the US’ domestic economy. Long-term analysis has shown that neighbouring countries tend to share production to a much higher degree than distant countries. For instance, 40% of the all the goods imported from Mexico had American manufactured parts in them, compared to just 4% from China. However, despite all the optimism, many US businesses are having trouble locating appropriate facilities as they have found the Mexican market fragmented and highly divergent in quality and infrastructure.

FINSUM: This seems like a win-win situation for the US and Mexico as it helps both economies. Further, the closer-to-home production helps lower carbon emissions domestically and globally.