Enterra Insights

Memorial Day

Although each new days brings with it stories of continued conflict from Iraq and Afghanistan, too many people find it easy to push the sacrifices made by the men and the women who are serving or have served in the military to the back of their mind. Today America celebrates Memorial Day. We welcome the holiday as the unofficial beginning of summer and, too often, forget its original intent -- to honor the war dead from America's Civil War and all subsequent wars. Honoring those who die in conflict is, of course, an ancient tradition. It became an official U.S. holiday because there was something particularly poignant about the Civil War, since it often saw brother fight against brother and friend against friend.

War is a terrible, but sometimes necessary, activity. It's not the dying that makes men and women heroic; it's their willingness to place their life on the altar of liberty. We memorialize the dead, but we honor both the living and the dead who serve the causes of freedom and justice. As Richard Watson Gilder wrote, "Better than honor and glory, and History's iron pen, was the thought of duty done and the love of his fellow-men." Remembering, memorializing, and honoring those willing to fight the country's wars could be seen by some as glorifying war. It's not. As Martin Luther King, Jr., said, "War is a poor chisel to carve out tomorrow." Memorial Day recognizes the sacrifices of men and women, not the horrific conflicts that made such sacrifices necessary.

Amid the day's activities -- the picnics, the games, the family gatherings -- pause, at least for a moment, and silently honor those who serve and who have served to make this world a little better place in which to live. Remember, as Wallace Bruce wrote, those "who kept the faith and fought the fight; the glory theirs, the duty ours."

Nature or Nurture?

Human beings have wrestled with the nature of man since the beginning of history. Despite all of the advances we have made in the sciences, we still debate about what is natural and what is learned behavior. Last October, David Brooks wrote about the variety of individuals who are being attracted to "social cognitive neuroscience" in the hope that "they can help settle some old arguments about how people interact" ["The Young and the Neuro," New York Times, 12 October 2009]. He noted that most of the people in the field seemed to be young, smart, and good looking. He writes:

"In 2001, an Internet search of the phrase 'social cognitive neuroscience' yielded 53 hits. Now you get more than a million on Google. Young scholars have been drawn to this field from psychology, economics, political science and beyond in the hopes that by looking into the brain they can help settle some old arguments about how people interact. These people study the way biology, in the form of genes, influences behavior. But they’re also trying to understand the complementary process of how social behavior changes biology. Matthew Lieberman of U.C.L.A. is doing research into what happens in the brain when people are persuaded by an argument. Keely Muscatell, one of his doctoral students, and others presented a study in which they showed people from various social strata some images of menacing faces. People whose parents had low social status exhibited more activation in the amygdala (the busy little part of the brain involved in fear and emotion) than people from high-status families. Reem Yahya and a team from the University of Haifa studied Arabs and Jews while showing them images of hands and feet in painful situations. The two cultures perceived pain differently. The Arabs perceived higher levels of pain over all while the Jews were more sensitive to pain suffered by members of a group other than their own. Mina Cikara of Princeton and others scanned the brains of Yankee and Red Sox fans as they watched baseball highlights. Neither reacted much to an Orioles-Blue Jays game, but when they saw their own team doing well, brain regions called the ventral striatum and nucleus accumbens were activated. This is a look at how tribal dominance struggles get processed inside. Jonathan B. Freeman of Tufts and others peered into the reward centers of the brain such as the caudate nucleus. They found that among Americans, that region was likely to be activated by dominant behavior, whereas among Japanese, it was more likely to be activated by subordinate behavior — the same region rewarding different patterns of behavior depending on culture. All of these studies are baby steps in a long conversation, and young academics are properly circumspect about drawing broad conclusions. But eventually their work could give us a clearer picture of what we mean by fuzzy words like "culture." It could also fill a hole in our understanding of ourselves. Economists, political scientists and policy makers treat humans as ultrarational creatures because they can’t define and systematize the emotions. This work is getting us closer to that."

Brooks goes on to note that the results of studies such as those mentioned above underscore the fact that social norms do play a role and that treating "individuals as discrete decision-making creatures is nonsense." That doesn't mean, individuals are without "free will and control"; it simply suggests that social groups share some reactions in common. He continues:

"A study by Saaid A. Mendoza and David M. Amodio of New York University showed that if you give people a strategy, such as reminding them to be racially fair, it is possible to counteract [socially-ingrained] perceptions. People feel disgust toward dehumanized groups, but a study by Claire Hoogendoorn, Elizabeth Phelps and others at N.Y.U. suggests it is possible to lower disgust and the accompanying insula activity through cognitive behavioral therapy. In other words, consciousness is too slow to see what happens inside, but it is possible to change the lenses through which we unconsciously construe the world."

Brooks concludes, "The hard sciences are interpenetrating the social sciences. This isn’t dehumanizing. It shines attention on the things poets have traditionally cared about: the power of human attachments. It may even help policy wonks someday see people as they really are." Studying how social norms affect personal behavior still doesn't answer whether humans have inherent traits that tend to make us good or bad. There is a lot of research going on in that area as well. I'd like to mention two. The first seems to indicate that we are born with a natural urge to help ["We May Be Born With an Urge to Help," by Nicholas Wade, New York Times, 1 December 2009]. Wade reports:

"What is the essence of human nature? Flawed, say many theologians. Vicious and addicted to warfare, wrote Hobbes. Selfish and in need of considerable improvement, think many parents. But biologists are beginning to form a generally sunnier view of humankind. Their conclusions are derived in part from testing very young children, and partly from comparing human children with those of chimpanzees, hoping that the differences will point to what is distinctively human. The somewhat surprising answer at which some biologists have arrived is that babies are innately sociable and helpful to others. Of course every animal must to some extent be selfish to survive. But the biologists also see in humans a natural willingness to help."

Wade reports on the findings of the studies that have resulted in the "good news" results.

"When infants 18 months old see an unrelated adult whose hands are full and who needs assistance opening a door or picking up a dropped clothespin, they will immediately help, Michael Tomasello writes in “Why We Cooperate,” a book published in October [2009]. Dr. Tomasello, a developmental psychologist, is co-director of the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany. The helping behavior seems to be innate because it appears so early and before many parents start teaching children the rules of polite behavior. ... Dr. Tomasello finds the helping is not enhanced by rewards, suggesting that it is not influenced by training. It seems to occur across cultures that have different timetables for teaching social rules. And helping behavior can even be seen in infant chimpanzees under the right experimental conditions. For all these reasons, Dr. Tomasello concludes that helping is a natural inclination, not something imposed by parents or culture."

There is an interesting twist to this natural inclination to help -- it seems to be more prevalent "outside the home" than in it. Somehow I think parents instinctively knew that! Dr. Tomasello believes this is because "in families, the competitive element is in ascendancy." As social norms and individual learning creep into the picture, Dr. Tomasello indicates that children "become more selective in their helpfulness." For example, he notes that "starting around age 3, they will share more generously with a child who was previously nice to them." The article then touches on the subject discussed by David Brooks: social norms.

"Another behavior that emerges at the same age is a sense of social norms. 'Most social norms are about being nice to other people,' Dr. Tomasello said in an interview, 'so children learn social norms because they want to be part of the group.' Children not only feel they should obey these rules themselves, but also that they should make others in the group do the same. Even 3-year-olds are willing to enforce social norms. If they are shown how to play a game, and a puppet then joins in with its own idea of the rules, the children will object, some of them vociferously."

Wade reports that Dr. Tomasello believes that children develop a sense of "group belonging" or what he calls "shared intentionality." It is from shared intentionality, Tomasello believes, "that children derive their sense of norms and of expecting others to obey them." He claims that parents can influence their children "by communicating with [them] about the effect of their actions on others and emphasizing the logic of social cooperation." He concludes, "Humans putting their heads together in shared cooperative activities are thus the originators of human culture." Wade continues:

"A similar conclusion has been reached independently by Hillard S. Kaplan, an anthropologist at the University of New Mexico. Modern humans have lived for most of their existence as hunter gatherers, so much of human nature has presumably been shaped for survival in such conditions. From study of existing hunter gatherer peoples, Dr. Kaplan has found evidence of cooperation woven into many levels of human activity. The division of labor between men and women — men gather 68 percent of the calories in foraging societies — requires cooperation between the sexes. Young people in these societies consume more than they produce until age 20, which in turn requires cooperation between the generations. This long period of dependency was needed to develop the special skills required for the hunter gatherer way of life. The structure of early human societies, including their 'high levels of cooperation between kin and nonkin,' was thus an adaptation to the “specialized foraging niche” of food resources that were too difficult for other primates to capture, Dr. Kaplan and colleagues wrote recently in The Philosophical Transactions of the Royal Society. We evolved to be nice to each other, in other words, because there was no alternative."

Wade concludes that "the roots of human cooperation may lie in human aggression. We are selfish by nature, yet also follow rules requiring us to be nice to others. 'That’s why we have moral dilemmas,' Dr. Tomasello said, 'because we are both selfish and altruistic at the same time.'" The second article ["The Moral Life of Babies," by Paul Bloom, New York Times Magazine, 3 May 2010] begins with a study that affirms Dr. Tomasello's observation that "children not only feel they should obey ... rules themselves, but also that they should make others in the group do the same."

"Not long ago, a team of researchers watched a 1-year-old boy take justice into his own hands. The boy had just seen a puppet show in which one puppet played with a ball while interacting with two other puppets. The center puppet would slide the ball to the puppet on the right, who would pass it back. And the center puppet would slide the ball to the puppet on the left ... who would run away with it. Then the two puppets on the ends were brought down from the stage and set before the toddler. Each was placed next to a pile of treats. At this point, the toddler was asked to take a treat away from one puppet. Like most children in this situation, the boy took it from the pile of the 'naughty' one. But this punishment wasn’t enough — he then leaned over and smacked the puppet in the head."

Bloom, a professor of psychology at Yale, goes on, in a lengthy article, to examine other moral behaviors demonstrated by babies. He writes:

"Like many scientists and humanists, I have long been fascinated by the capacities and inclinations of babies and children. The mental life of young humans not only is an interesting topic in its own right; it also raises — and can help answer — fundamental questions of philosophy and psychology, including how biological evolution and cultural experience conspire to shape human nature. ... From Sigmund Freud to Jean Piaget to Lawrence Kohlberg, psychologist have long argued that we begin life as amoral animals. One important task of society, particularly of parents, is to turn babies into civilized beings — social creatures who can experience empathy, guilt and shame; who can override selfish impulses in the name of higher principles; and who will respond with outrage to unfairness and injustice. Many parents and educators would endorse a view of infants and toddlers close to that of a recent Onion headline: 'New Study Reveals Most Children Unrepentant Sociopaths.' If children enter the world already equipped with moral notions, why is it that we have to work so hard to humanize them? A growing body of evidence, though, suggests that humans do have a rudimentary moral sense from the very start of life."

The good professor continues by discussing the value of experiments in helping determine when good or evil is "bred in the bone." Even if there is some inherent goodness or badness in people, he asserts that "socialization is critically important." He believes this "because the sense of right and wrong that they naturally possess diverges in important ways from what we adults would want it to be." He continues:

"For many years the conventional view was that young humans take a surprisingly long time to learn basic facts about the physical world (like that objects continue to exist once they are out of sight) and basic facts about people (like that they have beliefs and desires and goals) — let alone how long it takes them to learn about morality. I am admittedly biased, but I think one of the great discoveries in modern psychology is that this view of babies is mistaken. ... The eyes are a window to the baby’s soul. As adults do, when babies see something that they find interesting or surprising, they tend to look at it longer than they would at something they find uninteresting or expected. And when given a choice between two things to look at, babies usually opt to look at the more pleasing thing. ... Psychologists — most notably Elizabeth Spelke and Renée Baillargeon — conducted studies that essentially involved showing babies magic tricks, events that seemed to violate some law of the universe: you remove the supports from beneath a block and it floats in midair, unsupported; an object disappears and then reappears in another location; a box is placed behind a screen, the screen falls backward into empty space. Like adults, babies tend to linger on such scenes — they look longer at them than at scenes that are identical in all regards except that they don’t violate physical laws. This suggests that babies have expectations about how objects should behave. A vast body of research now suggests that — contrary to what was taught for decades to legions of psychology undergraduates — babies think of objects largely as adults do, as connected masses that move as units, that are solid and subject to gravity and that move in continuous paths through space and time."

Bloom continues his op-ed piece by discussing studies that have demonstrated that babies could do rudimentary math and could tell the difference between people and inanimate objects. He continues:

"Babies like to look at faces; they mimic them, they smile at them. They expect engagement: if a moving object becomes still, they merely lose interest; if a person’s face becomes still, however, they become distressed. ... New studies found that babies have an actual understanding of mental life: they have some grasp of how people think and why they act as they do. The studies showed that, though babies expect inanimate objects to move as the result of push-pull interactions, they expect people to move rationally in accordance with their beliefs and desires: babies show surprise when someone takes a roundabout path to something he wants. They expect someone who reaches for an object to reach for the same object later, even if its location has changed. And well before their 2nd birthdays, babies are sharp enough to know that other people can have false beliefs. The psychologists Kristine Onishi and Renée Baillargeon have found that 15-month-olds expect that if a person sees an object in one box, and then the object is moved to another box when the person isn’t looking, the person will later reach into the box where he first saw the object, not the box where it actually is. That is, toddlers have a mental model not merely of the world but of the world as understood by someone else."

Bloom then broaches the subject at hand: morality. He writes:

"Psychologists like myself who are interested in the cognitive capacities of babies and toddlers are now turning our attention to whether babies have a 'naïve morality.' But there is reason to proceed with caution. Morality, after all, is a different sort of affair than physics or psychology. The truths of physics and psychology are universal: objects obey the same physical laws everywhere; and people everywhere have minds, goals, desires and beliefs. But the existence of a universal moral code is a highly controversial claim; there is considerable evidence for wide variation from society to society. In the journal Science a couple of months ago, the psychologist Joseph Henrich and several of his colleagues reported a cross-cultural study of 15 diverse populations and found that people’s propensities to behave kindly to strangers and to punish unfairness are strongest in large-scale communities with market economies, where such norms are essential to the smooth functioning of trade. Henrich and his colleagues concluded that much of the morality that humans possess is a consequence of the culture in which they are raised, not their innate capacities."

To read more about the phenomenon of a society's propensity to behave kindly to strangers, read my blog entitled Ethics and Trust in the Business World. Bloom continues:

"People everywhere have some sense of right and wrong. You won’t find a society where people don’t have some notion of fairness, don’t put some value on loyalty and kindness, don’t distinguish between acts of cruelty and innocent mistakes, don’t categorize people as nasty or nice. These universals make evolutionary sense. Since natural selection works, at least in part, at a genetic level, there is a logic to being instinctively kind to our kin, whose survival and well-being promote the spread of our genes. More than that, it is often beneficial for humans to work together with other humans, which means that it would have been adaptive to evaluate the niceness and nastiness of other individuals. All this is reason to consider the innateness of at least basic moral concepts. ... Human babies, notably, cry more to the cries of other babies than to tape recordings of their own crying, suggesting that they are responding to their awareness of someone else’s pain, not merely to a certain pitch of sound. Babies also seem to want to assuage the pain of others: once they have enough physical competence (starting at about 1 year old), they soothe others in distress by stroking and touching or by handing over a bottle or toy. There are individual differences, to be sure, in the intensity of response: some babies are great soothers; others don’t care as much. But the basic impulse seems common to all."

Bloom mentions Dr. Tomasello's work and the fact that some "toddlers tend to spontaneously help, even without any prompting, encouragement or reward"; but, he asks, "Is any of the above behavior recognizable as moral conduct?" He continues:

"Not obviously so. Moral ideas seem to involve much more than mere compassion. Morality, for instance, is closely related to notions of praise and blame: we want to reward what we see as good and punish what we see as bad. Morality is also closely connected to the ideal of impartiality — if it’s immoral for you to do something to me, then, all else being equal, it is immoral for me to do the same thing to you. In addition, moral principles are different from other types of rules or laws: they cannot, for instance, be overruled solely by virtue of authority. ... And we tend to associate morality with the possibility of free and rational choice; people choose to do good or evil. To hold someone responsible for an act means that we believe that he could have chosen to act otherwise. Babies and toddlers might not know or exhibit any of these moral subtleties. Their sympathetic reactions and motivations — including their desire to alleviate the pain of others — may not be much different in kind from purely nonmoral reactions and motivations like growing hungry or wanting to void a full bladder. Even if that is true, though, it is hard to conceive of a moral system that didn’t have, as a starting point, these empathetic capacities. As David Hume argued, mere rationality can’t be the foundation of morality, since our most basic desires are neither rational nor irrational."

Bloom doesn't leave the matter there, however. Doing so would be very unsatisfying for an article claiming to examine the moral life of babies. He continues:

"So what do babies really understand about morality? Our first experiments exploring this question were done in collaboration with a postdoctoral researcher named Valerie Kuhlmeier (who is now an associate professor of psychology at Queen’s University in Ontario). Building on previous work by the psychologists David and Ann Premack, we began by investigating what babies think about two particular kinds of action: helping and hindering. Our experiments involved having children watch animated movies of geometrical characters with faces. In one, a red ball would try to go up a hill. On some attempts, a yellow square got behind the ball and gently nudged it upward; in others, a green triangle got in front of it and pushed it down. We were interested in babies’ expectations about the ball’s attitudes — what would the baby expect the ball to make of the character who helped it and the one who hindered it? To find out, we then showed the babies additional movies in which the ball either approached the square or the triangle. When the ball approached the triangle (the hinderer), both 9- and 12-month-olds looked longer than they did when the ball approached the square (the helper). This was consistent with the interpretation that the former action surprised them; they expected the ball to approach the helper. A later study, using somewhat different stimuli, replicated the finding with 10-month-olds, but found that 6-month-olds seem to have no expectations at all. ... This experiment was designed to explore babies’ expectations about social interactions, not their moral capacities per se. But if you look at the movies, it’s clear that, at least to adult eyes, there is some latent moral content to the situation: the triangle is kind of a jerk; the square is a sweetheart. So we set out to investigate whether babies make the same judgments about the characters that adults do. Forget about how babies expect the ball to act toward the other characters; what do babies themselves think about the square and the triangle? Do they prefer the good guy and dislike the bad guy?"

Despite the soap opera theory that claims girls fall for the bad boy, most adults like the good guy (be they male or female). Bloom goes on to explain how they set up an experiment to test baby morality. He continues:

"In one of our first studies of moral evaluation, we decided not to use two-dimensional animated movies but rather a three-dimensional display in which real geometrical objects, manipulated like puppets, acted out the helping/hindering situations: a yellow square would help the circle up the hill; a red triangle would push it down. After showing the babies the scene, the experimenter placed the helper and the hinderer on a tray and brought them to the child. In this instance, we opted to record not the babies’ looking time but rather which character they reached for, on the theory that what a baby reaches for is a reliable indicator of what a baby wants. In the end, we found that 6- and 10-month-old infants overwhelmingly preferred the helpful individual to the hindering individual. This wasn’t a subtle statistical trend; just about all the babies reached for the good guy."

Bloom notes that they were able to rule out color preferences by changing who the good and bad objects were. They were still left with the question, "did they act as they did because they were attracted to the helpful individual or because they were repelled by the hinderer or was it both?" He continues:

"We explored this question in a further series of studies that introduced a neutral character, one that neither helps nor hinders. We found that, given a choice, infants prefer a helpful character to a neutral one; and prefer a neutral character to one who hinders. This finding indicates that both inclinations are at work — babies are drawn to the nice guy and repelled by the mean guy. Again, these results were not subtle; babies almost always showed this pattern of response."

Bloom admits that the most these experiments do is permit researchers to "safely infer ... is that babies prefer the good guy and show an aversion to the bad guy." He continues:

"What’s exciting here is that these preferences are based on how one individual treated another, on whether one individual was helping another individual achieve its goals or hindering it. This is preference of a very special sort; babies were responding to behaviors that adults would describe as nice or mean. ... To increase our confidence that the babies we studied were really responding to niceness and naughtiness, Karen Wynn and Kiley Hamlin, in a separate series of studies, created different sets of one-act morality plays to show the babies. ... In both studies, 5-month-olds preferred the good guy ... to the bad guy. This all suggests that the babies we studied have a general appreciation of good and bad behavior, one that spans a range of actions."

Bloom goes on to relate that they took their experiments beyond simply assessing "whether babies possess ... moral capacities [beyond] ... preferring good and avoiding bad." He explains:

"Part and parcel of adult morality, for instance, is the idea that good acts should meet with a positive response and bad acts with a negative response — justice demands the good be rewarded and the bad punished. For our next studies, we turned our attention back to the older babies and toddlers and tried to explore whether the preferences that we were finding had anything to do with moral judgment in this mature sense."

Using the same kinds of experiments described above, Bloom and his colleagues gave infants and toddlers "the opportunity to reward or punish either by giving a treat to, or taking a treat from, one of the characters." He then provides the results:

"We found that when asked to give, they tended to chose the positive character; when asked to take, they tended to choose the negative one. Dispensing justice like this is a more elaborate conceptual operation than merely preferring good to bad, but there are still-more-elaborate moral calculations that adults, at least, can easily make. For example: Which individual would you prefer — someone who rewarded good guys and punished bad guys or someone who punished good guys and rewarded bad guys? The same amount of rewarding and punishing is going on in both cases, but by adult lights, one individual is acting justly and the other isn’t. Can babies see this, too?"

He goes on to describe experiments that tested that notion and reports "the results were striking." Not surprisingly, toddlers preferred nice characters who rewarded other nice characters. "What was more interesting was what happened when they watched the bad guy being rewarded or punished. Here they chose the punisher. Despite their overall preference for good actors over bad, then, babies are drawn to bad actors when those actors are punishing bad behavior." He nevertheless concludes:

"All of this research, taken together, supports a general picture of baby morality. ... Babies probably have no conscious access to moral notions, no idea why certain acts are good or bad. They respond on a gut level. ... [However,] the aspect of morality that we truly marvel at — its generality and universality — is the product of culture, not of biology."

That doesn't mean that our tendencies to be helpful and supportive aren't important. It just means that morality does, in fact, require thoughts leading to actions -- not merely gut reactions. Bloom notes:

"The morality of contemporary humans really does outstrip what evolution could possibly have endowed us with; moral actions are often of a sort that have no plausible relation to our reproductive success and don’t appear to be accidental byproducts of evolved adaptations. Many of us care about strangers in faraway lands, sometimes to the extent that we give up resources that could be used for our friends and family; many of us care about the fates of nonhuman animals, so much so that we deprive ourselves of pleasures like rib-eye steak and veal scaloppine. We possess abstract moral notions of equality and freedom for all; we see racism and sexism as evil; we reject slavery and genocide; we try to love our enemies. Of course, our actions typically fall short, often far short, of our moral principles, but these principles do shape, in a substantial way, the world that we live in."

Although we can pat ourselves on the back for developing moral codes, we should be aware that we also develop prejudices and preferences very early in life.

"Our initial moral sense appears to be biased toward our own kind. There’s plenty of research showing that babies have within-group preferences: 3-month-olds prefer the faces of the race that is most familiar to them to those of other races; 11-month-olds prefer individuals who share their own taste in food and expect these individuals to be nicer than those with different tastes; 12-month-olds prefer to learn from someone who speaks their own language over someone who speaks a foreign language. And studies with young children have found that once they are segregated into different groups — even under the most arbitrary of schemes, like wearing different colored T-shirts — they eagerly favor their own groups in their attitudes and their actions. The notion at the core of any mature morality is that of impartiality."

As adults, we carry our biases with us -- even if we fail to admit them. That doesn't excuse us, however, for acting immorally. Bloom refers to a character in the Kingsley Amis novel One Fat Englishman, who says, "It was no wonder that people were so horrible when they started life as children." Dr. Tomasello is more optimistic than that. He believes that we can raise children to overcome their natural selfish tendencies and there is a world full of people who prove him right. Bloom ends his article this way:

"Morality, then, is a synthesis of the biological and the cultural, of the unlearned, the discovered and the invented. Babies possess certain moral foundations — the capacity and willingness to judge the actions of others, some sense of justice, gut responses to altruism and nastiness. Regardless of how smart we are, if we didn’t start with this basic apparatus, we would be nothing more than amoral agents, ruthlessly driven to pursue our self-interest. But our capacities as babies are sharply limited. It is the insights of rational individuals that make a truly universal and unselfish morality something that our species can aspire to."

Henry David Thoreau encouraged people to "aim above morality. Be not simply good; be good for something." Morality may not be in our nature, but we all have the capacity to be good for something.

Traceability in Global Food Supply Chains

I first broached the subject of traceability in food supply chains in a post entitled Traceable Supply Chains and Food Safety. Tracing food supply chains, especially global food supply chains, can be difficult; but like in so many other areas, establishing and enforcing standards can help ["Standards set to protect reputations," by Ross Tieman, Financial Times, 27 January 2010]. Tieman claims that "traceability in global food supply chains has come a long way" and the result has been greater food safety -- at least in Europe. He reports:

"A glance at the annual report of Europe’s Rapid Alert System for Food and Feed provides a fascinating insight into the difficulties of ensuring food safety in an era of global supply chains. The 2008 report, published in July last year, lists about 7,000 notifications concerning potentially risky food or animal feed issued via the RASFF system maintained by the European Commission. The good news is that, while the number of notifications was stable, the number of alerts sent to national governments of the 27 members of the European Union and partner countries, including Norway and Iceland, halved, to 528 alerts, as regulators focused on the cases in which there was deemed to be a real risk to health."

The reason that the reduced number of alerts is "good news" is because it means that consumers should realize that these warnings are serious and not simply the government crying wolf at every opportunity. That should translate into fewer illnesses and deaths. For companies, it should also mean less liability and fewer losses as a result of recalls. If there is bad news coming from the report, it is that governments rather than retailers or suppliers are finding the tainted food. Tieman continues:

"Just a few incidents can trigger hundreds of notifications, as news about sunflower oil from Ukraine contaminated with mineral oil, melamine in food from China or dioxins in Irish pork is spread through EU supply chains. Many problems are forestalled by health inspectors long before foods reach the table. More than 40 per cent of notifications concerned imports that were tested at EU borders and then rejected, with warnings sent to the country of origin. Overall, official inspections triggered 83 per cent of notifications, company checks picked up 6 per cent more, and consumer complaints generated 4 per cent."

Regardless of where and by whom problems are detected, both consumers and companies end up winners. Tieman explains:

"Only 1 per cent arose from cases of food poisoning. Indeed, when problems are identified, companies, anxious to protect their reputations, seem to act fast to tackle the consequences. During December last year, the Canadian Food Inspection Agency issued only seven 'high risk alerts' involving food product recalls. No illness was recorded in any of the incidents, the recalls were voluntary, and the agency was able to provide serial numbers for the products and pinpoint where and when they were sold."

All of the challenges associated with food traceability haven't been eliminated of course; but Tieman nevertheless insists that "food safety and traceability has come a long way." He explains:

"Mella Frewen, director general of the Confederation of Food and Drink Industries of the EU (CIAA) says regulators and manufacturers have 'made an enormous improvement in the last couple of decades', which have seen the EU food safety regime become one of the toughest in the world. But the desire of consumers to buy the same products all year round has increased imports of fresh fruit and vegetables to developed countries, while foods once deemed exotic have become commonplace. 'Compliance checks on safety becomes a tough one in that context, because the source may be further away and there is an increased likelihood of finding producers with different analysis and control procedures,' she says."

That is the reason that Tieman asserts that global standards and enforcement are required. He continues:

"Frank Janssens, Belgium-based Europe food operations managerat SGS Group, the international inspection, verification, testing and certification company, agrees that globalisation adds to the legal and physical complexity of monitoring food safety in supply chains. 'Traceability is very important if there is a problem,' he says. 'We need to trace and locate food wherever it is in the supply chain.' This requires companies to maintain computer systems that track food products from the farm to the retailer. Retailers and manufacturers often use third-party certification – with audits carried out by companies such as SGS – to ensure not only regulatory compliance, but also to minimise risks of a food safety incident."

As I reported in my first post on this subject, food-borne diseases can cost billions of dollars (approximately $152 billion annually in health care and other losses in the U.S. alone). Companies are very aware that a food recall could result in huge economic losses or even bankruptcy. Tieman continues:

"Big retailers take food supply chain safety very seriously, because their reputations, and therefore sales, are at stake. Back in 1998, the British Retail Consortium, a trade body, launched its BRC Global Standard for Food Safety to provide a standard for due diligence and supplier approval. No matter where the product originates, or where the supplier is based, companies supplying food to UK retailers are unlikely to win or retain business unless they comply. That has contributed to the adoption of the voluntary BRC Global Standard around the world. As alerts and notifications on both sides of the Atlantic show, the system works. When a problem becomes known, the food affected can be tracked from farm to store, and destroyed – though publicity is still needed to alert consumers if unsafe food has reached the home."

Tieman concludes by explaining the kinds of technologies used to trace food supplies.

"Today, traceability still hinges on batch numbers, barcodes and the corporate databases that record them. But technology can underpin further improvements. Radio Frequency Identification (RFID) tags on crates of fresh produce have the potential to trigger alerts to retailers and manufacturers if food is nearing its sell-by date unsold, or is left out of the fridge for too long, and becomes a risk. Furthermore, retailers have begun using data from their loyalty cards to write to customers notifying them of product recalls. Some are experimenting with more sophisticated alerts. In the future, opt-in schemes to warn consumers of product recalls by text message or e-mail may become widespread. But recalls are a last resort. Standards, laboratory tests and supply chain controls remain the most effective, and most desirable tools to ensure food safety."

According to some analysts, we are getting nearer to the RFID era ["Signs are Pointing Up for RFID, AMR Analyst says, though Broad-based Supply Chain Applications still Lagging," Supply Chain Digest, 24 March 2010]. The magazine's staff reports:

"Various observers are sensing, in the post-Walmart RFID era, that activity and adoption are starting to move forward at a fairly steady pace. That includes AMR Research analyst Dennis Gaughan, who wrote ... that he has observed a variety of somewhat anecdotal data points that are leading him to think that RFID may at last be moving towards something like critical mass. 'I’ve seen a spike in the volume of [RFID] inquiry requests just within the last month,' Gaughan says. 'These companies aren’t just kicking the tires on RFID, but looking at broader production deployments.' This is a 'striking' difference, he says. In past years, too often companies 'were doing RFID pilots that never went anywhere because they were either based on some compliance mandate or were IT driven.' He cited one recent discussion in which he was talking to an IT person about RFID middleware software, but for a project for which there was no doubt that it was being led by the business with very clear goals and a focused sense of where the ROI would be."

Large companies like Walmart can leverage their position to require suppliers to use RFID tags, but small retailers have no such leverage and little desire to invest in monitoring equipment that could adversely affect their bottom line. As RFID costs are reduced, that may change. "The smallest mom and pop retail store ... for many years has been able to easily and successfully implement a bar code scanning system," the article notes. "Some day, this will be largely true for RFID as well." "Someday" may be closer than we think thanks to the development of an "inexpensive, printable transmitter [that] can be invisibly embedded in packaging ["Hidden RFID tags could mean end of bar-codes and lines at the checkout," by Darren Quick, Gizmag, 19 March 2010]. Quick reports:

"Newly developed radio-frequency identification (RFID) technology could usher in the era of checkout line-free shopping. The inexpensive, printable transmitter can be invisibly embedded in packaging offering the possibility of customers walking a cartload of groceries or other goods past a scanner that would read all the items at once, total them up and charge the customer’s account while adjusting the store’s inventory. More advanced versions could even collect all the information about the contents of a store in an instant, letting a retailer know where every package is at any time. Researchers from Rice University working in collaboration with a team led by Gyou-jin Cho at Sunchon National University in Korea, developed the new technology which is based on a carbon-nanotube-infused ink for ink-jet printers first developed in the Rice lab of James Tour. The ink is used to make thin-film transistors, a key element in radio-frequency identification (RFID) tags that can be printed on paper or plastic."

Quick reports that the technology should be mature in five years; although, adoption may take longer. The research team is also developing the electronics that will "bring the cost of printing the tags down to a penny apiece and make them ubiquitous." Quick continues:

"RFID tags are almost everywhere already. They are being used to identify and track everything from farm animals to shipping containers and passports to library books. But to date RFID tags have been largely silicon-based. Paper or plastic tags printed as part of a package would cut costs dramatically and the roll-to-roll technique, which uses a gravure process rather than inkjet printers, could replace the barcodes that currently appear on just about everything we buy. ... There are several hurdles to commercialization. First, the device must be reduced to the size of a bar code, about a third the size of the current device. Second, its range must increase."

One of the things that could hold up widespread implementation of RFID is, ironically, standards ["How Close – or Far Away – is RFID from 'Commoditization?'," Supply Chain Digest, 6 May 2010]. The article reports:

"Virtually every technology, especially in the area of automatic identification, ends up at a certain level of commoditization. What that means is that the technology becomes fairly straightforward to implement, the hardware elements of a system are increasingly sold by third party distributors rather than the manufacturers themselves, hardware prices fall sharply, and the technical aspects of system implementation become relatively straightforward. Clearly, this happened with bar coding, for example. The process of successfully printing and scanning bar codes and communicating that data to other systems was something of a black art in the early 1990s, became increasingly mainstream in the late 1990s, and reached largely commodity technology status by the early 2000s. ... Like virtually all technologies before it, RFID is caught a bit in a 'standards trap' says SCDigest editor Dan Gilmore. 'Industry standards are essential to build a real market, in part to give users confidence that their investments won’t be made obsolete over night by a change in the technology foundation,' Gilmore says. 'But ultimately, those standards make “plug and play” something close to a reality, and that brings with it a growing element of commoditization.' ... True interoperability between tag and reader manufacturers are growing though not yet complete reality, that means soon the hardware differences will revolve completely around features and price (and less on 'will it work?'), and give buyers growing clout to push hardware and tag prices down even more so than they have been able to date."

Until RFID technology becomes more affordable, small suppliers, distributors and retailers will continue to search for an affordable way to ensure traceability. Recently, I was contacted by one blog reader who indicated that her company was facing just such a dilemma and was wondering if I had any suggestions. One of Enterra Solutions' vice presidents pointed the reader to a company called TraceLink. That company's website states:

"Consumers trust the products they consume are safe and in general they are. Unfortunately, recent headlines on tainted products have questioned the industry’s manufacturing and supply traceability processes. Should an adverse event such as tainted ingredients, infectious organism or even terrorist threats occur, knowing immediately where the affected products are in the supply chain, where they were manufactured, what ingredients went into them and who in the distribution channel handled them is paramount."

The company claims that its "Predictable Supply Suite can help by providing unique product identity and end-to-end chain of custody for all products from time of manufacture to time of consumer purchase. Create package-level and case-level identity. Enable product authentication, both in bulk and per-package, throughout the channel. Support fast recall of product through proactive notification to channel partners of adverse events. Securely share quality documentation and artifacts with channel partners as needed." TraceLink indicates that it uses a "flexible business Cloud that combines virtual team collaboration, social networking and instrumented business process modules." There may be other companies that can also provide affordable traceability -- I simply don't know. What I do know is that sharing information is critical to ensuring food supply chain safety. As standards and technologies mature, food safety will undoubtedly improve.

ECOWAS and Other Upbeat News Out of Africa

Although a lot of bad news continues to flow from countries in Africa (like the Congo, Nigeria, and Zimbabwe), there is also the occasional story of hope and progress. For example, there was the bad news/good news story that followed elections in Sudan ["Half horrid, half hopeful," The Economist, 15 April 2010]. The article reported that although the election was "rigged in the north" it was "more or less fair in the south." Not everyone, however, is happy with the results. Kevin Funk and Steven Fake, for example, lament the fact that "indicted war criminal Omar Hassan Ahmed Bashir has maintained his grip on the presidency with 68% of the national vote, and the Sudan People's Liberation Movement will do the same in the south after obtaining 93% of votes in that region" ["How much does Washington care about African democracy?" Los Angeles Times, 6 May 2010]. The Economist admits that "the elections will have endorsed the status quo"; but it also believes that "many voters saw the election as a dry run for next year’s promised referendum, especially after the SPLM pulled its candidate out of the race against Mr Bashir for Sudan’s national presidency. A huge majority of southerners seems likely to vote for secession, which offers them a merciful release from Mr Bashir’s rule." To read more about South Sudan, read my post entitled Looking Forward to "New Sudan".

Among the "good news" stories is one about the Economic Community of West African States (ECOWAS), which, according to The Economist, "has notched up some successes" even as other regional organizations have faltered ["Quietly impressive," 25 March 2010]. The article reports:

"The Economic Community of West African States, better known as ECOWAS, has a notoriously tricky job. The 15-country club must, among other things, promote democracy in a region blighted by military coups and 'big men' who rarely wish to cede power. Four of its members have suffered civil wars in the past 20 years; only Cape Verde and Senegal have never had a coup since independence. Yet, especially compared with Africa’s other such clubs, ECOWAS is doing a pretty good job. Guinea and Niger, two resource-rich but coup-prone countries, have recently provided big tests. In the first case ECOWAS rose to the challenge. Last month Guinea’s junta finally handed over power to a transitional government after a concerted squeeze by ECOWAS, other African countries and the West. ECOWAS had taken the lead, holding talks with the soldiers and pro-democracy groups since October. It had also suspended Guinea from the club and had put sanctions on the regime of Captain Moussa Dadis Camara, who seized power in 2008 after the death of General Lansana Conté, a dictator who had run the show for 24 years. Meanwhile, last month Niger had its third coup in 14 years. The African Union (AU), the main continental body, promptly suspended the country from membership after soldiers ousted Mamadou Tandja, the president. But ECOWAS had suspended the impoverished desert state four months earlier, as Mr Tandja grew ever more tyrannical, seeing that his latest moves, if unchecked, would provoke the army to intervene. ECOWAS and the AU are now monitoring the soldiers’ promise to hold elections in the coming months."

One of the reasons that ECOWAS has had some success is because its officials are realists. They concede the organization "can achieve little on its own. Its sanctions are largely symbolic." The article explains that "to compensate for its lack of economic clout, ECOWAS has learnt to work in tandem with beefier bodies and countries, raising the alarm when it spots danger on the horizon."

"The club’s Achilles heel is Nigeria, Africa’s most populous country. Its economy is twice as big as the other members’ combined. The club’s headquarters is in Nigeria, which, on some counts, provides a third of the cash for Ecowas and a big chunk of its peacekeeping troops. But this makes it hard for the other ECOWAS members to criticise Nigeria. ... When it comes to dealing with Nigeria’s flaws, 'Ecowas is strangely absent,' says Alex Vines of Chatham House, a British think-tank."

With so much of its funding coming from Nigeria, ECOWAS will probably remain reluctant to bite the hand that feeds it. It may nevertheless play some role in helping Nigeria move forward peacefully following the death of its ailing president. Another good news story from that part of the world is that West African states are proactively trying to prevent terrorist groups from getting established there ["Radical Islam meets a buffer in West Africa," by Karin Brulliard, Washington Post, 21 December 2009]. Brulliard reports why West African nations are concerned:

"This past year has brought worrying signs that ... a violent brand of Islam [is infiltrating] moderate parts of West Africa. An increase in attacks has included the killing of an American teacher and a suicide bombing in Mauritania, the kidnapping of two Canadian diplomats in Niger, and the executions of a British tourist and a Malian colonel in Mali. All were attributed to an al-Qaeda branch made up mostly of Algerians that has ranged southward to hit in urban Mauritania and establish a rear base in the Malian desert."

Mali, Brulliard reports, is the test case for keeping extremists at bay. She explains:

"So far, the desert belt spanning black and Arab Africa has proved less a gateway for the southward spread of militant Islam than a bulwark against it, and some analysts call the threat overblown. In this secular nation, alcohol is served and gambling is common. Images of President Obama are ubiquitous, and anti-American sentiment is rare. Few women wear veils. 'We don't want an Islamic republic,' said Mahmoud Dicko, head of the High Islamic Council, an umbrella group of religious organizations in Bamako, the capital. 'We don't want sharia, or to cut people's hands off.' A socially conservative but tolerant Sufi strain of Islam dominates, but the ranks of foreign imams are rising, and the government has little handle on what is being preached in mosques, Western diplomats said. A weak army has done little to challenge the extremists, who easily cross invisible desert borders, while frequent U.S. military-led training sessions meant to build up the Malian forces -- part of a five-year, $500 million counterterrorism program in 10 countries of the region -- have been 'not very effective,' one diplomat in Bamako said."

The region's states also fear that if terrorist groups get a foothold in the area they will become targets of western military activity. In order to prevent such interventions, they have established their own joint military headquarters. To learn more about that, read Tom Barnett's post entitled North Africa plans on being ready. One concern in Mali is that a madrassa, or Islamic school, has been set up in Timbuktu that requires female teenagers and teachers to wear burqas. Schools can be a powerful influence for good and evil.

On the subject of schools, The Economist reported on Rwanda's efforts to connect its students to the Internet ["Upgrading the children," 3 December 2009].

"Tiny, landlocked Rwanda is sometimes touted as Africa’s high-tech economy. It is still a bit early for that, however. Neighbouring Uganda produces far more computer-science graduates. Countries such as Nigeria and Kenya are even further ahead. South Africa is out of sight. But technology is the core of Rwanda’s plan to transform its economy by 2020. The country seems ready to back its ambition with money and policies. By 2012, for instance, Rwanda wants every child in the country between the ages of nine and 12, 1.3m children in all, to have a laptop, each with an internet or intranet connection to download free educational software and electronic books. 'We estimate the start-up cost will be $313m,' says Richard Niyonkuru of Rwanda’s education ministry. ... Rwanda’s austere president, Paul Kagame, believes the initial outlay will be worth it. How else, he says, to produce the 50,000 computer programmers the country wants by 2020? ... If the scheme is to be profitable, software will eventually have to be written to link computers to omnipresent mobile phones. Money must also be found to keep updating the laptops. On the plus side, the project’s proposed scale means that small businesses will spring up to charge, repair and enhance the machines. Rwanda thinks it can also use laptops to improve government services. The laptops could then move the country seamlessly into electronic government. That, at any rate, is the hope."

The scheme also complements Kagame's desire for Rwanda to "develop its way" into the future without having to rely on official development aid ["A Supply-Sider in East Africa," by Anne Jolis, Wall Street Journal, 24 April 2010]. Jolis reports:

"Sixteen years ago, the world watched in horror as 800,000 Rwandans were systematically murdered by their neighbors. In just 100 days, well over 10% of the country's population—mostly Tutsis, the country's minority group, and some politically moderate Hutus, the country's majority—were slaughtered by an extremist Hutu government. Paul Kagame led the Rwandan Patriotic Front (RPF), the guerilla army made up largely of Tutsi refugees that ultimately overthrew the government and ended the bloodshed. Now he's president. You might suppose that the leader of a country synonymous with genocide would be far more interested in scoring foreign aid than in talking about supply-side economics. But then you probably haven't met Mr. Kagame. His agenda for improving the state of his country boils down to one goal: 'spurring private investment.' 'We believe in private enterprise, free market, and competition. ... So we have to make sure there is a conducive environment for people to be creative and innovative.'"

Jolis reports that Kagame remains a fighter at heart, but that his fight has moved from the battlefield to the boardroom. She continues:

"These days, the battle he is fighting is for national prosperity. Unlike many of his peers in the Third World, his focus is on how to create wealth—not on how to beg for charity. ... 'We can only have ourselves to blame for our failures,' he says. 'We don't expect anyone to hand us any success or progress we hope to be making.' That attitude makes Mr. Kagame a skeptic when it comes to foreign aid, which he faults for many of the world's ills. 'It has created dependency, it has distorted the markets, it has detached people from their leaders and their values, it has created conflicts in some cases.' He notes that Rwanda has cut its dependence on aid by half in the past 15 years, and he speaks with undisguised pride that Rwanda has become self-sufficient in food for the first time in its history. Gradual improvements to property rights, along with government money for fertilizer to farmers (which the farmers have since repaid with the revenue from their produce), have even allowed Rwanda to begin exporting some of its crops. What the country needs now, Mr. Kagame says, is the freedom to market itself around the world. His key bugaboos include import tariffs and agricultural subsidies: 'Trading fairly with developing countries would put more money in the hands of the developing countries than [donor countries] give through aid.' ... 'We ask would-be investors what is it they're really interested in when they come to Africa or when they come to Rwanda,' Mr. Kagame explains. 'We say, "What would you be interested in seeing happen in Rwanda that would facilitate your investment?" We put all this together and start seeing what we don't have and put it in place—whether it's about laws, institutions, or different aspects of relations, so on and so forth.' Mr. Kagame says his approach has lured New York-based electric and heating utility group ContourGlobal. It is investing in Lake Kivu's methane reserves for electricity generation, with an eye to producing enough power to export to Uganda. The president's other major project is simplifying the country's tax code. While the World Bank puts Rwanda's total levies on profits at 31.3%, well below the OECD average of 44.5%, Mr. Kagame predicts that streamlining taxes to bring down administrative costs and cut incentives to cheat is probably the best way of 'actually increasing the level of revenue you collect.' ... It's hard not to like his message. And yet Mr. Kagame has strong critics. Lately their concern has focused on Rwanda's upcoming presidential elections, in which Mr. Kagame remains unopposed in his run for a second seven-year term. His main would-be challenger, Victoire Ingabire—who returned to Rwanda in January after 16 years in the Netherlands—was arrested ... on charges of associating with a terrorist group (the Democratic Liberation Forces of Rwanda, founded by perpetrators of Rwanda's genocide) and advocating ethnic division. Ms. Ingabire was released on bail the day after her arrest. But unless she's officially cleared of the charges she's barred from registering her party in the elections."

Kagame insists that he has no ambitions to become Rwanda's "president-for-life." His only ambition, he claims, is to help secure a more peaceful and prosperous future for all Rwandans. Time will tell. If more Africa had more leaders who, like Kagame, believed that development rather than foreign aid was the key to prosperity, there might be less corruption on the continent. With China providing so-called "rogue aid" to African nations, however, that's not likely to happen anytime soon. As I have noted in past posts, China has moved aggressively to secure access to natural resources found within African nations and it has been joined by Brazil. Another emerging market country that has shown interest in Africa is Turkey ["Ottoman dreaming," The Economist, 25 March 2010]. According to the article, "The Turks have new ambitions for trade and influence in Africa." It explains:

"On March 17th, ... Abdullah Gul became the first Turkish president to visit Cameroon and Congo. ... Mr Gul’s African expedition was ... about finding new markets, ... which helps to explain the presence of some 140 Turkish businessmen in his entourage. The economic crisis has hit Turkey’s trade with the rest of Europe. So the 'Anatolian tigers'—small-and medium-sized entrepreneurs from Turkey’s conservative heartland—are eyeing opportunities in Africa. And Africans are responding with enthusiasm. ... The Turks ... want to sell Africans a range of finished goods, from washing powder to jeans. Turkish contractors are angling to build airports, housing and dams. Turkish Airlines now has regular flights to Addis Ababa, Dakar, Johannesburg, Lagos and Nairobi. Mehmet Buyukeksi, president of Turkey’s exporters’ association, says that Turkish exports to Africa have leapt from $1.5 billion in 2001 to over $10 billion in 2009. 'We believe in the future of Africa,' he declares."

The article notes that "Turkey cannot hope to match up to the likes of China or India. Yet Mr Gul believes it has a competitive edge." That edge, according to the article, is the fact that Turkey was never a colonial power in sub-Saharan Africa (although "Egypt, Libya, Algeria and Sudan were all once part of the Ottoman empire) and it has embraced a moderate form of Islam. The article continues:

"Farther south Turkey is on virgin turf. Locals often have bitter memories of rapacious Western colonialists and Arab slave traders. This is another reason why Turkish Islam has such appeal—and can be so good for business. Ebubekir Keskin, a 37-year-old Turkish businessman who settled in Douala, Cameroon, three years ago, swaps Turkish-made pasta for local timber. He says his business model is based on alliances with local Muslims. 'Being Muslim helps big time, soon we will overtake the Italians,' he boasts. His ambitions are bolstered by members of Turkey’s largest Islamic fraternity, led by a moderate Muslim cleric, Fetullah Gulen, who lives in America. Gulenists now run 60 schools in 30 African countries. Staffed by locals and Turks alike, the schools are patronised by the offspring of elites lured by Western standards of education (if not mandatory Turkish-language classes)."

As Turkey's economic influence grows, it hopes to leverage it into political influence as well. Turkey has already started playing a large diplomatic role in the Middle East and wants to extend its influence into Africa. The article notes that one reason that Turkey won a seat on the UN Security Council was because "all but one African country vot[ed] in its favour." As a result, Turkey "opened or plans 12 new embassies in Africa." One fly in the ointment, the article claims, is "Turkey’s desire to join the European Union."

"Faced with EU howls, it had to withdraw a recent invitation to Sudan’s president, Omar al-Bashir, who has been indicted by the International Criminal Court for war crimes in Darfur. Widespread abuses in other African countries that Turkey is wooing could yet cause further headaches. Mr Gul is undaunted. 'There are many people like us here, the Lebanese for example,' he notes. He might have added Armenians and Greeks too. But many of these are descendants of Christians who were killed or deported as the Ottoman empire collapsed, and went on to be big traders in provincial African towns. Unlike their fellow Africans, their feelings for Turkey may not be warm."

One last article that shows that things may be looking up for some African nations discusses how some companies are looking to make Africa the next region to which they outsource ["The world economy calls," The Economist, 25 March 2010]. The first activity to be outsourced there could be call centers.

"The arrival of three international fibre-optic cables in Kenya in the past six months, ... has sparked hopes of an information-technology boom. The Kenyan government reckons that business-process outsourcing (BPO) can provide work for the country’s many unemployed graduates. As established outsourcing companies in India take on ever more complex and lucrative work, firms elsewhere spy an opportunity at the lower end of the BPO market, in prosaic jobs such as operating call centres and keying in data. Can Kenya win some of that business? Four undersea cables will have made landfall in east Africa by the end of the year, enormously increasing the availability and reducing the cost of telecoms links with the rest of the world. Kenya also boasts a decent workforce: educated, hard-working, closer to customers in Europe and America than Asian call-centre workers, and, some say, more comprehensible too. High unemployment should help limit turnover of workers—a big headache for outsourcing firms elsewhere."

Although improved connectivity opens up some real opportunities for East Africa, the article reports that "a smile and a cable are not enough in the cut-throat BPO business." It explains:

"Margins are slim; customers are fickle. 'It’s not plug and play. The operational costs and political risks are significant,' says Andrea Bohnstedt, the editor of Ratio, a Nairobi business journal. 'Connectivity is not a source of celebration just yet,' agrees Bobby Varanasi, a consultant in the field. Would-be investors say Kenya’s tax code is unfriendly and, given the complete lack of public services, poor value. Crime is rife and electricity is patchy. The extra cost of paying for private security and backup generators can upend a business model. Some expect widespread violence in the run-up to elections next year. High costs and jammed roads make Nairobi an expensive place to build a giant call centre. Setting up further away from the capital would be cheaper, but a proposed high-tech city has stalled."

As I have written a number of times during discussions about Development-in-a-Box™, having critical infrastructure in place is one of the most important things that a country can do to attract foreign direct investment. As Kenya is learning, a lack of such infrastructure (especially reliable electrical power) can be off-putting for most businesses. The article concludes:

"Other African countries have similar ambitions. Ghana has also identified BPO as a pillar of future development. It wants to create 40,000 jobs by 2015, with a longer-term goal of earning $1 billion a year from the industry. It, too, is talking of technology parks across the country. But as in Kenya, many Ghanaians complain that their government’s technocratic talk is not matched by action. If BPO does blossom in Africa, there could be many positive repercussions. Call centres could train lots of managers, who could then apply their experience to other industries. In this way, say boosters, call centres could serve as incubators of local business talent—provided, of course, that the power stays on."

Although it is good to read positive stories about African nations, an underlying, if unstated, issue that runs through all of them is the need for good governance. For more on that subject, read my post entitled Leadership and Good Governance in Africa. With more and more countries looking for opportunities in Africa, it appears that the first glimpses of dawn are starting to appear on the Dark Continent's horizon.

The Wild World of Medical Science

When Mary Shelly published her novel about Frankenstein's monster in the early 19th century, she hoped it would serve as a warning about the dangers involved in mankind's technological evolution during the Industrial Revolution. Her caution, spoken by Dr. Victor Frankenstein, creator of the monster, was, "You seek for knowledge and wisdom, as I once did; and I ardently hope that the gratification of your wishes may not be a serpent to sting you, as mine has been." Although some fears remain that mad scientists will play God and unleash a crisis upon mankind, the past 200 years have witnessed much more good than evil emerge from laboratories and workshops. I thought it might be interesting to review some of the breakthroughs that have been made recently -- at least the ones that have come to my attention. Let's start at the top and work our way down the body.

The Brain

Samantha Gross reports, "Mind reading may no longer be the domain of psychics and fortune tellers — now some computers can do it, too" ["‘Mind-reading’ brain-scan software showcased in NY," The Daily Caller, 8 April 2010]. She explains:

"Software that uses brain scans to determine what items people are thinking about [is] among the technological innovations ... still under development. The software [by Intel] analyzes functional MRI scans to determine what parts of a person’s brain is being activated as he or she thinks. In tests, it guessed with 90 percent accuracy which of two words a person was thinking about, said Intel Labs researcher Dean Pomerleau. Eventually, the technology could help the severely physically disabled to communicate. And Pomerleau sees it as an early step toward one day being able to control technology with our minds. 'The vision is being able to interface to information, to your devices and to other people without having an intermediary device,' he said. For now, the project’s accomplishments are far more modest — it can only be used with prohibitively expensive and bulky fMRI equipment and hasn’t yet been adapted to analyze abstract thoughts."

Researchers at the University of Maryland are also working on a system that will allow the mind to control technology ["Maryland researchers offer hope of non-invasive portable brain-computer interface," by Paul Ridden, Gizmag, 7 March 2010]. Ridden reports:

"A study at the University of Maryland has the potential to help movement-impaired people to control the operation of artificial limbs or computer systems without having to undergo extensive training or invasive surgery. The researchers have successfully reconstructed 3D hand movements by decoding electrical brain signals picked up from sensors placed on the scalps of volunteers. The University of Maryland researchers decoded brain signals from five volunteers asked to perform a series of random hand movements while hooked up to an electroencephalography (EEG) machine via 34 sensors around their scalps. The recorded electrical activity data was then translated and reconstructed into 3D hand movements by the team. The researchers discovered that the sensor placed over the primary sensorimotor cortex (which is linked to voluntary movement) appeared to offer more accurate information than the others. More useful data came from the sensor located above the inferior parietal lobule, an area associated with guiding limb movement. ... It is believed that the non-invasive, portable technique could be of use to those with severe disabilities and allow them to operate such things as a motorized wheelchair, a prosthetic limb or a robotic device using only a headset containing scalp sensors and the power of thought. The findings may also result in improvements to existing EEG-based systems which facilitate computer interaction by translating brain activity so that current extensive training regimes can be reduced."

While those breakthroughs could make life much easier for individuals with mobility impairments, other research is going on in areas that will help people with failing memories ["A Little Black Box to Jog Failing Memory," by Yudhjit Bhattacharjee, New York Times, 8 March 2010]. Bhattacharjee reports on a concept to help people with Alzheimer's Disease hold on to their memories.

"The concept [is] simple: using digital pictures and audio to archive an experience like a weekend visit from the grandchildren, creating a summary of the resulting content by picking crucial images, and reviewing them periodically to awaken and strengthen the memory of the event. The hardware is a little black box called the SenseCam, which contains a digital camera and an accelerometer to measure movement. Worn like a pendant around the neck, it was developed at Microsoft's research lab in Cambridge, England. Vicon, a British company that has licensed the technology, is selling its version of the SenseCam only to researchers. For the elderly, though, it could herald a new kind of relationship between mind and machine: even as plaque gets deposited on the brain, everyday experience is deposited on silicon, then retrieved. Researchers say the technology could benefit not just patients but also family and friends, helping them avoid the routine of repeating conversations over and over."

The Eye

For those old enough to remember the television series "The Bionic Man," you might recall that it was about a former astronaut who had a serious accident that left him crippled. The opening catch-phrase of the show was "We can rebuild him — we have the technology." Researchers in Australia are, in fact, trying to build a bionic eye ["First advanced prototype revealed for the Australian bionic eye," by Loz Blain, Gizmag, 31 March 2010]. Blain reports:

"Researchers at Bionic Vision Australia (BVA) have produced a prototype version of a bionic eye implant that could be ready to start restoring rudimentary vision to blind people as soon as 2013. The system consists of a pair of glasses with a camera built in, a processor that fits in your pocket, and an ocular implant that sits against the retina at the back of the eye and electronically stimulates the retinal neurons that send visual information to the brain. The resulting visual picture is blocky and low-res at this point, but the technology is bound to improve, and even in its current form it's going to be a major life-changer for those with no vision at all. And the future potential - even for sighted people - is fascinating. ... The challenge in bionic eye design is not to get a signal through to the brain, but to improve the resolution and detail of that signal. The first version of the Argus system had only 16 electrodes, so it effectively sent a 16-'pixel' image to the brain. The next-gen Argus II carries 60 electrodes. The prototype unveiled this week by BVA is a little more advanced, but still quite rudimentary in the scheme of things. It offers 100 electrodes - so the eventual picture will still be blocky and difficult for somebody with normal vision to interpret. ... The second prototype model they're working on for its first trial run in 2013 is more exciting - with 1000-electrode resolution, the picture will become a lot clearer for patients who receive the implant. We're talking 20/80 vision, or more than enough to recognize faces, read large print and generally integrate much better into a visually-focused world."

Seeing through an implant in your eye makes sense, but what about seeing with your tongue? A prototype system that does just that is also under development ["Seeing Tongue, Spray-On Skin, Transplanted Hand: Top Officer Encounters Military’s Extreme Medicine Wing," by Noah Shachtman, Wired, 19 April 2010]. Shachtman reports:

"White-haired Clarence 'Butch' Schultz, who last served in the Navy in the 1950s, ... [has] lost sight in both of his eyes. But a device under investigation [at the University of Pittsburgh Medical Center] has enabled his brain to route around his damaged eyes. The Brainport uses a digital video camera, housed on a pair of sunglasses, to collect visual data. The data is transmitted to a handheld unit, which converts the data to electrical impulses. Those impulses are then sent to an electrode array that’s placed on the tongue (saliva is a great electrical conductor, and the tongue offers densely packed nerves to collect and transmit the impulses to the brain). The device then converts the data to pixels — and allows Schulz to experience the world. 'I can actually see the difference between light and dark, between cement and black top, between the lawn and the driveway,' Schultz said. With [Chairman of the Joint Chiefs of Staff Admiral Michael] Mullen and his wife and staff watching, Schultz put down his cane. He shuffled down a laboratory hallway, side-stepping a swivel-chair and a small garbage pail. He’s planning a much longer walk this summer: a 1000-mile trip to his home in Florida."

As during other periods of conflict, the military is faced with trying to help heal thousands of wounded military personnel. The research being conducted at the University of Pittsburgh Medical Center is at the cutting edge of what can be done. Shachtman calls this "bleeding-edge research into the science of rebuilding human muscle, tissue, and minds." One researcher, Dr. Douglas Kondziolka, told Admiral Mullen it could take "another decade before his treatment of transplanted brain cells might be widely available to troops who have suffered in war."

The Skin

Another research project underway at University of Pittsburgh Medical Center is spray-on skin. Shachter reports:

"[During Admiral Mullen's visit,] Dr. Alain Corcos took a silver rod, tipped with a glowing blue light. He pointed the rod at an easel of white paper, and squirted it with a fine blue mist. When the spray gun is loaded with a compressed air and solution of stem cells and epidermal progenitor cells, it can be used to assist the badly burned. The cells start to divide, eventually covering and healing an area far greater that a traditional skin graft. On one patient, a patch of spray-on skin the size of a postage stamp grew to repair an entire arm. The military has identified 40 troops for future trials, and 40 more civilians have been picked, as well."

The Medical Center at the University of Pittsburgh isn't the only lab making advancements in skin research. "Scientists at Spain’s University of Granada have created artificial skin with the resistance, firmness and elasticity of real skin" ["Scientists create artificial skin that stretches like the real thing," by Ben Coxworth, Gizmag, 28 April 2010]. Coxworth reports:

"It is the first time artificial skin has been created from fibrin-agarose biomaterial. Fibrin is a protein involved in the clotting of the blood, while agarose is a sugar obtained from seaweed, commonly used to create gels in laboratories. The new material could be used in the treatment of skin problems, and could also replace test animals in dermatological labs. ... Previously, artificial skin has been made from biomaterials such as collagen, polyglycolic acid, and chitosan. The fibrin-agarose skin, however, looks particularly promising."

Limbs

Lost limbs are one the challenges created by conflict no matter where it occurs in the world. Although Shachter reports that doctors successfully transplanted a hand from a cadaver to replace one lost by Corporal Josh Maloney, it isn't a procedure that holds a lot of promise for the majority of people who have lost limbs around the world. A lot of work, however, is being done with artificial limbs. For example, a new foot is being developed that literally puts the spring back in the step of amputees ["Energy recycling artificial foot is a step in the right direction for amputees," by Darren Quick, Gizmag, 17 February 2010]. Quick reports:

"Most of us take it for granted, but walking isn't as simple as it looks. With the natural human gait the ankle exerts force to push off the ground. A typical prosthesis doesn’t reproduce the force exerted by a living ankle, resulting in amputees spending much more energy in comparison to walking naturally. A new prototype artificial foot recycles energy that is otherwise wasted in between steps to significantly cut the energy spent per step, making it easier for amputees to walk. The prosthetic foot created by Art Kuo, professor in the University of Michigan (U-M) departments of Biomedical Engineering and Mechanical Engineering, and U-M graduate, Steve Collins, was designed to capture the energy that is wasted when the ankle hits the ground. To enhance the power of the ankle push-off a microcontroller tells the foot to return the energy at precisely the right time."

Melding Man with Machine

Fans of Star Trek are well aware of the Borg ("Resistance is futile!"). The Borg become borg-like as a result of having technology fused with their biological systems. In Star Trek television shows and movies, the Borg are the enemy. In real life, however, the melding of technology with biological systems holds great promise ["Silicon computer chips successfully implanted in living human cells," by Darren Quick, Gizmag, 28 March 2010]. Quick reports:

"Scientists have begun integrating electronics into biology, but don't bolt your doors in fear of cyborgs and hybrid human-robots yet! Researchers from the Instituto de Microelectrónica de Barcelona IMB-CNM (CSIC), have found a way to implant minute silicon chips into living cells and use them as intracellular sensors. This bio-nanotechnological advancement could tell us a lot about how our cells are working at a nano level, and have widespread implications for early detection of diseases, and new cellular repair mechanisms. ... CMOS or Complementary Metal–Oxide–Semiconductor is a technology for constructing integrated circuits, also known as IC, microcircuit, microchip, silicon chip, or chips. These are miniaturized electronic circuits that have been manufactured in the surface of a thin substrate of semiconductor material, and are used in almost all electronic equipment today. A typical human cell is the size of about 10 square micrometers and with transistors the size of nanometers, hundreds of today's smallest transistors could fit inside a single cell. It was therefore only a matter of time before scientists began interfacing nanoelectronic components with living cells. ... The main applications of future intracellular chips will be the study of individual cells. The technology could significantly aid early detection of diseases and new cellular repair mechanisms."

In an article published a week later, Quick reports on another type of implantable device ["New tissue-hugging implants using flexible electronics," Gizmag, 28 March 2010]. He reports:

"In what represents the first use of [flexible silicon] for a medical application a team of cardiologists, materials scientists, and bioengineers has created and tested a new type of implantable device for measuring the heart’s electrical output that the team says is a vast improvement over current devices and could also mark the beginning of a new wave of surgical electronics. ... New technology that is the result of a collaboration between researchers at Northwestern University and the Universities of Illinois at Urbana-Champaign and Pennsylvania allows the full power of silicon electronics to be directly applied to body tissue. Consisting of a flexible sensor array that can wrap around the heart to map large areas of tissue at once, the new device allows for measuring electrical activity with greater resolution in time and space. The new device can also operate when immersed in the body's salty fluids and can collect large amounts of data from the body at high speed. ... By bringing electronic circuits right to the tissue, rather than having them located remotely, the device can process signals right at the source. This close contact allows the device to have a much higher number of electrodes for sensing or stimulation than is currently possible in medical devices. The researchers say the new device will be able to map the body's complicated electrical networks in much more detail, with more effective implantable medical devices and treatments likely to emerge."

Printing Body Parts

A story in The Economist claims "a machine that prints organs is coming to market" ["Making a bit of me," 18 February 2010]. The article reports:

"The great hope of transplant surgeons is that they will, one day, be able to order replacement body parts on demand. At the moment, a patient may wait months, sometimes years, for an organ from a suitable donor. During that time his condition may worsen. He may even die. The ability to make organs as they are needed would not only relieve suffering but also save lives. And that possibility may be closer with the arrival of the first commercial 3D bio-printer for manufacturing human tissue and organs. The new machine, which costs around $200,000, has been developed by Organovo, a company in San Diego that specialises in regenerative medicine, and Invetech, an engineering and automation firm in Melbourne, Australia. One of Organovo’s founders, Gabor Forgacs of the University of Missouri, developed the prototype on which the new 3D bio-printer is based. The first production models will soon be delivered to research groups which, like Dr Forgacs’s, are studying ways to produce tissue and organs for repair and replacement. At present much of this work is done by hand or by adapting existing instruments and devices. To start with, only simple tissues, such as skin, muscle and short stretches of blood vessels, will be made, says Keith Murphy, Organovo’s chief executive, and these will be for research purposes. Mr Murphy says, however, that the company expects that within five years, once clinical trials are complete, the printers will produce blood vessels for use as grafts in bypass surgery. With more research it should be possible to produce bigger, more complex body parts. Because the machines have the ability to make branched tubes, the technology could, for example, be used to create the networks of blood vessels needed to sustain larger printed organs, like kidneys, livers and hearts."

The article states that the "3D bio-printer works in a similar way to some rapid-prototyping machines used in industry to make parts and mechanically functioning models." To learn more about those machines, read my blog entitled Where is My Replicator? The article continues:

"Researchers have found that ... when small clusters of cells are placed next to each other they flow together, fuse and organise themselves. Various techniques are being explored to condition the cells to mature into functioning body parts—for example, 'exercising' incipient muscles using small machines."

The article notes that even though "printing organs is new, growing them from scratch on scaffolds has already been done successfully." It explains:

"In 2006 Anthony Atala and his colleagues at the Wake Forest Institute for Regenerative Medicine in North Carolina made new bladders for seven patients. These are still working. Dr Atala’s process starts by taking a tiny sample of tissue from the patient’s own bladder (so that the organ that is grown from it will not be rejected by his immune system). From this he extracts precursor cells that can go on to form the muscle on the outside of the bladder and the specialised cells within it. When more of these cells have been cultured in the laboratory, they are painted onto a biodegradable bladder-shaped scaffold which is warmed to body temperature. The cells then mature and multiply. Six to eight weeks later, the bladder is ready to be put into the patient."

The eventual goal of medical science is to use stem cells so that a person's body can regrow damaged or missing parts. Reports of "engineered stem cells" brings that day closer than ever before. To read more on that topic see my post entitled MIT Technology Review's Ten Technologies Predicted to Change the World. As I wrote in that post: "I don't think that there is much doubt that stem cell therapy holds great promise for the future. People with degenerative diseases and spinal column injuries can't wait for the day that damaged tissues can be replaced by new, healthy material produced by their own bodies."

Recent experiments are looking at artificial cell structures and synthetic cells. Some of the artificial cell structure research is being done at MIT and Harvard ["Building artificial organs using ‘biological Legos’," by Darren Quick, 17 May 2010]. Quick explains:

"Researchers at the MIT-Harvard Division of Health Sciences and Technology (HST) have devised a new way to achieve [growing 3D cell cultures that more closely resemble those inside the human body] by using 'biological Legos'. Tissue engineering has long held promise for building new organs to replace damaged ones, like livers, or blood vessels and other body parts. However, one major obstacle is getting cells grown in a lab dish to form 3D shapes instead of flat layers. To overcome this problem the researchers have encapsulated living cells in cubes and arranged them into 3D structures, just as a child would construct buildings out of blocks. The new technique, dubbed 'micromasonry', employs a gel-like material that acts like concrete, binding the cell 'bricks' together as it hardens. The tiny cell bricks hold potential for building artificial tissue."

More controversial was the recent announcement that scientists had created a new form of life using synthetic cells ["Did Scientists Create a Synthetic Cell? It Depends Who You Ask," by Jacquelyn K. Beals, PhD, Medscape Today, 24 May 2010]. Beals reports:

"Scientists at the Venter Institute have reported the creation of the first 'synthetic cell' — Mycoplasma capricolum cells that received and are controlled by a laboratory-assembled genome of Mycoplasma mycoides. Although some scientists note that only the genome is synthetic, the developers explain that the recipient cell's cytoplasm is diluted with each division. Thus, after 30 generations in culture, some progeny not only have a chromosome of synthetic origin but also contain no proteins from the original cell. ... Jim Collins, PhD, professor, Department of Biomedical Engineering, and codirector of the Center for BioDynamics, College of Engineering, Boston University, Massachusetts, responded to the hype: 'The work ... is an important advance in our ability to re-engineer organisms; it does not represent the making of new life from scratch,' he pointed out. Dr. Collins considers the 'synthetic cell' as synthetic only 'in the sense that its DNA is synthesized, not in that a new life form has been created. Its genome is a stitched-together copy of the DNA of an organism that exists in nature, with a few small tweaks thrown in. ... Frankly,' said Dr. Collins, 'scientists do not know enough about biology to create life.'"

All of these breakthroughs are promising. Unfortunately, many of them will likely be expensive to implement in the near-term. True medical breakthroughs are those with the potential to help billions of people, not simply the wealthy. Nevertheless, it is essential that researchers continue to test the limits of science. In 1929, John Dewey wrote, "Every great advance in science has issued from a new audacity of imagination." Although medical science is likely to bump against ethical concerns (such as the cloning of human beings), researchers need to be motivated by a certain audacity of imagination in order to further the frontiers of the medicine.

Are Retailer Compliance Penalties On the Rise?

Although I try to keep blatant advertising about Enterra Solutions to a minimum, I do try and expose readers to what my company is currently engaged in. This is, after all, a corporate blog. Tomorrow, Enterra Solutions is hosting a web seminar that focuses on how our latest offering, the Enterra Supply Chain Assurance Platform (ESCAPE™), can help save manufacturers and distributors millions of dollars. Below you can find information on the event. Hope to see you there!

Suppliers and distributors face increasing penalties for failing to meet ever stricter retailer "must-arrive-by" delivery windows. With each retailer free to establish its own requirements, suppliers and distributors face increasing complexity as they try to optimize their order fulfillment process. The answer does not lie in traditional processes and technologies. Fortunately, a new approach is available.

This webinar will explain how Conair and Enterra Solutions partnered together to create a process that keeps track of retailer requirements and automatically checks new orders to identify potential fulfillment challenges. It’s a fascinating story that could help your company save millions of dollars in future penalties. During the webinar, John Mayorek, Senior Vice President of Operations of Conair, and I, as CEO/President of Enterra Solutions, will explain how technology has helped Conair fight back and save millions of dollars. We will be joined by Lora Cecere, a Partner in the Altimeter Group. Lora will share results from recent research on the state of the industry on retail compliance. This event is a must for any company whose bottom line continues to be eroded by retailer penalties.

Participants in this webinar will:

• Have a better understanding of the challenges
• Learn how challenges can be addressed (pro-actively, when orders are taken, and after penalties have been assessed)
• Realize that retailer penalties don’t have to be a continuing “cost of doing business”

Join this informative Web seminar and learn more today!

Dealing with Failure often Precedes Achieving Success

In yesterday's post entitled A Window of Opportunity for Entrepreneurs, I indicated that I would discuss a column by Luke Johnson that dealt with success and failure. President Theodore Roosevelt once famously said, "It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat." That is basically what Luke Johnson's column is about. He writes: "Success is not about being ambitious – that is easy. It’s about overcoming adversity" ["Behind all successes are a series of failures," Financial Times, 31 March 2010]. He continues:

"In my experience, what separates the winners from losers in business – and probably in life – is how they handle disappointment. If you strive to achieve, you will suffer setbacks, just as thunder follows lightning. As everyone knows, if nothing is ventured, nothing is gained. Inflexible entrepreneurs who imagine they cannot possibly fail are likely to suffer an uncomfortable shock when their luck runs out. What is needed is a pragmatic approach so that you adapt and rebound if events do not go precisely according to our desires. As Helmuth von Moltke, the Prussian field marshal, said: 'No plan survives contact with the enemy.' You might fail to get a job, miss a deal, be defeated in a contract battle, lose money on an investment. Remember always that no one triumphs every time; and the more attempts you make, the more reverses you will suffer – as well as victories. After all, failures are rarely fatal, and most are unimportant. There will be another company to buy, another great appointment, another race to run. What matters is your attitude to the inevitable knocks."

The right attitude is an essential characteristic if one wants to become a successful entrepreneur (for more on this subject, read my posts entitled Optimism and Pessimism, In Praise of Optimism and Optimism, and Entrepreneurs, and Prosperity). Johnson continues:

"I reflect on this because recently a project I had been working on for some time came to nothing. As I accepted the repulse, my usual set of responses kicked in: ways of stopping myself becoming disillusioned. Initially I think back to other failures in the past, and how all the intensity of emotion prevalent then has entirely dissipated – time has cured any regret. I try to learn from a flop: what did I do wrong, what shall I do differently next time? In every disaster there is a precious element of experience. But while improvement is essential, it pays to keep blame in proportion."

As I noted in another post, there is always a lot more to be learned during times of crisis than there are during prosperous times. One of the real tragedies of most crises is that people fail to learn the lessons they should. There is one caution I would raise about Johnson's advice to "keep blame in proportion" and that is that there is a difference between accepting blame for failures and rationalizing one's actions. I recommend accepting blame when necessary and avoiding rationalization altogether. Citing another Teddy Roosevelt quote, "The only man who makes no mistakes is the man who never does anything." Johnson agrees:

"Chance plays a huge role in life, so do not torture yourself unnecessarily in the wake of a mistake. And by the same token, try to avoid making so many excuses that you sound as if you’re in denial. Honestly analyse the reasons why things did not go your way, and then move on."

Johnson also recommends that you surround yourself with friends and family who can help you keep things in perspective. He asserts that it is easy "to get carried away with imagined dramas." He then returns to the subject of having the right attitude.

"Try to avoid complaints and irritation in the workplace – everyone hates an incessant whinger; they develop an odour of self-pity that is most off-putting. Do not cave in to pessimism or despair. Life is a long journey, the world is a big place, and there will be other opportunities. Of course there is unfairness, but a setback will only cause you serious harm if you allow it to damage your confidence."

One of the symptoms of those suffering from clinical depression is a desire to withdrawal from the world. Those whose self-esteem has been damaged as the result of a failure also tend to want to withdraw from the world. But as the famous Frank Sinatra song "That's Life" states:

"I've been up and down and over and out
And I know one thing:
Each time I find myself, flat on my face,
I pick myself up and get back in the race."

That is also advice Johnson gives:

"Keep busy – never retreat from the fray entirely. Take exercise, research other possibilities, network furiously, redouble your efforts and seek advice about alternatives. As Winston Churchill said: 'Never give in, never give in, never; never; never.' Set new goals as soon as possible, keep occupied by planning fresh adventures, and retain your thirst for experimentation. As Gordon Moore, co-founder of Intel, put it: 'Failures are not something to be avoided. You want to have them happen as quickly as possible so you can make progress rapidly.' Coping with these hardships requires tenacity and self-belief – but nothing of lasting value is ever easy. Samuel Johnson said: 'Great works are performed not by strength but by perseverance.' Almost every entrepreneur I have met has clambered over considerable obstacles to reach their objectives. At least all these hurdles create barriers to entry, which is why highly accomplished business owners are so rare. We live in a far from perfect world, and this is the phase in the cycle when things are apt to go awry. But educating yourself to cope with each misfortune, while soldiering on relentlessly, is the surest formula for glory I know."

Getting over failures is not easy. Accepting defeat is never fun. If you find yourself in a funk following a particularly bad stretch, just click on the video and let Frankie urge you forward!

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Time is running out to register for Enterra Solutions Web Seminar (“Retailer Compliance: Accentuate the Positive, Eliminate the Penalties”). The webinar, to be held next Tuesday at 11 a.m. EDT, will help you learn more about the Enterra Supply Chain Assurance Platform (ESCAPE™) and how your company can reduce retailer imposed penalties. It could help save your company millions of dollars. Follow this link to register.

A Window of Opportunity for Entrepreneurs

One of the columnists I regularly follow is Luke Johnson, who writes for the Financial Times. He also runs Risk Capital Partners, a private equity firm, and is chairman of the Royal Society of Arts. Although he writes from "across the pond," he has a wealth of experience dealing with entrepreneurs and venture capitalists. Johnson believes that as the global economy gradually emerges from recession it opens a window of opportunity for individuals who want to be their own boss ["Now is the moment to seize your opportunity," 5 May 2010]. He writes:

"The hour is always darkest before dawn. I have a gut feeling that now might just be a great time to take the plunge. There is plenty of negative news about deficits and double-dip recession. But technology and global markets are creating real advantages for anyone tempted to give it a go. And a new concern will not be weighed down with the legacy issues like property and pension obligations that are holding back incumbent players."

His "gut feeling" seems to apply especially to individuals who want to establish a virtual business (i.e., one that doesn't have to deal with property issues). He explains his reasoning behind his belief that now is a good time to take the leap:

• The internet has made it easier to experiment than in the past. Building an online presence costs less than it ever did. ... Yes, the web is crowded, but there are billions of consumers connected to it who might see your ads or buy your products. And if your idea fails, too bad – shut the project down and try another; it is cheaper and quicker to discover what works than at any time in history.

Although it is true that "internet has made it easier to experiment," don't be fooled into thinking that just because a new business is connected to the internet it is going to be a great success. You still need a good idea, a great business plan, and some luck to succeed.

• The corporate life seems less appealing. Jobs for life have gone; occupational pensions have gone; and who wants to slog away in a suffocating hierarchy their whole career? The freedom and satisfaction of self-employment are hard to beat. Of course there are risks – but then you might get sacked anyway if you work for someone else. Starting a company gives you the chance to achieve independence and self-determination – and if it succeeds, you really will get the rewards of your efforts.

I have noted before that it takes a certain temperament to become an entrepreneur. Johnson, I believe, gives a false impression that being self-employed is good for everyone. It's not. Make sure you know yourself and your tolerance for risk before setting out on your own.

• The world needs entrepreneurs more than ever. New jobs and wealth creation spring principally from new companies. I predict governments will do more to encourage entrepreneurs in years to come – from lower taxes to a reduced regime of bureaucracy. Every policymaker I speak to understands that only private enterprise can tackle unemployment and generate the tax we need to deal with our problems.

Hear! Hear! I couldn't agree more. With all of the negative press being generated by Goldman Sachs and their synthetic derivative products, we are constantly reminded that what the public really needs are jobs and real wealth creation.

• There is more advice and support than ever before. Books, online, agencies, magazines – you name it, there are hundreds of places to go to find ideas, recruit staff, secure premises, source IT, deal with legal and accounting issues and so forth. There are more clubs and networks – more ways to access funding, find partners and reach customers. There are many more role models and mentors around than when I started out in the 1980s.

All of that is true (except maybe for the availability of funding -- which remains tight). I reiterate, however, that starting a new business is not as easy as Johnson makes it sound. Or maybe I should say, starting a business is easier than succeeding with one.

• It is easier to freelance and subcontract than before. Virtual businesses are common. Almost everything can be outsourced – manufacture, R&D, fulfilment, logistics, administration, IT – you name it. And providing these services offers endless niche markets.

Johnson is correct. Many companies are happy to subcontract for services rather than hire full-time employees. The savings for a company can be tremendous if they don't have to pay benefits. As a CNN Money report notes, "A $14 per hour worker [can have] a true cost of $19.63 per hour, or about 40% more than base pay. This so-called 'loaded rate' includes fixed expenses -- federal and state taxes, health insurance, workman's compensation, uniforms, and paid time off -- along with soft costs like the time spent training a new hire" ["Why a $14/hour employee costs $20," by Catherine Clifford, 26 March 2010]. If you go this route, make sure you include some of those costs in your estimates of doing business. Also make sure that you have several clients. If you work solely for one client, that business can get in legal trouble because you are essentially its employee and not an independent contractor.

• There is talent galore looking to join in a new venture. Now is a wonderful time to recruit able staff. Big business and the state are shedding personnel – people will be more willing to throw in their lot with an emerging company than during the good times.

As I noted above, not everyone is cut out to be an entrepreneur; but that doesn't mean that great people aren't looking to go to work for one. With so many people out of work right now, people with jobs are in the driver's seat.

• Premises and plants are plentiful. Rents are lower, machines are in surplus – there is more choice than there has been for years in terms of premises and equipment.

Although most of Johnson's reasons for starting a new business right now focused on virtual businesses, his point here is that even traditional brick-and-mortar businesses should be able to get a good deal on office or shop space. With the economy picking up, however, good deals won't last.

• Redundancy should be a beginning, not an end. Thousands do seize the day when they lose their job – and while not all find it a pushover, for many it allows them to pursue their dream and follow their passion.

"Redundancy" in the UK is a polite way of saying that you were fired. Papers like the Financial Times and Wall Street Journal and magazines like Bloomberg BusinessWeek are constantly running pieces about people who have re-invented themselves as a result of the current economic downturn. If you've been laid off, re-inventing yourself could be an exciting way of plotting your course into the future. It will be an even more exciting time if you can successfully take others along for the ride.

• Part-time is a way to get going. When I worked for others, I moonlighted for several years, participating in various schemes at weekends, evenings and during holidays. It gave me experience, confidence and helped generate capital – so I was better prepared when I left employment for good after a few years.

Part-time self-employment certainly can be a hedging strategy against failure. It takes enormous commitment and perseverance to hold down more than one job. Really successful businesses, however, normally take all of the time and attention an owner can give them. Johnson concludes, "No one believes starting something from scratch is a breeze. But as Samuel Johnson said: 'He that labours in any great or laudable undertaking has his fatigues first supported by hope and afterward rewarded by joy.'" Tomorrow, I will discuss another of Johnson's columns that deals with failure and success. They are topics with which any true entrepreneur needs to be fully conversant.

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Register for Enterra Solutions Web Seminar (“Retailer Compliance: Accentuate the Positive, Eliminate the Penalties”) to learn more about the Enterra Supply Chain Assurance Platform (ESCAPE™) and how your company can reduce retailer imposed penalties. The webinar will be held May 25, 2010, at 11 a.m. EDT. Follow this link to register.

Genetically-Modified Crops Gain New Importance (But Be Careful)

Farmers in India have been looking skyward for signs of the rains that normally come during the annual monsoon season. Those rains did not come last year and caused widespread drought on the subcontinent. Some scientists now believe that heavy snowfalls in the Himalayas can cause reduced rains during the monsoon season ["‘Heavy Himalayan snowfall cause of drought in India’," by Ashis Ray, The Times of India, 23 April 2010]. Whatever the cause, Indian farmers have been scrambling to stay in business. Many Indian farmers have turned to technology, in this case drip irrigation, to mitigate the effects of drought ["The seeds of a profitable crop," by Amy Kazmin, Financial Times, 22 April 2010]. Kazmin reports:

"In the mid-1990s, one of the wealthier farmers [in the Indian village of Jarandi] bought a small drip-irrigation system, a technology unknown among the poorly educated villagers, from Jain Irrigation Systems, a family-run Indian business. Cotton yields on the drip-fed land quadrupled and a second villager tried it, then a third and so on. Today, nearly every landowner in Jarandi has bought drip-irrigation systems and local cotton yields are 15 to 20 quintals per acre. Yields of food crops have also increased dramatically. With surging agricultural output, local life is changing. The farmers’ children now go to school, ownership of motorcycles has soared and diets are improving."

Jarandi is a good example of why individuals and organizations involved in development work concern themselves with food security and improving the lot of small farmers. Increased crop production not only eliminates hunger, but it begins a chain of good things that improve the quality of life for current and future generations. Kazmin continues:

"The evolution in Jarandi highlights the potential for transforming Indian agriculture through modern technology such as drip irrigation, a fast-growing business in which Jain is a pioneer and market leader. ... Netafim, the Israeli company that pioneered drip irrigation in the Negev desert and is the global market leader for the technology, set up an Indian subsidiary in 1997 and now has two plants in the country manufacturing systems for local use and for export to elsewhere in Asia. Netafim also employs big marketing teams to try to raise awareness among Indian farmers. John Deere Water, a subsidiary of the US tractor and agricultural equipment maker, is also gearing up to sell modern irrigation systems in India."

Drip-irrigation technology delivers water "only to the plants the farmer wanted to grow – thus cutting not only water consumption but also labour costs, because there is less need for weeding, fertiliser and fuel." Saving water is especially important, obviously, in times of drought. Kazmin reports that the increased use of drip irrigation in India "is almost a revolution." Even greater use of drip irrigation systems is important, because water tables in India are plummeting. In an effort to expand the use of drip irrigation systems, the government subsidizes farmers who use the method and helps others pay for installing the systems. It may not be enough, however, to avert future challenges. As Ajit Jain, one of the four sons of the founder of Jain Irrigation Systems, avers, "There is no food security without water security." Planting genetically-modified plants that require less water to thrive is another strategy that farmers are likely to use in the future to deal with water scarcity ["The Seed Makers Who Don't Pray for Rain," by Jack Kaskey and Antonio Ligi, Bloomberg BusinessWeek, 29 April 2010]. Kaskey and Ligi conclude that "technology that boosts crop yields despite dry environments will become a growth engine for agriculture companies." They explain:

"After battling for a decade over the $11 billion market for insect-resistant and herbicide-tolerant seeds, DuPont, Monsanto, and Syngenta are turning their attention to crops that can survive drought. DuPont estimates that up to 150 million acres of drought-tolerant corn eventually could be planted globally. For seed producers, that could add up to annual revenues of $2.7 billion, or about 10% of the global seed market and nearly a third of corn seed sales. 'Farmers around the world are going to pay hundreds of millions of dollars' for seeds that require less water, predicts Michael Mack, chief executive of Syngenta. The technology could change the economics of farming by reducing the need for irrigation, lowering crop insurance premiums, and boosting land values in water-starved regions. With agriculture accounting for 70% of global freshwater use, 'The biggest single issue in farming going forward is...water availability,' says Monsanto CEO Hugh Grant."

Drought-tolerant plants that are being developed include corn, cotton, wheat, and sugar cane. According to Monsanto's CEO, "developing crops that require less irrigation not only contributes to more sustainable farming, ... but also will help farmers in the developing world." Although genetically-modified plants are gaining greater acceptance, they still face some opposition. Kaskey and Ligi report:

"The drought-resistant seeds aren't winning over opponents of genetically modified foods. They say the latest technology may further taint conventional corn supplies and allow large companies to perpetuate an industrial agriculture system that remains too water-intensive. 'Their approach is that...we can use technology to adapt to any problems and make money at the same time,' says Maude Barlow, chairwoman of Washington-based Food & Water Watch, a nonprofit that advocates for sustainable agriculture."

The combination of drip irrigation and drought-resistant plants, however, could have tremendous impact on sustainable farming in the developing world. Analysts have concluded that farmers have been the big beneficiary of GM technology so far ["The genetically modified crop marches on," by Clive Cookson, Financial Times, 4 May 2010]. Cookson reports:

"In agricultural biotechnology, the big theme is still the march of genetically modified crops across the world’s farmland. While farmers have yet to adopt genetic engineering or cloning of animals to a significant extent – even in the GM-friendly US, fears of consumer resistance to biotech meat and milk outweigh any likely benefits – they have embraced biotech plants in some of the world’s most important growing regions. The most authoritative annual survey of GM planting, carried out by the International Service for the Acquisition of Agri-biotech Applications, showed a 7 per cent annual increase last year in the area covered to 134m hectares (330m acres) in 25 countries. But GM food crops are still concentrated in the western hemisphere. The US accounts for almost half the world’s GM planting (64m hectares), followed by Brazil (21.4m ha) and Argentina (21.3m ha). Although India and China are big biotech growers, their GM crops are almost entirely cotton, cultivated for fibre rather than food."

If farmers in the developing world are going to undergo a new, sustainable "green revolution," they are going to have to adopt new technologies and plant appropriate GM crops. China and India, with their large populations, should lead the way. They may not, however. Cookson explains:

"The picture may change soon in China, where regulators issued biosafety certificates in November for insect-resistant rice and 'phytase' maize (which has an added gene to make the crop more digestible in animal feed). But GM food had a setback in India in February, when the government unexpectedly rejected an application to grow an insect-resistant strain of brinjal (aubergine) and demanded more safety tests."

Continued resistance in Europe is one reason that GM crops don't fare better around the globe. Cookson believes that may be changing.

"'Agbio' companies continue to face strong consumer and political resistance to GM crops in Europe, where only 95,000ha were grown last year – mainly insect-resistant maize in Spain. The industry celebrated a success in March in its long struggle to get more crops approved in Europe. After a 13-year wait, the European Commission allowed BASF of Germany to plant its GM potato called Amflora to produce industrial starch – but not spuds for human or animal consumption. Many other GM crops, approved elsewhere in the world, are still waiting for a go-ahead from the EC. Three more GM maize products are believed to be at the front of the queue."

Cookson goes on to paint a broader picture of GM crops around the world.

"Worldwide, the GM scene is dominated by four crops (soyabeans, maize, cotton and canola or oilseed rape), two traits (herbicide tolerance and insect resistance) and one company (Monsanto). Herbicide-tolerant genes let the farmer spray a broad-spectrum weedkiller, usually Monsanto’s RoundUp, to kill all weeds without harming the crop. The Bt insect resistance gene, derived from Bacillus thuringiensis bacteria, reduces the amount of pesticide required to protect the crop. Crops with combined or 'stacked' traits are becoming increasingly important. This year, Monsanto will launch SmartStax maize, which has eight added genes coding for three traits. It is herbicide-tolerant and protects against insects."

Cookson cites a report by the National Academy of Sciences in the United States that concludes that "farmers who grow genetically engineered crops are realising substantial economic and environmental benefits, such as lower production costs, fewer pest problems, reduced use of pesticides and better yields, compared with conventional crops." That should open the eyes of those who are trying to help small farmers in developing countries become profitable. The next wave of GM crops will likely contain plants that benefit the health of consumers.

"A report last month by in Washington DC said: 'Many US A new wave of GM crops, to be released over the next few years, may bring more obvious benefits to the consumer, in the form of better nutritional qualities, and to agricultural production, in the form of more resistance to stresses such as drought, salinity and extremes of temperature. An important development will be the commercial launch of drought-tolerant GM maize, scheduled for 2012."

Cookson notes that farmers have been cross-breeding plants for years to develop desired traits and reports that such efforts continue. "For example Australia’s CSIRO announced last month a salt-tolerant wheat that yields 25 per cent more on saline soils than its parent variety. The Australian scientists isolated two salt tolerance genes in Triticum monoccum, a wheat species that grows on poor, arid soils in the Middle East, and introduced them into durum wheat, which is widely cultivated for pasta production – through non-GM breeding aided by the latest molecular marking technology." He reports that some companies are specializing in the rapid development of crops with desirable traits:

"Cibus, a privately owned company based in San Diego, is a leader here with its proprietary Rapid Trait Development System or RTDS. This uses the plant’s own genetic machinery to change its DNA. Cibus has reached agreements with a variety of companies and organisations – most recently the Flax Council of Canada – to use RTDS on their crops. Stephen Evans-Freke, Cibus chairman, says the technology makes it possible to commercialise new traits more quickly than GM, because regulatory approval is much more straightforward when no external genes are introduced."

Although RTDS may be able to commercialize traits more quickly, GM crops are likely to develop more varied and useful traits than those that can be created more "naturally." Wheat may be the next crop that requires the deft touch of plant modifiers. Ug99, a fungus that causes stem rust, is starting to spread and it could cause widespread starvation if it is not stopped ["Red Menace: Stop the Ug99 Fungus Before Its Spores Bring Starvation," by Brendan I. Koerner, Wired, 22 February 2010]. Koerner writes:

"Stem rust is the polio of agriculture, a plague that was brought under control nearly half a century ago as part of the celebrated Green Revolution. After years of trial and error, scientists managed to breed wheat that contained genes capable of repelling the assaults of Puccinia graminis, the formal name of the fungus. But now it’s clear: The triumph didn’t last. While languishing in the Ugandan highlands, a small population of P. graminis evolved the means to overcome mankind’s most ingenious genetic defenses. This distinct new race of P. graminis, dubbed Ug99 after its country of origin (Uganda) and year of christening (1999), is storming east, working its way through Africa and the Middle East and threatening India and China. More than a billion lives are at stake. 'It’s an absolute game-changer,' says Brian Steffenson, a cereal-disease expert at the University of Minnesota who travels to Njoro regularly to observe the enemy in the wild. 'The pathogen takes out pretty much everything we have.' Indeed, 90 percent of the world’s wheat has little or no protection against the Ug99 race of P. graminis. If nothing is done to slow the pathogen, famines could soon become the norm — from the Red Sea to the Mongolian steppe — as Ug99 annihilates a crop that provides a third of our calories. China and India, the world’s biggest wheat consumers, will once again face the threat of mass starvation, especially among their rural poor. The situation will be particularly grim in Pakistan and Afghanistan, two nations that rely heavily on wheat for sustenance and are in no position to bear added woe. Their fragile governments may not be able to survive the onslaught of Ug99 and its attendant turmoil. The pathogen has already been detected in Iran and may now be headed for South Asia’s most important breadbasket, the Punjab, which nourishes hundreds of millions of Indians and Pakistanis. What’s more, Ug99 could easily make the transoceanic leap to the United States. All it would take is for a single spore, barely bigger than a red blood cell, to latch onto the shirt of an oblivious traveler. The toll from that would be ruinous; the US Department of Agriculture estimates that more than 40 million acres of wheat would be at serious risk if Ug99 came to these shores, where the grain is the third most valuable crop, trailing only corn and soybeans. The economic loss might easily exceed $10 billion; a simple loaf of bread could become a luxury."

Whether plant modification is done by manipulating genes or cross-breeding, plants must continue to change with the environment or the world's food supply could be at risk. A report by National Resarch Council "actually suggests that environmentalists should be feeling pretty rosy about G.M. crops. It concludes that they're providing American farmers with substantial net environmental and economic benefits over conventional crops, including lower production costs, fewer pest problems, reduced use of pesticides and better yields. But the report noted that these benefits aren't universal and may decline over time, and that both benefits and risks may increase as more farms adopt the technology." ["Genetically modified crops may not be environmentally harmful," by Nina Shen Rastogi, Washington Post, 18 May 2010]. Rastogi did raise one growing concern.

"The report did flag one issue that's been a major concern to environmentalists: The likelihood that herbicide-tolerant crops will lead to herbicide-resistant weeds. But again, it's important to note that the problem of herbicide-tolerant weeds isn't unique to G.M. crops: It's a risk farmers run any time they rely too heavily on one form of weed management, whether the seeds are genetically engineered or conventionally bred."

An editorial in the New York Times, citing the same NRC report, raised this same issue and suggested that the "solution is more diverse crops and cultivation practices, and a wider array of seeds, including non-genetically engineered ones. The unpalatable alternative is the re-introduction of far less benign herbicides." ["Resisting Roundup," 16 May 2010]. Food security remains a serious challenge, especially over the century or so as the world's population peaks. For more on the challenges that lie ahead, read my series of posts that detailed the agricultural challenges that must be faced in the coming decades (Agriculture Old and New, Agriculture: The Bumpy Road Ahead, Agriculture Production and Prices, Feeding the World While Watching the Environment, The Gherkin and the Olive Tree, and Eating and the Environment).

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Register for Enterra Solutions Web Seminar (“Retailer Compliance: Accentuate the Positive, Eliminate the Penalties”) to learn more about the Enterra Supply Chain Assurance Platform (ESCAPE™) and how your company can reduce retailer imposed penalties. The webinar will be held May 25, 2010, at 11 a.m. EDT. Follow this link to register.

The Future of Rare Minerals

Last September, in a post entitled The Future of Electric Cars, I discussed how manufacturers of hybrid and electric vehicles were growing increasingly concerned about predicted shortages of rare metals ["As hybrid cars gobble rare metals, shortage looms," by Steve Gorman, Washington Post, 31 August 2009]. Their angst was fed by China's announcement that it was going to restrict the export of rare minerals ["China Tightens Grip on Rare Minerals," by Keith Bradsher, New York Times, 31 August 2009]. China insisted that the move had no sinister motives and that it was only looking out for its best interests because it too believed a shortage of rare minerals was inevitable ["China predicts rare earths shortage," by Patti Waldmeir and Peter Smith, Financial Times, 3 September 2009]. Waldmeir and Smith reported:

"China ... predicted a domestic shortage of some minerals needed to produce green and high-technology products, exacerbating concerns that Beijing may tighten its stranglehold on global supply of so-called rare earth elements. China, which supplies about 95 per cent of the global rare earths market, is considering plans to clamp down further on export quotas for the valuable minerals used to produce everything from hybrid cars to iPod music players."

As Waldmeir and Smith note, rare minerals are used in all sorts of products in addition to automobiles, including the ubiquitous mobile phone. In January, the Financial Times published a graphic showing some rare minerals and their uses (click to enlarge). In an accompanying article, the newspaper noted that "increasing concern surrounds narrow sources of supply that often involve China" ["In their element," by Javier Blas, Financial Times, 29 January 2010]. Blas reports:

"Get Mark Smith talking about his company’s biggest asset and the feeling is one of being transported back to a high-school chemistry class. Cerium, lanthanum, praseodymium, neodymium ... The mine described by the head of the Denver-based Molycorp Minerals contains deposits featuring some of the more esoteric reaches of the periodic table. 'It is really a challenge to explain to investors what we do,' Mr Smith concedes. Yet these so-called minor metals and rare earths are as critical as copper and aluminium to the global economy. From the cobalt in mobile phone batteries to the neodymium in Toyota’s hybrid Prius cars, 'minor metals and rare earths are involved in every aspect of modern life', says Guy Darby of the London-based Minor Metals Trade Association."

Blas goes on to discuss the raw materials used in the production of automobiles.

"At the start of the 20th century they were typically made up of about five raw materials: wood, rubber, steel, glass and brass. But today, according to a report by the National Academies, which has been written by experts who advise the US on science and technology, 'a typical automobile may contain up to 39 different minerals in various components' – including several obscure metals."

This rise in demand, Blas reports, has resulted in the prices of many rare minerals "trebling or more in value in the past five years." With shortages of such minerals looming on the horizon, both economic and national security analysts are worrying more and more. That concern has brought with it "a level of attention once reserved for energy and food security." And China knows that on this topic it is the middle kingdom -- but that could change. Blas explains:

"'Rare earths are to China as oil is to the Middle East,' Deng Xiaoping proclaimed when he was leader as far back as 1992. With volumes still small, even rumours of tiny variations in supply or demand can send prices up or down by a factor of 10. But because the overall trend is upward, China faces the prospect of losing its total grip as the increase in prices makes other countries’ production more viable economically than before. Molycorp’s Mountain Pass mine, which sits on the California-Nevada border, was shut in 2002 when prices plummeted as Chinese production flooded the market. Now, Mr Smith says it could be reopened. The growth of 'green technologies' such as wind turbines is also expected to boost the sector. The environmental applications of rare earth elements 'have increased markedly' over the past 30 years, according to the US Geological Survey, a government agency, which expects the trend to continue. Avalon Rare Metals, a Toronto-listed mining company, reckons that about 25 per cent of new technologies rely on minor metals and rare earths. 'Minor' metals and 'rare' earth elements owe those designations more to a lack of familiarity than true scarcity. Some, including manganese, are as common as base metals such as nickel or precious metals such as gold. However, as the US Geological Survey notes, in contrast to ordinary base and precious metals, minor metals and rare earths are so dispersed that production is feasible only in the few places where they are present in high enough concentrations. Most supply thus comes from a handful of mines. Bayan Obo, in the Chinese region of Inner Mongolia, is the world’s largest, followed by Mountain Pass, then Mount Weld in Australia. Like Mr Smith’s facility, Mount Weld is currently inactive, though production there is also likely to restart. So in a world in which Beijing’s voracious appetite for commodities dominates demand trends, China is also the main, if not only, supplier of a number of those little-known metals. In particular, it accounts for 97 per cent of the global supply of rare earth elements – a list of 17 elements of the periodic table for which demand is growing fast."

Chinese leaders are certainly aware that their threats to restrict exports have had global repercussions. As a result, "Beijing eased its quotas recently, allowing exports of 16,300 tonnes of strategically important rare earth metals for the first half of this year, up by more than 8 per cent from the same period in 2009." That action, however, is probably not enough to satisfy critics. Blas continues:

"Such reassurances are not enough to ally the concerns of US politicians such as Mike Coffman, a congressman who has pushed for new legislation to minimise American dependence on foreign supplies of obscure metals. 'This is strategically dangerous,' he has argued. Yet all is not quite as it may seem. More and more more western companies have been shifting production to China in order to bypass the quotas, as the limits apply only to the ores and not to finished products such as magnets or batteries. Indeed, some see the export quotas as an attempt by Beijing to accelerate that trend, with companies relocating near its mines in Inner Mongolia. China, they say, is not clamping down on supplies as part of a resource war but is attempting to move value-added industry into the country in order to profit from the presence."

In addition, Blas notes, "for some – such as titanium, rhenium or lithium – Beijing is not even the dominant supplier, with Chile, the US, Congo, Australia and Russia being large producers too." Nevertheless, "policymakers remain worried."

"Japan is already stockpiling obscure metals. The European Commission is considering a list of 'critical' minor metals and an announcement, including measures such as stockpiles, is expected later this year. With mining industry lobbyists pushing for strategic stocks, the US defence department has discussed creating a similar list."

Stockpiles, however, bring with them their own challenges, like artificially driving up prices as stockpiles are acquired. Blas concludes:

"Many traders remain sceptical, arguing that political concerns about so-called 'critical' metals are misplaced. They do not foresee worse shortages than for more common commodities such as iron ore. As [Anthony Lipmann of Lipmann Walton, a UK-based trader,] points out, this is not the first time that policymakers worrying about metal supplies have fumbled their response. He remembers how the US considered tin a critical metal at some point. It even built a stockpile because of fears that communism would spread from the Korean peninsula to important producing nations including Indonesia, Thailand and Malaysia. At its peak in 1972 the stockpile contained 250,000 tonnes of the metal, equal to more than the world’s entire annual supply at that time. 'The US government then spent the next 30 years trying to get rid of it without disrupting the market,' Mr Lipmann recalls. Now, the worry is again that governments will commit the same mistake as they seek to limit a national dependency on China for supplies of substances that, while less prosaic than tin, are needed in rather more modest volumes."

Fears over shortages nevertheless seem to be winning the day and stockpiles are starting to grow ["Pentagon in Race for Raw Materials," by Liam Pleven, Wall Street Journal, 3 May 2010]. Plevin reports:

"The U.S. military is gearing up to become a more active player in the global scramble for raw materials, as competition from China and other countries raises concerns about the cost and availability of resources deemed vital to national security. The Defense Department holds in government warehouses a limited number of critical materials—such as cobalt, tin and zinc—worth about $1.6 billion as of late 2008. In the coming weeks, the Pentagon is likely to present a plan for Congress to overhaul its stockpiling program. The new plan, dubbed the Strategic Materials Security Program by the Pentagon, would give the military greater power to decide what it stockpiles and how it goes about buying the materials. It would also speed up decision making at a time when military technology evolves rapidly, commodity markets swing widely and countries around the world fight to secure access to natural resources."

Like their commercial counterparts, many U.S. defense systems rely on rare minerals in their manufacture. In a time of crisis, the Pentagon wants to ensure that materials needed to produce weapons and communications systems are available to its contractors. Pleven continues:

"Right now, the military can't add to the stockpile list without congressional approval, a process that can take as long as two years. The military wants to remove that restriction. It also wants the authority to strike long-term deals with companies or allied nations to provide emergency supplies of materials that the military says are irreplaceable for making weapons, jet engines, high-powered magnets and other gear."

Pleven notes that the U.S. is not alone in its concerns and that "last year, Australia blocked a Chinese firm's bid for control of a company that was developing a mine for rare-earth elements, which are used in products such as alloys, electronics and computer monitors." Those arguing in favor of reforming the current stockpiling system believe it "leaves the U.S. vulnerable to a shortage of critical supplies. That could weaken the military's negotiating position or leave it at the mercy of wild price swings in the market, or unable to get the material it needs for key weapons." Opponents of stockpile reform worry that Pentagon actions could have a negative impact on the market.

"The changes being proposed by the military have the potential to move prices, especially on materials for which the market is small. If the military decides to add a commodity to the stockpile, it could cause 'some upward pressure on price,' said Roderick Eggert, a mineral economist at the Colorado School of Mines, who has tracked the proposal."

That would be good for mine owners but bad for consumers -- including the Pentagon, which "is also a major buyer of raw materials for immediate consumption, as opposed to stockpiling. It purchases about three-quarters of a million tons of raw materials a year for immediate consumption, and it uses almost 1% of U.S. steel production and nearly 5% of its aluminum." Although some analysts believe that the stockpiling system is an artifact of times past, the Pentagon points out that "a special type of steel was needed early in the Iraq war to reinforce Humvees to protect soldiers from powerful explosives used by insurgents. The Defense Department didn't have the steel in its stockpile, and couldn't find a domestic firm to produce all it needed. The rules were changed to allow the military to use material from Mexico, according to testimony to Congress last year."

With more and more technologies in a growing number of fields all becoming reliant on rare minerals, I can assure you that we haven't heard the last on this subject. The debate will inevitably include the importance of supply chains as well as environmental issues such as the damage caused by poor mining practices and the importance of recycling products containing rare minerals. The search for new sources of rare minerals could also raise the economic profiles of Africa and South America.

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Register for Enterra Solutions Web Seminar (“Retailer Compliance: Accentuate the Positive, Eliminate the Penalties”) to learn more about the Enterra Supply Chain Assurance Platform (ESCAPE™) and how your company can reduce retailer imposed penalties. The webinar will be held May 25, 2010, at 11 a.m. EDT. Follow this link to register.