June Round-up

Holistic bodycare and natural medicines specialist Weleda UK reports that sales to independent health food stores are up by a “staggering” 35% on this time last year. The announcement underlines the growing confidence within the health food trade that has been seen over the past 12 months. Weleda, which celebrates its 80th anniversary this year, says that sales across its overall business are also up by a solid 12%. Strong year-on-year growth in recent years has seen total UK sales rise from £3 million in 2000  to £4.2 million in 2004. Internationally, turnover by the Weleda Group is around £100 million.

New York Attorney General Eliot Spitzer suffered his first major defeat in his campaign to clean up big business.  Former Bank of America broker Theodore Sihpol was acquitted by a US court of 29 counts of helping a hedge fund to trade mutual funds illegally. A New York Supreme Court judge also declared a mistrial on four counts on which the jury was deadlocked.

A new study by academics provides evidence that the market value of Hong Kong listed companies is positively and significantly correlated with their corporate governance scores. Click here to download the research paper.

After dismissing electronic waste problems at its annual general meeting, Apple Computers announced it will offer free recycling of iPod music players at its retail stores throughout the US and a 10 percent discount on the same-day purchase of a new iPod. This fulfills the request made by socially responsible investment firm Green Century Capital Management at the AGM; however, the Computer TakeBack Campaign is advocating for Apple to go further, extending its recycling efforts throughout its product lines.

Forest companies received a warning from Time Inc. that their logging practices must meet sustainability criteria, or they won't get the business from the world's largest magazine publisher. David Refkin, director of sustainable development for Time Inc., told the Global Forest and Paper Summit that sustainable development is important to the business world, and it is time for forest companies to stop viewing it as a threat. Time Inc., which buys 650,000 tonnes of paper a year for its publications, does an annual review of its suppliers, evaluating them on a scale of sustainability targets. "Our strategy has been to reward leaders, encourage laggards, and for those who have egregious practices: No business," Refkin said.

Venture Capital

PolyFuel apparently is going to raise £ 12 million, which would give it an enterprise value of around £40 million. It's initial VC funding round provided a post-money valuation of just $13.2 million, while a $15.6 million infusion in 2002 was post-valued at $35 million (according to our VentureXpert database). This is delivering decent returns for first-round backer Mayfield, and later investors like Intel Capital and Chrysalix Energy, and demonstrates that opportunities are attractive in this uncharted line of work.

German Chancellor Gerhard Schroeder recently said he planned to propose strengthening international controls on hedge funds at the G8 summit. Similarly, US Treasury Secretary John Snow has said that US authorities are working on increased monitoring of hedge funds.

Second quarter activity numbers for the US are coming out and it looks like it was good for buyouts though more modest for VC deals.  The strong performance may partly be driven by the volume of capital required to be invested in the coming year.

The Motley Fool has now also weighed in on the US VC overhang, predicting that tech VC will boom over the summer because of the capital overhang that will expire next year - funds must invest capital or lose it. They estimate the overhang at $ 13.5 billion. Thus buyin prices will rise and investors should be wary that their managers do not overpay. It will also be an opportunity for some funds to sell to other funds and potentially get top dollar.

The newly published guide Venture Capital and Private Equity Funds for Development appears to be a useful reference by Holland's International Cooperation and Sustainable Development Committee.  It is fairly priced at € 25 making it accessible to a wide audience. 

Although Africa must be on everyone's mind with the upcoming G8, it is rarely seen as an investment opportunity. But this is now changing fast as it becomes a rapidly emerging market for development VC. Of the billions of dollars of private capital that is circling the globe, looking for a place to land and multiply only 1 per cent of it finds its way to sub-Saharan Africa. This vote of no confidence in Africa on the part of global investors is seen by some as a justification for doubling aid. But this is confounded by the fact that Africa delivers some of the highest returns on investment on the planet. Even more intriguing: despite the misperception that capital shortages are holding back development, banks across east, west and sub-Saharan Africa are actually flush with money. Yet they refuse to lend it to those who can do the most with it: millions of disenfranchised, small-scale African entrepreneurs who could lift Africa out of poverty if given half a chance. the Shell Foundation's recent report Enterprise Solutions to Poverty edited by Kurt Hoffmann offers some guidance on opportunities.

The following note by Thomas Forest Farb, Managing Director of New America Partners, points out why understanding the impact of China is relevant to investing in the US and Europe as well as Asia:

Watch China Surprisingly, many private equity firms are still making investment decisions without seriously considering the impact of China on their prospective investment. Including an analysis of the impact of China as part of due diligence is now a must. Surprisingly, some firms have not taken the global view, while others formally require that these issues be considered in due diligence. One of the few mistakes to be made in analyzing China is to underestimate its capabilities. China is now the leading supplier in over 100 product categories. It has achieved the greatest and longest record of economic growth that has been recorded. China cannot be easily discounted - it is likely to succeed as a result of its well educated and disciplined labor force, its high savings rate, low production costs, stable and business-oriented government and massive infrastructure investments. In comparison, while the U.S. is patching its creaky infrastructure, China is boldly initiating major infrastructure projects, although often to the detriment of environmental practices found in other parts of the world. For instance, the Three Gorges Dam project is the largest engineering project in the world, far exceeding Boston's Big Dig, and being brought in a lot closer to budget and schedule. When conducting its due diligence, there are at least four impacts of China that a private equity firm should consider before making an investment: The U.S. prospective investment's own international sales may be at serious risk - China 's own expertise in Asia is winning Asian markets. There are 56 million ethnic Chinese dispersed in Asia who are not in residence on the mainland. This has given the Chinese the knowledge of each of the Asian markets that allow it to be ferocious competitors. And although the press in the U.S. has focused on the impact of Chinese sourced or manufactured goods in the U.S., one hears little discussion of a related problem - China is not only impacting the U.S. market, but is also competing with U.S. firms in foreign markets such as Europe, Latin Am eric a and Africa. China 's ability to produce goods and services at a significantly lower cost is disrupting the current supply chains - An incredible 55% of the exports of China are related to foreign-owned entities, suggesting all of these products are part of a company's supply chain. This exporting machine is having a significant impact on the structure of many U.S. industries. If ignored, this can devastate a company, if embraced these goods can create an opportunity for a U.S. company to be more competitive, allowing it to build value in other parts of the business. Wage differences can range easily from being 10 to 40 times higher in the U.S. in the manufacturing area. Even financial analysts have compensation approximately five times higher in the U.S. China is having a significant impact on the input costs of many companies - Businesses with inputs that are also in demand in China are potentially vulnerable to not only higher prices but actual scarcity. China is negotiating for commodity after commodity exclusive supply contracts that are turning fungible products into ones that could be unavailable at even greatly higher costs in a shortage situation. China is no longer a marginal player. At the same time that the activity in China has driven up certain natural resource prices, China 's production capability has also put pressure on margins - a double whammy. Maytag, for instance, has suffered from increased cost of steel for its washing machines, while also seeing increased competitive pricing on its products from imports from Haier. Chinese domestic companies are globalizing by developing their own export capability or establishing direct distribution in the U.S. , challenging domestic companies directly - Chinese companies often have very competitive, unconsolidated internal markets running at overcapacity of 20% to 40%. Chinese companies are attempting to achieve scale and operating leverage by exporting and by developing their brand. We already have some significant Chinese brands, including Lenovo, Huawei, Haier, Tsingtao , Giordano, and in the industrial arena, PetroChina and COSCO Shipping.   There are many product areas where the Chinese supplier can go directly to the U.S. customer of a prospective investment. This will typically occur with products that are lower in technology, closer to commodities rather than brands, do not require much advanced engineering or training, service or ongoing maintenance. Product areas where there is a low end segment may be more vulnerable to a toe hold and then a movement upwards in quality and price. And having higher technology does not necessarily make for a defensible position. Like Japan , Taiwan and Korea , China is quickly climbing the value-added trail. U.S. private equity firms have to learn to analyze China along at least these four dimensions. They have to be careful not to lose their markets entirely to Made in China . But protectionism won't work, nor will ignoring it, only understanding the opportunity and embracing it will. Unfortunately, understanding how to do business in China is not an easy task for the smaller and mid-sized U.S. firm. It will require some significant expenditure of effort and funds.

Interest Rates and Currencies

As expected US interest rates are continuing to rise and is expected to continue.

Attention on Chinese Yuan revaluation continues, but do not expect anything soon. There are now serious questions about whether or not it is overvalued, even in the US.

Trade and FDI

G8 (the G7 plus Russia) agreed to cancel all the debts that 18 heavily indebted poor countries owe to three multilateral lenders, the World Bank, the International Monetary Fund (IMF) and the African Development Bank (AfDB). The beneficiaries are Guyana, Honduras, Nicaragua, Bolivia and 14 African countries. The debts in question have a face value of about $40 billion, on which an annual average of $1 billion-1.5 billion is paid in debt service. Nine other countries may benefit within a few years, and a further 11 would be eligible if their governments were not so inept and corrupt. One cannot know whether the money promised in London will come in addition to, or instead of, the money they would have given anyway.

Why forgive the debt?  Several personal views available here add colour to our understanding of the inequality of the situation. One follows here ...

My name is Abdul Raufu Mustafa. I'm from Nigeria and I live in Cowley in England. The issue that Nigeria really is bothered about in the conduct of the G8 countries is essentially debt. In the 70s Nigeria borrowed something in the region of 17 billion dollars. Not all of this money got to Nigeria because of collusion between corrupt Nigerian officials and corrupt bankers. But since then Nigeria has paid over 30 billion dollars and still owes another 34 billion dollars in back interest and penalties and the lot. And that has become a major problem for the country because a lot of resources are being diverted just to service the debt. And this is happening in the situation where 7 million Nigerian kids are not having the most basic of primary education. The health system in the country is in dire condition, the universities, the roads, virtually all public infrastructure. That is a situation which is partly contributed to by internal problems but also no doubt by the debt burden. This is an unsustainable debt. And absolutely something has to be done about it at the level of the G8 so that ordinary people in Nigeria can get a look in to the issues of life.

As June draws to a close, the energy focused on the G8 meeting events start to get under way.  Top of the agenda is poverty alleviation and climate change.  Blair, president during this semester, raised the stakes at the end of June by connecting the UK's EU budget with a demand to scrap CAP.  Scrapping CAP would have multiple benefits, even though a few farmers would have to change production practices.  Removing subsidies would raise revenue to emerging economies and would reduce energy consumed by agriculture because emerging economies have more natural production systems.

The Common Agricultural Policy, which swallows more than 40 per cent of Europe's budget for the benefit of just 5 per cent of its population, is a relic of the postwar years, when the predecessor of the Union was founded. As the EU's official history of the CAP, on its website, puts it, 'The memory of postwar food shortages was still vivid and thus agriculture constituted a key element from the outset of the European Community.' Europe is not alone - the farm lobby in the US is also powerful, and Washington subsidises a range of products, from cotton to maize.

The greatest beneficiaries of CAP are the wealthiest landowners! In Britain, European Common Agricultural Policy subsidies are worth £3.5 billion. They are doled out to royalty, the wealthiest of aristocrats, food manufacturers and major agribusinesses. Small rural enterprises, in Britain and in poor countries, go to the wall. Anyone thinking the CAP helps small business should be reminded that last year the Queen received £545,897 for her farms on the Sandringham and Windsor Castle estates. Her eldest son, Prince Charles, did even better. He snaffled £680,835 for his Duchy of Cornwall and Highgrove estates. The CAP handout is now enshrined in the value of rural land. In business parlance, it is capitalised. This is why, as land prices fall in most of the country, farm land has retained its value. It sounds very comforting unless you are a would-be farmer. Peter Hardstaff, head of policy at the World Development Movement, said: 'There are some good reasons to subsidise agriculture in Europe, or anywhere else for that matter. For instance, protecting the environment or supporting small scale local operations. But paying producers or companies to export is a disgrace.' The CAP, far from being redistributive, stifles competition.

Dunce's CAP (from The Observer)

(By the way, we do not accept CAP subsidies at Ballin Temple as a matter of principle - while we can!.)

So it is good to hear that reform of the sugar subsidies is begriming in Europe.  The reforms were necessary after the World Trade Organization last year ruled EU sugar subsidies were illegal following from Brazil - the world's biggest sugar exporter - and Asian producers. By 2009 the price set for white sugar will drop by 39%.  Producers and refiners will be paid to go out of business in beet growing countries.  The reform of sugar subsidies can contribute annually $ 4.9 billion in wealth, much for the benefit of emerging economies that grow cane. We are already seeing the pinch as neighbours growing beet have had to stop and seek alternatives, like contracting. Q&A: EU sugar subsidies

Commodity markets volatility continues to be high because of the role of China.  Raw material prices shot up last year as demand for minerals could not keep pace with demand.  Now, the supply of steel is putting downward pressure on prices and China is delaying delivery of ores.  Global economic conditions will still impact prices, but China's appetite continues to grow and thus we expect the upward trend in prices to continue, with volatility remaining unpredictable and high.  It is likely that prices will rise again within the next couple of quarters.

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Energy

By mid-June the price of oil had risen off recent lows in May to resume its upward trend.  OPEC is finally adjusting its target price band from around $ 28 per barrel to a $ 30 - 50 range, which may be optimistic given the range for the last 12 months:

The price is already touching $ 60.

The recent merger  notions concerning Unocal, Chevron and CNOOC have raised the spectre of ethical governance because the Chevron is using the "scare" of energy security as the principal reason they should be allowed to pay less than CNOOC.  The reality is that Chevron buying Unocal will increase the retail price for US consumers and not really impact supply of raw materials.  Energy security is available through alternative fuels only, whose development the US could lead by a significant margin if this strategy became policy.

London could see a quarter of its electricity come from 270 wind turbines in what would be the world's largest offshore wind farm, Shell and several energy partners said Tuesday in applying for permits to build the $2.7 billion project. The London Array project would place the turbines on offshore platforms where the Thames River meets the North Sea around 60 miles outside London. The turbines would generate around 1,000 megawatts and connect into Britain’s national grid to supply power for more than 750,000 homes, helping meet Prime Minister Tony Blair’s target of generating 10 percent of electricity from renewable sources by 2010.

And on the other side of the pond the newly reconstructed Stillwell Avenue subway station in Brooklyn, New York has become the city's first solar-powered train terminal, and one of the most environmentally responsible mass transportation sites built in the U.S. The 76,000-square foot state-of-the-art solar roof, manufactured by RWE Schott Solar, is expected to contribute approximately 250,000 kilowatt hours a year to the station's non-traction power needs.

Toyota has also introduced "the first performance hybrid SUV", an attractive beast that is virtually silent in city traffic when it can run on electric alone, and has 3.6 litre V6 power on call.

Climate Change and Environment

A leaked copy of a document on climate change being drafted for the G8 summit suggests it has been watered down. A version of the communique leaked in May treated climate change as a fact and pledged money to energy projects. In the new version the words "our world is warming" appear in square brackets, meaning at least one country disagrees, and all financial pledges have gone.

Until now it was thought that El Nino conditions - which cause changes in rainfall patterns, with far-reaching effects, including serious flooding and droughts - could not be maintained permanently. But scientists from the University of California, whose research was published in the journal Science, said coupled systems of oceanic and atmospheric circulation that drive the global climate were capable of dramatic shifts.

"Global Warning” was published by the Meridian Programme (see: meridian.org.uk) at the beginning of June 2005 and launched on the eve of the United Nations World Environment Day during a Symposium on Climate
Change held in University College London. The full presentation is accessed via the Meridian Programme web-site. “Global Warning” identifies three threatening waves of change now facing humanity. These are:

· Climate change
· Footprint overshoot
· Psychodynamic response

The causes and effects of each wave are outlined, followed by a resounding call for action at all levels of global society. The paper concludes with a practical section outlining the required multi-level response to the situation, combining systemic initiatives with personal action. Links, notes and references open opportunities for self-directed follow-up.

Emissions of the greenhouse gas carbon dioxide rose in the European Union by 1.5% in 2003 after falling in 2002, the European Environment Agency reports. Italy, Finland and the UK were named as the worst offenders while cold weather was blamed for a rise in the use of fossil fuels to heat homes and offices. Some commentators now doubt the EU can meet its promise to cut emissions by 8% of 1990 levels by 2012. Friends of the Earth called the new figures "shocking". "The blame goes mostly to national economy and industry ministers, who constantly block any attempts to introduce mandatory targets for renewable energies, energy efficiency rules or fuel consumption standards for cars," Jan Kowalzig said. Carbon dioxide emissions have risen by 3.4% since 1990, according to the EEA figures. The Copenhagen-based EEA said emissions in the 15 old EU member states increased by 53 million tonnes, or 1.3%, in 2003, after a drop in 2002. According to its figures, between 2002 and 2003, Italy, Finland and the UK saw the largest emission increases in absolute terms - 15 million tonnes, eight million tonnes and seven million tonnes respectively.

Those of you who are aware of the gross environmental cost of flying may be interested to see the My Climate website where you can commit to various efforts to combat the causes of global warming

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IT

A quick roundup of some interesting facts that show how the internet is making the noosphere a reality and transforming economic and social relationships.  Skype (VOIP) has 41 million users and contributes to the 15% drop in revenues of AT&T and MCI.  Open source software is established - by one recent survey over half of businesses have replaced servers with Linux versions already.  eBay has demonstrated an alternative model to retail shops.  Online trading has brought transaction costs close to zero.  Consumers share information and views requiring more authentic marketing.  The principal source of  revenue for Google, the largest media company, is advertising.  the overall picture is of declining transaction costs, increasing information and virtual communities that have political power outside traditional, national boundaries.

An open source VOIP has been launched. See Gizmo here.

Virus writers have adopted a new tactic to try to make sure their malicious programs reach as many victims as possible. Instead of releasing Windows viruses intermittently, many creators of worms and trojans are pumping them out with increasing frequency.  For a while new variants of one virus, called Mytob, were appearing every hour. Some viruses appear in hundreds of different guises. This tactic is designed to fox security firms that use software to scan e-mail attachments for the signatures of known viruses. The variants are appearing far faster than firms can analyse them and update their scanners to spot the malicious code. The tactic seems to be paying off. Currently, Mytob variants are filling 14 of the positions in the Top 20 threats list collated by security firm Sophos. So the best defense remains GETTING RID OF WINDOZE!  It is embarrassing to raise a voice against those educated and responsible for IT security, i.e. CTOs etc, but why do they insist on committing their companies to ever spiraling costs of security and software updates when a solution is available.  Perhaps it is like the US health care system in which the professionals are compensated for keeping the dead alive, the CTO's get their padded salaries because of the poor design and performance of the infrastructure they are supposed to maintain.

Some 100 leading consumer sites were assessed by web-testing firm SciVisum, who noted that 10% do not follow code practice, though the site might work with IE. Web developers who create code around the web standards recommended by the World Wide Web stand to gain more than just friends among the alternative browser community, but also will make it easier for disabled people to use, which leads to a CSR and open information issue which can affect the business reputation. Simplifying things by separating content from presentation will have a third benefit in that it will make it easier for sites to be picked up by search engines. Alternative browsers, like Mozilla, Firefox and Opera are gaining in popularity. Mozilla and Firefox are proving popular because they have far fewer security holes than IE and has innovations lacking in IE. Its share of the browser market grew to 8% in May, up from 5.59% at the beginning of the year, according to US-based analysts NetApplications. Microsoft is working on a new version of IE, largely in response to the success of Firefox.

The World Money Laundering Report Online highlighted a potential problem with Google's principle way of generating revenue - how context sensitive ads are a potential risk.

You can't escape Google's context sensitive adverts anywhere on the web: even major news sites use them and they provide at least some prospect of a small income for many other webmasters. But the algorithm that works out what to display can create some interesting - and potentially risky - combinations. Sony is threatening to take legal action against those who legally purchase Portable Play Station consoles in Japan and the US (where Sony has launched the product) and then sell them commercially in Europe (where it has not). This story was a front page story in Google's UK Edition of their news page yesterday and it linked to the full story at < link http://www.earthtimes.org/articles/show/3084.html EarthTimes.Org> At the top of the page is a block of Google ads. The first that appears is in French from a company called Cherchons.com - and it is for the PSP. The first advert on that page is for PSPs imported from Japan selling for only euro299 (suspiciously low, one might think). The page also carries ads by Google. And the second advert on that page is headlined "New psp portable - see what the talk is about USD249.99 Value pack still in supply" That advert links to Amazon.com - (where the price shown is more than USD320 - demonstrating that compliance needs to be delivered right across organisations - someone at Amazon has clearly forgotten to update the Google ad and there is, seeminly, no effective procedure to catch such errors). Clicking on the product shows that this is not an Amazon sale: it's a list of dealers all over the USA. A random check of several demonstrated no restrictions on shipping to Europe. Website managers do not know what ads are going to appear from Google: the ads are served by analysing a mix of the content on your page and, if the link comes from a search, the searcher's enquiry. There's a parallel risk. The ads that appear on Google's own search results depend on the search terms: so your keyword advertising may inadvertently turn up in response to unsavoury requests for information. Keyword context sensitive advertising is propelling Google's business model - and helping many webmasters to make money from otherwise dead space - and it's a lot more reliable, apparently, than the old "link exchange programmes" that very few people ever seemed to make any money from.  But that doesn't mean it's risk free.

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Integral Systems and LOHAS

dance as though no one is watching you
love as though you have never been hurt before
sing as though no one can hear you
live as though heaven is on earth
... Souza

Meditating monks are giving clues about how the brain's basic responses can be overridden, researchers say.   "Meditation is a way of tapping into a process of manipulating brain activity"    increasing evidence and technology available to develop mental control ought to be driving the demand for these skills to be prerequisites for leaders, especially executive directors and officers of large public companies.  Without mental control people in these powerful roles all too often behave like psychopaths.

The European Prospective Investigation into Cancer and Nutrition (EPIC) looked at the dietary habits of over 500,000 people across Europe over 10 years. Those eating over two 80 g portions of red meat a day were a third more likely to get bowel cancer than those eating less than one portion a week.

Potatoes may be healthier to eat than previously thought, after scientists found them to contain chemicals which lower blood pressure. The independent Institute of Food Research says the chemicals, called kukoamines, occurred naturally in many common types of potato. Scientists at the Norwich institute stumbled upon the chemicals while studying potatoes for other reasons. They say boiling potatoes may preserve the health benefits better than frying. The scientists were studying genetically-modified potatoes and ordinary ones to compare their chemical make-up when they discovered the kukoamines. The say they knew the chemicals existed in some Chinese herbal remedies but had not expected to find them in potatoes. As well as being known to lower blood pressure, they are also used to treat the disease known as "sleeping sickness", which is widespread in parts of Africa.

Leading cereal manufacturers, Nestlé and Weetabix, are following in the footsteps of US giant General Mills by switching to whole grain as the main ingredient in their breakfast cereals.

Infertility may be becoming more of a man's than a woman's problem, new figures suggest. Until now, both were level pegging - 40% of cases linked to men, 40% to women and 20% to joint problems. However, the European Society for Human Reproduction and Embryology found rates of an IVF treatment typically used to help male infertility have risen. It said a number of factors including declining sperm quality due to environmental toxins may be involved.

Ibuprofen hit the headlines last month after research linking the OTC drug with an increased risk of heart attack was picked up by the media. “Medicine is an important element in the treatment for the vast majority of people with arthritis,” said Neil Betteridge, chief executive of Arthritis Care. “There is now much confusion and worry over the risks associated with many of the medicines used for arthritis.” The upshot could be that people suffering from arthritis will increasingly turn to the better known — and well researched — natural alternatives, such as arnica creams and gels, devil’s claw and glucosamine sulphate. These herbal based products have been clinically proven to provide topical relief for symptoms such as inflammation of the joints, pain relief and joint damage, without suppressing the immune system or damaging the stomach lining.

A new survey from Mintel which finds that crisp and savoury snack sales are down by 12% since 2002. In tonnage terms that’s a fall from 360,000 tonnes to 280,000 tonnes. Mintel says last year appeared to be a turning point. Crisp and snack sales had been in slow decline for a number of years but fell away sharply in 2005 as media concern over issues such as obesity and high-fat, high-salt foods reached a peak. Within the overall snacks category, savoury snacks have taken the biggest battering. The reason for this is that despite the wider availability of rice-based, baked snacks, the savoury snack’s sector has not benefited from the development of value-added premium products as seen in the crisps sector. It has been the success of speciality ‘hand-fried’ crisps that has prevented crisp sales from losing further value. The strongest growth has been from new snack products using a wider range of ingredients such as soya, rice, parsnips and other root vegetables. Low-fat and low-salt versions of conventional snacks have largely failed to take off however. A longer term challenge facing Britain’s snack manufacturers is falling child population (the number of children under 15 in Britain fell by 4% between 2000 and 2004). This has prompted manufacturers to develop products specifically targeted at other age groups such as younger males — the Nobby’s brand being one example. Mintel analyst David Bird predicts that a wave of vitamin and omega-3 enriched snacks will arrive in the coming year as the industry tries to get its products to appeal to health conscious parents.

Manufacturers of health and nutritional products must now provide detailed research reports during product registration, and marketers must now have advertisements pre-approved, as Chinese regulators attempt to raise the quality threshold. The new rules, which take effect on July 1, apply to nutritional supplements and health products intended to serve specific benefits such as weight loss, lower blood pressure, increased immunity and improved memory. The State Food and Drug Administration lists 27 such functions.

IFOAM is challenging the UN’s Food and Agriculture Organization (FAO) over its funding priorities. Currently, organic barely gets a look in as part of FAO’s 2006-07 $ 850 million Program of Work Budget. Agricultural biotechnology, by contrast, is already assigned substantial funding as part of the FAO budget — and other schemes. Not surprisingly, IFOAM sees a certain irony in this, since the heart of the FAO’s mandate is the goal of “achieving food security for all”. With biotechnology widely seen as one of the major global threats to food security it does appear that there are some seriously skewed priorities here. And it’s not as if IFOAM is demanding the earth — it’s calling for just 2% of FAO’s budget to be allocated to organic farming, so that at least there is some reflection of the percentage of organic agricultural practices worldwide.

Canada's parliament has approved a bill that legalises same-sex marriage, despite strong opposition from conservative MPs and religious groups. The bill was supported by 158 lawmakers in the 308-seat House of Commons, with 133 MPs voting against. Same-sex marriage is already legal in several Canadian provinces, but the bill has caused huge controversy. The move makes Canada only the third country after the Netherlands and Belgium to allow gay marriages. The bill still needs to be approved by the Liberal-dominated Senate to become a law.

Spain's Senate has rejected a bill on gay marriage but MPs are likely to make it law when it returns to the lower chamber of parliament. Belgium and the Netherlands are the only EU states to have legalised gay marriage to date. Opinion polls suggest that a majority of Spaniards support the gay marriage and adoption bill.

Pro-whaling nations have lost two early votes as this year's International Whaling Commission meeting began. Conservationists feared Japan, boosted by four new members, might be able to command a pro-whaling majority. But Japan lost votes on a proposal to ban the discussion of new whale sanctuaries, and a procedural motion. But a number of controversial proposals remain on the table, such as abandoning the IWC's programme on whale welfare, which looks at killing methods. If Japan is unable to command a majority here, as it had hoped, it could play its final card and leave the IWC altogether. This option would have far reaching implications for conservation and perhaps for Japan's relations with other countries such as Australia and Britain with whom it is generally on friendly terms. Conservation groups are concerned at the impact on whales and their close relatives such as dolphins and porpoises. It came into effect in 1986 after research showed that whale stocks worldwide were in serious decline, as a result of unregulated catches for meat and oil. Some statistics on whaling since the ban.

• Japan, Norway and Iceland have killed more than 25,000 whales since the IWC moratorium took effect in 1986

• Most whales are killed with harpoons designed to explode inside them, though small traditional coastal communities use other methods

• Whalers say unconsciousness or death is near instantaneous; opponents say some whales can take over an hour to die

Japan abides by the moratorium on commercial whaling, but catches around 800 of the mammals each year for a programme of "scientific research", as it is allowed to under the international whaling convention. The meat from those whales ends up in the stomachs of Japanese people; and critics say the scientific programme is just commercial whaling in disguise. Iceland runs a similar, much smaller scheme, whereas Norway objected to the moratorium when it came into place, and catches several hundred whales each year. The moratorium was seen as a stop-gap measure when it came into place, and since 1990 discussions have been going on about a replacement, the Revised Management Scheme (RMS), which would allow some degree of commercial hunting on a sustainable basis. A version of the RMS will be proposed at this year's meeting; but Japan is expected to reject several of its components, such as what it regards as an over-zealous inspection regime, and present its own version instead. Ben Bradshaw, the UK fisheries minister, has accused the Japanese government of "sticking two fingers up at world opinion" in its efforts to increase its whaling quota. The Japanese have threatened to walk out of the IWC, describing the anti-whaling nations, which include Italy, Germany, the US, Britain, Australia and New Zealand, as fanatic. At the centre of the conflict is the future of the moratorium on commercial whaling introduced by the IWC in 1986, after evidence that the world's largest mammals were being driven to extinction. Every year Japan has sought to overturn the moratorium; every year it has failed to achieve the required three-quarters majority.

Closer to home, Ireland continues to raise two fingers to the international community on the subject of drift net fishing which has all but wiped out the wild Atlantic Salmon. The International Herald Tribune reported in June:

In the last three decades, the wild Atlantic salmon population has been slashed by two-thirds. Fragile salmon stocks are vanishing quickly in countries like Germany, France and Spain, while in some U.S. and Canadian rivers, salmon are already extinct. In just five years, from 1994-1999, the total run of Atlantic salmon in North American rivers fell from 200,000 to 80,000. Hazardous to Atlantic salmon are water pollution, dams and predators, as well as aquaculture diseases, parasites and interbreeding with farm "escapees," which weakens the wild salmon gene. But the real enemy, says Vigfusson, is the rapacious commercial drift-net fishing introduced in the 1960s, when traditional hemp nets were replaced with merciless modern filament. ... While the rest of Europe voluntarily attempts to protect wild Atlantic salmon, Ireland's drift netting continues to kill more than 200,000 salmon annually, greedily taking 51 percent of Europe's total wild salmon catch. Full article here.

Following up on popular attention to Terri Schiavo, the woman at the centre of America's most contentious right-to-life case, earlier in the year, it appears that she was so brain damaged that no amount of therapy could have improved her condition. The finding by Dr Jon Thogmartin, who led a post mortem investigation after Schiavo (41), died in March, vindicated her husband's claim that she could not recover and appeared to clear him of having caused her injury in the first place. Dr Thogmartin said that her condition was consistent with a clinical diagnosis that she was in a persistent vegetative state. Neither was there evidence that the damage was caused by her having been strangled or beaten.

The winter of 2004-2005 saw the second highest chemical ozone destruction ever observed over the Arctic. Polar ozone is destroyed when chlorine, cold temperatures, and sunlight mix in the atmosphere 8-50 kilometers above the Earth’s surface. Since ozone shields the Earth from ultraviolet light, the high-energy light that causes sunburns and is associated with skin cancers, low ozone levels could threaten human health.

These images show the fluctuations in ozone during the Arctic winter of 2005. The top two images show the average total column ozone over the Arctic during the months of January and March, 2005, and the lower image shows total column ozone on a single day, March 11, 2005. The images are based on data collected by the Ozone Monitoring Instrument (OMI) aboard NASA’s Aura satellite.

Astronomers believe they have discovered Earth's 'bigger cousin' orbiting a nearby star 15 light years away. The planet could be the first rocky, terrestrial world to be found circling a normal star outside the Solar System.  Unlike the Earth, the planet orbits at a distance of only two million miles from its star, whipping round Gliese 876 in just two days. It is so close to the star that its day-side temperature could reach between 200C and 400C - far too hot for liquid water or any kind of Earth-like life.

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Activities, Books and Gatherings

June activities focused on finalising our annual returns, final preparations for Astraea Integral - Nurturing Natural Performance and rejuvenating the garden while keeping on top of the weeds! Investment performance was decent.

Extracurricular reading took in Darwin's Watch which can not be recommended highly enough. It offer current science and insights relevant to frontier science (like time travel) and critical issues facing us today (like genetic engineering). Guards, Guards by Pratchett was a great fantasy story with dragons to boot; and it is a prescient parody of the Iraq War - fortunately there is a happy ending!

The PestalozziWorld summer newsletter is now available.  Its a tenth anniversary issue and offers updates on the Asian Village as well as other activities.  The Asian Village will provide accommodation for poor students in North India.  PestalozziWorld supports the education of children in developing economies and has a policy of putting all donations directly to that end, not administration. There is a reception for some Asian Pestalozzians in London on July 19th so if you would like to meet them please contact PestalozziWorld.

We participated in an open space on education, which revealed some great initiatives which are emerging across the country. During the open space I was fortunate to (unintentionally) meet and chat with David Holmgren. David is well grounded and a leading agent of change - for 25 years he has pioneered permaculture design and this is the first occasion upon which he has been persuaded to board a plane to share his views globally (he resists traveling by plane because of the environmental cost). He co-authored the quintessential permaculture text with Bill Mollison. You can find him on the internet at www.holmgren.com.au.

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