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Against the backdrop of Ukraine's counteroffensive and the Kremlin's efforts to illegally annex additional territory, a delegation of members from the NATO Parliamentary Assembly arrived at Stanford to meet with experts and weigh considerations about the ongoing conflict. First on their circuit was a panel hosted by the Freeman Spogli Institute for International Studies (FSI) chaired by FSI Director Michael McFaul, with Marshall Burke, Francis Fukuyama, Anna Grzymala-Busse, Scott Sagan, and Kathryn Stoner participating.

The delegates represented thirteen of NATO's thirty member nations, including Belgium, the Czech Republic, France, Greece, Hungary, Italy, Latvia, Luxembourg, Portugal, Romania, Spain, Turkey, and the United Kingdom. Top of mind were questions about the possibility of nuclear escalation from the Kremlin, and appropriate repsonses from the alliance, as well as questions about the longevity of Putin's regime, the nature of international authoritarian alliances, and the future of Ukraine as a European nation.

Drawing from their expertise on state-building, democracy, security issues, nuclear enterprise, and political transitions, the FSI scholars offered a broad analysis of the many factors currently playing out on the geopolitical stage. Abbreviated versions of their responses are given below.

Kathryn Stoner, Francis Fukuyama, Marshall Burke, Scott Sagan, Anna Grzymala-Busse, and Michael McFaul present at a panel given to memebers of the NATO Parlimentary Assembly.
Kathryn Stoner, Francis Fukuyama, Marshall Burke, Scott Sagan, Anna Grzymala-Busse, and Michael McFaul present at a panel given to memebers of the NATO Parliamentary Assembly on September 26, 2022. Melissa Morgan

The following commentary has been edited for clarity and length, and does not represent the full extent of the panel’s discussion.
 


Rethinking Assumptions about Russia and Putin

Kathryn Stoner

Right now, Putin is the most vulnerable he's ever been in 22 years in power. But I don’t believe he's under so much pressure at this point that he is about to leave office anytime soon. Autocracies do not usually die by popular mobilization, unfortunately. More often they end through an elite coup or turnover. And since the end of WWII, the research has shown that about 75% of the time autocracies are typically replaced by another autocracy, or the perpetuation of the same autocracy, just with a different leader. So, if Putin were replaced, you might get a milder form of autocracy in Russia, but I don't think you are suddenly going to create a liberal democracy.

This means that we in the West, and particularly in the U.S., need to think very hard about our strategies and how we are going to manage our relationships with Putin and his allies. This time last year, the U.S. broadcast that we basically wanted Russia to calm down so we could pivot to China. That’s an invitation to not calm down, and I think it was a mistake to transmit that as policy.

We need to pay attention to what Russia has been doing. They are the second biggest purveyor of weapons globally after the United States. They will sell to anyone. They’ve been forgiving loans throughout Sub Saharan Africa from the Soviet period and using that as a way of bargaining for access to natural resources. They’re marketing oil, selling infrastructure, and building railroads. Wherever there is a vacuum, someone will fill it, and that includes Russia every bit as much as China. We need to realize that we are in competition with both Russia and China, and develop our policies and outreach accordingly.

KStoner

Kathryn Stoner

Mosbacher Director of the Center on Democracy, Development, and the Rule of Law
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Confronting Autocracy at Home and Abroad

Anna Grzymala-Busse

Why is Putin in Ukraine? Because the fact that there is a democratic country right next door to Russia is an affront to him. Putin doesn’t care that much about NATO. The fact that nothing happened when Sweden joined is some evidence of this. That’s something to keep in mind as people are debating NATO and Ukraine and Ukraine’s possible future as a member.

NATO membership and EU membership are both wonderful things. But more fundamental that that, this war has to be won first. That’s why I think it’s necessary in the next six months to speed up the support for Ukraine by ensuring there’s a steady stream of armaments, training personnel, and providing other military support.

There’s been incredible unity on Ukraine over the last seven months across the EU, NATO, and amongst our allies. But our recent history with President Trump reminds us how fragile these international commitments can be. In foreign policy, it used to be understood that America stands for liberal democracy. But we had a president of the United States who was more than happy to sidle up to some of the worst autocrats in the world. That’s why we can’t afford to leave rising populism around the world unaddressed and fail to engage with voters. When we do that, we allow far right parties to grab those votes and go unopposed. Whatever happens domestically impacts what happens internationally.

Anna Grzymała-Busse

Anna Grzymala-Busse

Director of The Europe Center
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The Consequences of Nuclear Sabre-Rattling

Scott Sagan

We have to very clear-eyed when we’re talking about the threat, however improbable, of the use of a nuclear weapon. When it comes to the deployment of a tactical nuclear weapon, its kinetic effects depend on both the size of the weapon, the yield, and the target. Tactical weapons range in yield from very low — 5-10% of what was in the Hiroshima bomb — to as large as what was used against Hiroshima and Nagasaki. If that kind of weapon was used on an urban target, it would produce widescale effects. In a battlefield or rural area, it would have a relatively small impact.

But in the bigger picture, what any use of a weapon like this does is break a 70+ year tradition of non-use. Those seventy years have been dicey and fragile, but they have held so far. A tradition that is broken creates a precedent, and once there’s a precedent, it makes it much easier for someone to transgress the tradition again. So even if a decision was made to use a tactical weapon with little kinetic importance for strategic effect, I think we still need to be worried about it.

Personalistic dictators surround themselves with yes men. They make lonely decisions by themselves, often filled with vengeance and delusion because no one can tell them otherwise. They don't have the checks and balances. But I want to make one point about a potential coup or overthrow. Putin has done a lot to protect himself against that. But improbable events happen all the time, especially when leaders make really, really bad decisions. That’s not something we should be calling for as official U.S. policy, but it should be our hope.

Headshot of Scott Sagan

Scott Sagan

FSI Senior Fellow at the Center for International Security and Cooperation
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Cycles of Conflict, Climate Change, and Food Insecurity

Marshall Burke

The estimates right now project that there are 350 million people around the world facing acute food insecurity. That means 350 million people who literally don’t have enough to eat. That’s roughly double what it was pre-COVID. The factors driving that are things like supply chain disruptions from the pandemic and climate shocks, but also because of ongoing conflict happening around the world, Ukraine included.

There was an early concern that the war in Ukraine would be a huge threat to global food security. That largely has not been the case so far, at least directly. Opening the grain corridors through the Black Sea has been crucial to this, and it’s critical that we keep those open and keep the wheat flowing out. Research shows that unrest increases when food prices spike, so it’s important for security everywhere to keep wheat prices down.

What I’m worried about now is natural gas prices. With high global natural gas prices, that means making fertilizer is also very expensive and prices have increased up to 300% relative to a few years ago. If they stay that high, this is going to be a long-term problem we will have to find a way of reckoning with on top of the other effects from climate change already impacting global crop production and the global economy.

Marshall Burke

Marshall Burke

Deputy Director of the Center on Food Security and the Environment
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Ukraine After the War

Francis Fukuyama

I've been more optimistic about the prospects for Ukraine taking back territory for more of this war, just because of the vast difference in motivation between the two sides and the supply of modern weapons that Ukraine has been getting. But I don’t know what the conditions on the ground will look like when the decision to negotiate comes. Will Russia still be sitting on occupied territory? Are they kicked out entirely? Or are the frontlines close to where they are now?

As I’ve observed, Ukraine's demands have shifted depending on how they perceive the war going on. There was a point earlier this summer where they hinted that a return to the February 23 borderlines would be acceptable. But now with their recent successes, they're saying they want everything back to the 2014 lines. What actually happens will depend on what the military situation looks like next spring, by my guess.

However the war does end, I think Ukraine actually has a big opportunity ahead of them. Putin has unwittingly become the father of a new Ukrainian nation. The stresses of the war have created a very strong sense of national identity in Ukraine that didn’t exist previously. It’s accurate that Ukraine had significant problems with corruption and defective institutions before, but I think there’s going to be a great push to rout that out. Even things like the Azov steel factory being bombed out of existence is probably a good thing in the long run, because Ukraine was far too dependent on 20th-century coal, steel, and heavy industry. Now they have an opportunity to make a break from all of that.

There are going to be challenges, obviously. We’ll have to watch very carefully what Zelenskyy chooses to do with the commanding position he has at the moment, and whether the government will be able to release power back to the people and restore its institutions. But Europe and the West and our allies are going to have a really big role in the reconstruction of Ukraine, and that should be regarded by everyone as a tremendous opportunity.

frank_fukuyama

Francis Fukuyama

Olivier Nomellini Senior Fellow at FSI
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Victory in Ukraine, Victory for Democracy

Michael McFaul

Nobody likes a loser, and right now, Putin is losing strategically, tactically, and morally. Now, he doesn’t really care about what Biden or NATO or the West think about him. But he does care about what the autocrats think about him, especially Xi Jinping. And with reports coming out of the Shanghai Cooperation Organization that Xi has “concerns” about what’s happening in Ukraine, Putin is feeling that pressure. I think that's why he has decided he needs to double down, not to negotiate, but to try and “win” in some way as defined by him.

In my view, that’s what’s behind the seizure of these four regions. If he feels like he can unequivocally claim them as part of Russia, then maybe he will sue for peace. And that’s exactly what President Zelenskyy fears. Why? Because that’s exactly what happened in 2014. Putin took Crimea, then turned around to the countries of the world and said, “Aren’t we all tired of war? Can’t we just have peace? I’m ready to end the war, as long as you recognize the new borders.” And, let’s be honest, we did.

We keep hearing politicians say we should put pressure for peace negotiations. I challenge any of them to explain their strategy for getting Putin to talk about peace. There is no doubt in my mind that President Zelenskyy would sit down tomorrow to negotiate if there was a real prospect for peace negotiations. But there's also no doubt in my mind right now that Putin has zero interest in peace talks.

Like Dr. Fukuyama, I don’t know how this war will end. But there's nobody inside or outside of Russia that thinks it’s going well. I personally know a lot of people that believe in democracy in Russia. They believe in democracy just as much as you or I. I’ve no doubt of their convictions. But they’re in jail, or in exile today.

If we want to help Russia in the post-Putin world, we have to think about democracy. There’s not a lot we can do to directly help democracy in Russia right now. But we should be doing everything to help democracy in Ukraine.  It didn’t happen in 1991. It didn’t happen in 2004. It didn’t happen in 2014. They had those breakthroughs and those revolutionary moments, but we as the democratic world collectively didn’t get it right. This is our moment to get it right, both as a way of helping Ukraine secure its future, and to give inspiration to “small-d” democrats fighting for rights across the world.

Michael McFaul, FSI Director

Michael McFaul

Director of the Freeman Spogli Institute for International Studies
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FSI Director Michael McFaul, Kathryn Stoner, Francis Fukuyama, Scott Sagan, Anna Grzymala-Busse, and Marshall Burke answered questions from the parliamentarians on the conflict and its implications for the future of Ukraine, Russia, and the global community.

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We study a program that funded 39,000 Jewish households in New York City to leave enclave neighborhoods circa 1910. Compared to their neighbors with the same occupation and income score at baseline, program participants earned 4 percent more ten years after removal, and these gains persisted to the next generation. Men who left enclaves also married spouses with less Jewish names, but they did not choose less Jewish names for their children. Gains were largest for men who spent more years outside of an enclave. Our results suggest that leaving ethnic neighborhoods could facilitate economic advancement and assimilation into the broader society, but might make it more difficult to retain cultural identity.

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Levinthal Hall

Stanford Humanities Center

 

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Sam Sasan Shoamanesh, Stanford Law graduate student, Co-founder, Global Brief, and Head of the Counsel Assistance Unit of the ICC
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This past Thursday, on the 10th of November 2011, former U.N. Secretary-General, Kofi Annan delivered a speech at Stanford University on the occasion of the launch of the Freeman Spogli Institute for International Studies' Center on Food Security and the Environment. Citing UN estimates, more precisely the UNFPA State of the World Population 2011 report, he highlighted that the world population had recently reached seven billion and growing. Advancements in healthcare and technology have increased our life expectancy, affording 'man' the ability to escape a life that is, in Hobbesian parlance, "poor, nasty, brutish, and short." Yet this apparent human success story eclipses the "shameful failure" of the international community to address an indiscernible fact: that in the contemporary technological age, an astonishing number of people in the world go hungry each day. The marriage of a globalized economy and scientific innovation was supposed to - at least in theory - increase and spread wealth and resources to enhance the human condition. And yet today - talks of unfettered markets and the financial crisis aside -, we lay witness to close to one billion people around the world who lack food security (both chronic and transitory). Citing numbers from the World Bank, Annan stated that rapidly rising food prices since 2010 have "pushed an additional 70 million people into extreme poverty". Adding to these disturbing figures is the fact that one of the world's most ravenous culprits of infanticide is no other than hunger, which claims the young lives of 17,000 children every day.

Dwindling incentives to farm and increasing pressures on farmers are not helping the food insecurity crisis. Frequently, companies who contract local farmers to produce cash crops for export do not employ "strategic agricultural planning" or take into account the impact their policies and modus operandi may have on local farming communities and their immediate (food) needs. Artificially low prices for agricultural goods force farmers from their land and discourage investment in the sector, Annan warns. Agricultural subsidies in the US and Europe against farm produce injected into the market by farmers from developing countries have also added to the problem. Agricultural subsidies in Europe in particular have had a devastating impact on farmers from other parts of the world - mostly in Asia and Africa - who simply cannot compete with the existing market conditions and the low price tags attached to their goods. This phenomenon is most acute in Africa where a significant segment of the population lives modestly by working the land and these subsidies are choking the lifeline that feeds their families. To bring home the point of the sheer imbalance between the conditions of Western farmers and the 'rest', Annan stated that with a fraction of the funds generated by a reduction of subsidies, one "can fly every European cow around the world first class and still have money left over". Without a more balanced approach to international trade policy making, subsidies will continue to be a factor in food insecurity.

And it gets worse. The 'Four Horsemen of the Apocalypse' of our times - (i) an ever emerging global water crisis, (ii) land misuse and degradation, (iii) climate change, and (iv) kleptocratic governance - have combined to aggravate an already dire international food insecurity predicament. The hard truth is that without countering the forward gallop of these ills, food insecurity cannot be adequately addressed.

The facts on the ground and projections into the future do not paint a promising picture. Food prices are expected to rise by 50 percent by the year 2050, Annan warns, and this at a time when the world will be home to two billion more inhabitants. In 40 years from now, there simply isn't enough food to nourish and satisfy the world's population.

The growing world food crisis also stifles development. It is the cyclical brutality of poverty that keeps the hungry down. Without the means or access to proper and adequate nutrition, the impoverished who are always the first victims of food insecurity invariably suffer from poor health, in turn resulting in low productivity. This vicious cycle traps the less privileged to a seemingly inescapable downward spiral.

During the course of his poignant remarks, Annan stated that without addressing food insecurity "the result will be mass migration, growing food shortages, loss of social cohesion and even political instability". He is correct on all counts.

The fact is that a world which 'cultivates' and then neglects the hungry is a dangerous and volatile world. Since time immemorial, dramatic human migrations have had a direct correlation with changes in climate, habitat and resource scarcity. Survival instincts are engrained in our genetic make-up. When the most basic and fundamental necessities of life are sparse and hard to come by, our natural inclination is to look for 'greener pastures'. An unaddressed and lingering food insecurity crisis will mean the world will witness significant and rapid migration trends in the 21st century (a phenomenon very much in motion today). The injection of mass flows of people into other foreign populations will cause friction and conflict induced by integration challenges, both social and economic (surmountable, but conflicts no less).

Moreover, the desperation and unmet basic needs of the underprivileged can translate into open outbursts of conflict and violence. Tranquility and social harmony are virtues enjoyed by countries that can provide for their people. Leaving the growing food insecurity dilemma unaddressed will be to invite inevitable political instability and violence in countries and fragile regions of the world grappling with high poverty rates and concomitant food insecurity challenges. More often than not, history has shown a positive nexus between hunger and social upheaval (it bears noting that La Grande Révolution of 1789-99 was preceded by slogans of "Du pain, du pain!"). Further, it does not take too much of a forethought to recognize that it is precisely in environments of destitute and despondency where autocratic rule can easily take root and grow to inflict further suffering.

Food insecurity can also lead to wars, but similarly wars contribute to food insecurity by destroying both the land and the ability to cultivate the land. Conflict represents formidable barriers to the access and availability of otherwise usable land (countries like Somalia, Sudan, Burundi, Ethiopia and Liberia come to mind).

To be sure, "[w]ithout food, people have only three options: they riot, they emigrate or they die" (borrowed from the often cited words of Josette Sheeran, the Executive Director of the UN World Food Program).

How are we to tackle this grave problem in a realistic and effective manner? Annan rightly tells us that the "[l]ack of a collective vision is irresponsible". Implicit in Annan's remarks is also a lack of leadership to effectively tackle and untie the Gordian Knot of food insecurity. The nature and colossal character of food insecurity demands action and cooperation on a global scale. Climate change and its negative impact on the environment - e.g. diminishing arable lands, water resources, recurring drought -, one of the accelerators of food insecurity, requires robust and committed international agreement and action to reduce the emission of greenhouse gases. Strict adherence and compliance with the Kyoto Protocol and the Copenhagen Accord are a must in this regard. With strategic agricultural planning, knowledge transfer and investment, uncultivated arable lands - abundant in many parts of the world, including in Africa - can become productive and bear fruit, reducing in turn the hunger crisis. Efforts to implement more balanced international trade policies which make farming viable across continents as well as efforts to eradicate corruption (by promoting good governance) are also part and parcel of the fight against hunger. So are innovative ways of thinking about establishing, say rapid response mechanisms to preempt and effectively counter famine and other food emergencies by bolstering the capacities of relevant existing international and regional organizations. We could also reduce the threat of hunger by doing more than just pay lip-serve to the UN Millennium Development Goals (MDGs) and uphold our commitments to the MDGs through sustained funding and support.

The UN and other multilateral bodies and pacts are tools we have created to work collaboratively - as best as human frailties permit - to confront global challenges and ills that threaten the social fabric of human society (whether they be food insecurity, dearth in development, war and the crimes that emanate from aggression which threaten peace and security, inter alia). Our capacity to reason, innovate, communicate and cooperate is hence an indispensible tool in our struggle to keep the peace, to protect our fundamental human rights and to satisfy our most basic needs for survival. It's time to put these faculties to work in confronting the world's food security challenges.

It is only fitting to conclude these brief remarks by quoting from the man and the lecture that inspired them. "If we pool our efforts and resources we can finally break the back of this problem", stated Annan in his call for action to defeat food insecurity. If there's a will, history tells us, change is within grasp, no matter how daunting the task. It only takes the trinity of courage, commitment and leadership.

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Ashley Dean
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Despite an increase in food production and incomes worldwide, one in seven of the world’s 7 billion people is hungry.

Upheavals in food prices and the global economy, combined with a growing population’s demands for food and energy, are widening the gap between rich and poor. And that rift is creating new challenges to feed the hungry – most of whom live in remote, rural areas – without depleting the planet’s natural resources.

Stanford’s Center on Food Security and the Environment (FSE) is dedicated to addressing these challenges. Started as a research program in 2006, FSE is celebrating its launch today as a full-scale research center. The celebration is part of a larger conference hosted by the Freeman Spogli Institute for International Studies (FSI) focused on links between international security, food and health care. The institutional elevation signifies the growing importance of food security issues at Stanford and worldwide. And it positions FSE to become the leading academic institution in the field of food security.

“Food security has quickly risen as a critical global issue comparable to international security, global health, and democratization, and will remain a pressing issue in the years head,” said Rosamond L. Naylor, director of FSE. “We’re looking at how to raise people out of poverty so they can afford more food, how to stabilize prices so food isn’t too expensive, and how to grow more food without destroying the environment.”

In an introduction given at FSE’s Global Food Policy and Food Security Symposium Series last winter, Stanford President John Hennessy remarked, “Stanford was founded on the idea that its teaching and research could have a broader impact on society, and the area of food security certainly has that kind of possibility.”

“Our work on hunger, rural poverty, and the environmental impact of food production is critical not only to the future of our lives here in the United States but to the lives of people around the world,” said Hennessey. “We will need to bring together teams of experts from different disciplines if we are going to make important contributions to this work.”

FSE’s dual affiliation with the Freeman Spogli Institute for International Studies and the Woods Institute for the Environment supports these collaborations, and is a key factor to the center’s expansion. The center is led by Naylor and its deputy director, Walter P. Falcon. Both share a long history at Stanford studying international agricultural economics.

Naylor received her PhD from Stanford’s Food Research Institute in 1989, and is now a professor in the department of Environmental Earth System Science. Her interdisciplinary approach to teaching has resulted in popular courses such as the World Food Economy (which she co-teaches with Falcon,) and Human Society and Environmental Change. Naylor was appointed the William Wrigley Senior Fellowship in 2008 in recognition of her multidisciplinary, cutting-edge research and long-term commitment to combating global hunger and environmental degradation.

Falcon, the Helen Farnsworth Professor of Agricultural Policy, Emeritus, served as the director of Stanford’s Food Research Institute from 1972 to 1991. Falcon’s leadership role continued as FSI’s director from 1991 to 1998. Between 1998 and 2007, he co-directed the Center for Environmental Science and Policy out of which grew the Program on Food Security and the Environment.

FSE is now engaged in over 15 major projects with $11.5 million in grant and program funding under management. Productive food systems and their environmental consequences comprise the core of the Center’s research portfolio.

“Roz Naylor and Wally Falcon have worked tirelessly to promote the center’s mission and to secure the funding needed to support the center’s growth,” said FSI Director Coit D. Blacker. “It is gratifying to see FSE’s research and scholarly agendas receiving a resounding vote of confidence from the University as well as some of the world’s leading foundations, agencies and individual donors.” 

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New technologies can improve agricultural sustainability in developing countries, but only with the engagement of local farmers and the social and economic networks they depend on, say Stanford University researchers. Their findings are published in the May 23 online edition of the Proceedings of the National Academy of Sciences (PNAS).

"Most people tend to think that technology information flows to farmers through a direct pipeline from scientists, but that isn't true," said lead author Ellen McCullough, a former research fellow at Stanford's Program on Food Security and the Environment, now at the Bill and Melinda Gates Foundation.

The study was co-authored by Pamela Matson, dean of the School of Earth Sciences and senior fellow at the Woods Institute for the Environment at Stanford.

To better understand how farmers decide to adopt new technologies, the researchers interviewed growers, farm credit unions and agricultural experts in the Yaqui Valley in Sonora, Mexico – the birthplace of the "green revolution" in wheat and one of Mexico's most productive breadbaskets.

Matson and other Stanford researchers have been working in the Yaqui Valley for nearly 20 years. Among their objectives is demonstrating how science can inform agricultural policy in an area grappling with the kinds of environmental challenges that plague other intensive farming regions.

While Yaqui Valley supplies most of Mexico's wheat, the environmental costs are high, according to the Stanford researchers. Valley farms pollute local drinking water, wreck coastal ecosystems and foul the air with particulates that cause a variety of diseases.

"If scientists want to offer solutions to manage these environmental impacts, they need to understand what influences farmers' decisions about technology and production strategies," McCullough said.

Growers in Mexico's Yaqui Valley are more likely to adopt sustainable farming technologies that have been endorsed by local credit unions.

Credit union clout

In Yaqui Valley, credit unions hold sway among the majority of farmers, McCullough said. In addition to providing loans, crop insurance, fertilizer and seed, credit unions have taken over the government's role in providing technical expertise and management advice.

Valley growers also have a long history of working with the Mexico-based International Maize and Wheat Improvement Center, a world-renowned agricultural research center known by its Spanish acronym, CIMMYT.

But interviews conducted for the PNAS study revealed that most farmers take their cues from local credit unions and not from experts at CIMMYT. As an example, McCullough pointed to a collaborative effort between CIMMYT scientists and farmers to develop a nitrogen diagnostic tool that reduces fertilizer use without sacrificing crop yields.

The device, which gives real-time readings of nitrogen levels in the soil, proved early on that it could save farmers 12 to 17 percent of their profits. Yet most farmers rejected the new technology until CIMMYT researchers finally convinced credit union officials that it was a worthwhile investment.

"The most successful innovations that have been adopted by farmers in the Yaqui Valley have come from collaborations among researchers, farmers and local establishments, like the credit unions," McCullough said. Because of their considerable influence among farmers, credit unions should be included in any effort to effect environmental change in the region, she added.

"The Yaqui case negates the simplistic view of the one-way flow of scientific information from the agricultural research community to the user community," Matson said. "If researchers seek to produce relevant knowledge that ultimately influences decision making, they must recognize the dynamics of the local knowledge system and participate purposefully and strategically in it."

The research was supported with grants from the National Oceanic and Atmospheric Administration and the David and Lucile Packard Foundation.

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Kate Johnson
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Full video of the symposium is now available - Why Has Africa Been Slow in Developing its Agriculture?

A poor African farmer produces a little more corn than last year. He sells the surplus in a nearby urban market, and uses the money to purchase a shirt stitched by a local seamstress. With the bumper crop of corn, more and more farmers are interested in the seamstress' wares. The extra income allows her to buy better materials and a new sewing machine. Her business grows, and she begins to sell her work in bigger markets, further from her small village.

Years later, a poor farmer responds to an announcement for a job in a local clothing factory. The monthly wage is more than he currently makes in a year.

This is the vision that Dr. Ousmane Badiane, Africa Director for the International Food Policy Research Institute, presented to an audience of Stanford students and faculty on April 7. In a two-hour symposium entitled "Why Has Africa Been Slow in Developing its Agriculture?," Badiane outlined the steps he believes African nations must take to sustain economic growth and encourage high-value industrial development. Public investment in agriculture formed the backbone of his proposal.

Badiane said that although African nations have experienced unprecedented economic growth in the last 15 years, they still lag behind the developed world in economic sophistication. When workers leave agriculture for other sectors, he explained, the transition usually signifies economic progress.

But in Africa, too many farmers have abandoned their fields to peddle trinkets on the streets as part of a low-productivity service sector. They have left behind an underdeveloped and understaffed agricultural industry.

Agriculture has just plummeted too fast and too quickly in these countries," Badiane said. "Agriculture is not claiming the share of GDP and employment that it should."

When agriculture thrives, Badiane explained, economies grow and diversify. A wealthier rural population purchases products manufactured by urban entrepreneurs. Productive local farms buffer fluctuations in global crop output and food prices, improving security for urban industrial workers and reducing wage pressure on industrial employers.

"What agriculture needs is what industry needs," Badiane said, emphasizing that investment in one need not mean neglect of the other. "There are a lot of things you can do right by all the sectors at the same time."

In fact, according to Badiane, every $100 increase in agricultural output could result in up to a $130 increase in output from industry.

Badiane described one step that African governments have already taken to set the positive agriculture-industry feedback in motion. The Comprehensive Africa Agriculture Development Program is a cooperative effort by the African Union's 53 member nations to achieve ambitious goals for economic development and investment in agriculture by 2015.

Badiane commended the Program's unprecedented commitment to agricultural growth and its high standards for accountability, policy research, and performance review. He also praised the political momentum and unity that the initiative has generated within Africa, and the respect that it has earned in the international community.

However, Badiane admitted that agricultural growth in Africa cannot always proceed in harmony with other objectives. The need to finance agricultural research and development will put pressure on budgets for broader public welfare programs that Dr. Joel Samoff, a Stanford professor of African Studies, says most African nations simply cannot afford to de-fund.

"Most countries in Africa spend around $10 per person per year on health," says Samoff. "How do you reduce that?"

But Badiane suggested that governments may be able to address both agriculture and welfare simultaneously.

They will have to see how they can use social service budgets to sustain growth in agriculture," he said. "Look at health and education not as an entitlement, but as a tool to raise labor productivity."

Addressing the audience during a question-and-answer session following Badiane's talk, Harvard Development Professor, Emeritus, Peter Timmer drew attention to the scope of Badiane's objectives.

"You're talking about getting industry moving at the same time as you're getting agriculture moving," he noted, "and this is a very ambitious undertaking."

However, Timmer also indicated that he saw the seeds of success in Badiane's ideas. "I think we've just heard a quite profound analysis of Africa's agricultural problems, and its structural history," he said. "And a possible way forward."

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February 10th marked the launch of the Program on Food Security and the Environment's Global Food Policy and Food Security Symposium Series. Setting the stage for the two-year series were Jeff Raikes, CEO of the Bill & Melinda Gates Foundation, and Greg Page, CEO and Chairman of Cargill Inc. As CEOs from the largest foundation and the largest agricultural firm in the world they provided important perspectives on global food security in these particularly volatile times. Full video and clips of the event are now available - Improving Food Security in the 21st Century: What are the Roles for Firms and Foundations.

Jeff Raikes: A Perspective from the Bill & Melinda Gates Foundation

Catalytic philanthropy

The Gates Foundation, through its Agricultural Development Initiative, has been a leader in addressing global food security issues. The Foundation allocates 25% of its resources to global development and to addressing the needs of the 1 billion people who live in extreme poverty ($1/day). 70-75% of those people live in rural areas and are dependent on subsistence agriculture for their livelihoods.

The Gates Foundation is driven by the principle: how can it invest its resources in ways that can leverage performance and address market failures? Its approach embodies a novel concept driven by both private sector motives and public responsibilities. Raikes describes this as catalytic philanthropy.

"The Foundation identifies where its investments can create an innovation, a new intervention that can really raise the quality of lives for people," said Raikes. "If successful, it can be scaled up and sustained by the private sector if we can show that there is a profit opportunity or the public sector if we can show that this is a better way to improve the overall quality of society through investment in public dollars."

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Photo credit: Michael Prince

In the realm of agriculture, allocating resources across the agricultural value chain has proven to be the most effective approach. As an example of this strategy, Raikes talked about a farmer-owned, Gates-supported dairy chilling plant in Kenya. The cooling facility provided the storage necessary to provide a predictable price at which to sell farmers' milk. This price knowledge and market access gave farmers the confidence to invest in better technology and better dairy cattle. The plant also provided artificial insemination services and extension services to teach farmers how to get greater amounts of milk from the cattle.

"I love the concept. I also love the numbers," said Raikes. "In just two or three years there were now 3,000 farmers in a 25 kilometer radius that were able to access this dairy chilling plant and able to sell their milk."

In addition to improving incomes, Raikes remarked that very consistently what he hears is when farmers are able to improve their incomes the first thing they do with the money is invest in the education of their children.

Upcoming challenges to food security

During the next 40 years or so, global food production must double to accommodate a growing and richer population. Climate change and water scarcity contribute to this challenge. The places that will suffer the most severe weather are also the places where the poorest farmers live. 95% of sub-Saharan agriculture is rain fed with very little irrigation.

"If we are going to be able to feed the world we are going to have to figure out how to achieve more crop per drop," cautioned Raikes. "This includes trying to breed crop varieties that will better withstand water shortages. Early results show that you can get as much as a 20% increase in yield or more under stressed conditions when you have varieties that are bred for that need."

These challenges are compounded by the current economic crisis that is putting pressure on budgets in both donor and developing countries. In 2009, the G20 committed 22 billion dollars to agricultural development in recognition of the importance of agricultural development to food security. However, of the 22 billion promised, 224 million dollars went to five countries in the first round of grants in June. By November, when 21 additional countries submitted their proposals, just 97 million dollars were available to be dispersed and 17 countries were turned away empty handed.

High- and low-tech solutions

In an effort to alleviate some of this deficit, the Gates Foundation has committed 300 million dollars in six grants that span the value chain. These include investments in science and technology, farm management practices, farmer productivity, and market access as well as the data and policy environment to support the Foundation's work. The grants are intended to support about 5 ½ million farm families in sub-Saharan Africa and South Asia.

"We believe innovative solutions can come from both high-tech and low-tech," said Raikes. "On the high-tech end, submergent genes are allowing rice crops to survive periods of flooding up to 15 days. In areas of rice farming prone to flooding, this can save entire crops traditionally wiped out by such weather disasters."

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Photo credit IRRI/Ariel Javellana

The sub1gene seeds are now being used by 400,000 farmers and are on track to be used by 20 million rice farmers by 2017. On the low-tech end, the Gates Foundation is providing $2 triple layer bags to farmers to reduce crop loss from pests; an affordable solution that has increased average income per farmer by $150/year.

"We primarily support conventional breeding, but we also support biotechnology breeding. In some cases we think that breeders in Africa and South Asia will want to take advantage of the modern tools we use here in our country to provide better choices for their farmers," explained Raikes.

Reasons for optimism

After years of diminished support, US Agricultural Development assistance to sub-Saharan Africa has gone from about 650 million in 2005 to about 1.5 billion in 2009. In developing countries, the Comprehensive Agricultural Development Program (CADP) in Africa has challenged countries to dedicate 10% of their national budgets to agriculture with the goal of improving annual agricultural growth by 6%. 20 countries have signed on to the CADP compacts, and 10 countries are exceeding the 6% growth target. Finally, since 1990, 1.3 billion people worldwide have lifted themselves out of poverty primarily through improvements in agricultural productivity.

Raikes pointed to Ghana as a success story. Since 1990, casaba production, an important staple food for poor smallholder farmers, has increased fivefold. Tomato production increased six fold. The cocoa sector has been revived and hunger has been cut by 75%.

"The key to success in Ghana was a combination of getting the right developing country policy with the right macroeconomic reform, the right institutional reform, smart public investment, and an overall good policy environment," said Raikes.

Supporting good policy is an important part of the Foundation's food security strategy, and was a strong motivation behind its funding of FSE's Global Food Policy and Food Security Symposium series.

"We see this symposium series as an opportunity to gather policy leaders who will bring new ideas of what will be effective policy approaches and effective economic environments in the countries we care a lot about, in particular sub-Saharan Africa and South Asia," said Raikes.

Raikes concluded his remarks by reminding everyone that the key to improving food security globally is making sure women, who make up at least 70% of the farm labor population, are included in the equation.

Greg Page: Balancing the race to caloric sufficiency with rural sociology

As the largest global agricultural firm, Cargill has an influential role to play in the world of food and agriculture. Cargill is a major supplier of food and crops and a provider of farmer services, inputs, and market access.

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Photo credit: Olaf Hammelburg

Together with the Gates Foundation, Cargill has reached out and trained 200,000 cocoa farmers in the Ivory Coast, Ghana, and Cameroon. One tribe and one small village at a time the company has helped improve food safety, quality maintenance, and storage; benefiting the farmers, Cargill, and customers further down the supply chain. Cargill has also assisted, through financing and product purchasing, 265,000 farmers in Benin, Burkina Faso, the Ivory Coast, Malawi, Uganda, Zambia, and Zimbabwe.

Can the world feed itself?

A billion people lack sufficient caloric intake on a daily basis. In sub-Saharan Africa, 38% of all children are chronically malnourished, largely the result of inadequate agricultural productivity. While nine of the ten countries that have the highest prevalence of malnourishment are in sub-Saharan Africa, the two countries with the largest absolute number of malnourished people are India and China.

"This points to the difficulty of this problem," said Page. "India exports corn and soybean protein and China has 2.5 trillion dollars of hard currency reserves. These issues aren't necessarily of ability to feed people, but a willingness and commitment to do so."

Can the world feed itself? Yes, said Page.

When you break down the number of calories needed per malnourished person per day and convert that to tons of whole grains required to extinguish that hunger you get 30 million tons; 1/6 the amount of grain we converted to fuel globally last year. In the U.S. alone, 40% of our corn goes to ethanol.

"It isn't an issue of caloric famine-it is an issue of economic famine," stated Page. "In other words, this is not a food supply problem, but rather the lack of purchasing power to pay for a diet. An adequate price must be assured to reward the farmer for his efforts and to provide enough money that she can do it again the following year."

Rural sociology premium

What we face is the need to keep smallholders on the farm-despite the fact that they may not be the low-cost producer of foodstuffs-in order to avoid a rural population migration that would be unsustainable. As a result, the challenge the world faces is who is going to pay that rural sociology premium? If it costs more to raise crops on small farms is that burden going to be borne by the urban poor or is there going to be an alternative funding mechanism that allows smallholders to succeed?

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Photo credit: Cargill

What is the survival price for a smallholder farmer? Page explained that if you wanted a family of four on a farm in sub-Saharan Africa to receive an income commensurate with the average per capita income of the urban population, you would come up with a price near $400 a ton.

"To put this in context, the highest price for maize that has ever been reached here in the United States is about $275 a ton," said Page. "This rural sociology premium to sustain smallholders is not an insignificant amount of money. How do we achieve fairness between the revenue received by the rural smallholder and the price borne by the urban consumer?"

State of disequilibrium - complacency to crisis

Today we are experiencing incredible price volatility where commodity prices are in a continuous state of disequilibrium. Very small changes in production have outsized impacts on price. This is in contrast to the last two and a half decades when the world operated with fairly robust stocks due to crop subsidies in the United States and Western Europe.

"This period of subsidization was when the western world probably did more harm to sub-Saharan Africa and South Asia than any other period in history," said Page. "We refused to allow price to signal to western farmers to produce less. As a result, the world price of grains fell far below the ability of any smallholder to compete. We then shipped those surpluses to developing countries, which then failed to invest in their agriculture for decades."

Today we are lurching from complacency to crisis. The ability of information and market speculation to be transmitted rapidly is affecting purchasing decisions of thousands to millions of consumers. Rising fuel prices, export restrictions, increasing demand for crops for biofuels, and unpredictable weather have all contributed to higher prices. Some of the drivers of price, however, are good things, such as the increase in per capita income and the capacity of more people to have a more dense and nutritious diet.

"Interestingly, the upside of the ethanol and biofuels program is that it brought prices back to a sufficiency that reinvigorated investment in agriculture," noted Page. "On one level I think a very good argument could be made that the biofuels program brought the world further from famine than it ever had been because of the price."

Critical food security factors

Page concluded by summarizing the elements that Cargill believes are critically important to increase food security. The first is the ability to understand the tradeoffs between a fast path to caloric sufficiency and the needs of rural sociology. Second, that crops be grown in the right soil, with the right technology, and relying on free trade so we can harvest competitive advantage to its fullest.

Another critical factor is rural property rights. Smallholders must have the ability to own the land, have access to it, and transfer it to future generations if you want a farmer to reinvest in his farm, said Page.

"Smallholders in developing countries need some degree of revenue certainty and access to a reliable market if we expect them to do what their countries really need them to do, which is raise productivity," explained Page. "Today they are often forced to sell at harvest, often below the cost of production, and lack the storage capabilities and capital to provide crops sufficiently and continuously."

Open, trust-based markets also play a key role in ensuring food security. Governments need to support trade. When Russia, Ukraine, and Argentina turned to embargos as a way to protect domestic food prices open markets were jeopardized and price volatility increased. Finally, there are very important roles for the world's governments in the creation of infrastructure that is vital to provide access to markets.

"I believe fully and completely in the world's capacity to harvest photosynthesis to feed every single person and to do it at prices that can be borne by all," concluded Page.

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Rachael Garrett is a 3rd year PhD student in the Emmett Interdisciplinary Program in Environment and Resources. Rachael earned her Bachelor of Arts in History and Environmental Analysis and Policy at Boston University, Magna Cum Laude, where she was a University Scholar and earned the Franklin C. Erickson Prize for Excellence in Geography. She later obtained her Master in Public Administration in Environmental Science and Policy from Columbia University. She is the current recipient of the Richard L. Kauffman and Ellen Jewett IPER Fellowship.

Rachael studies the economic and institutional determinants of soybean production in Brazil. To develop a more well-rounded understanding of these issues she incorporates multiple spatial scales in her analysis, including: local case studies, regional modeling, and macroeconomic analysis.  Garrett presented some preliminary research on the macroeconomic drivers of soybean planted area in Brazil at the Association of American Geographers Annual Conference in April 2010 and is currently focusing on developing the local and regional scales of her dissertation. This summer Garrett will be returning to Brazil for three months to conduct additional interviews with soy farmers.

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Rosamond L. Naylor
Rosamond Naylor
Walter P. Falcon
Walter Falcon
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FSE director Rosamond L. Naylor and deputy director Walter P. Falcon discuss the food crisis in a lead article in the September/October 2008 issue of Boston Review.

During the eighteen months after January 2007, cereal prices doubled, setting off a world food crisis. In the United States, rising food prices have been a pocketbook annoyance. Most Americans can opt to buy lower-priced sources of calories and proteins and eat out less frequently. But for nearly half of the world’s population—the 2.5 billion people who live on less than $2 per day—rising costs mean fewer meals, smaller portions, stunted children, and higher infant mortality rates. The price explosion has produced, in short, a crisis of food security, defined by the Food and Agriculture Organization (FAO) as the physical and economic access to the food necessary for a healthy and productive life. And it has meant a sharp setback to decades-long efforts to reduce poverty in poor countries.

What we are witnessing is not a natural disaster—a silent tsunami or a perfect storm. . . . [The food crisis] is a man-made catastrophe, and as such must be fixed by people.
-Robert Zoellick, The World Bank (July 1, 2008)

The current situation is quite unlike the food crises of 1966 and 1973. It is not the result of a significant drop in food supply caused by bad weather, pests, or policy changes in the former Soviet Union. Rather, it is fundamentally a demand-driven story of “success.” Rising incomes, especially in China, India, Indonesia, and Brazil, have increased demand for diversified diets that include more meat and vegetable oils. Against this background of growing income and demand, increased global consumption of biofuels and the American and European quest for energy self-sufficiency have added further strains to the agricultural system. At the same time, neglected investments in productivity-improving agricultural technology—along with a weak U.S. dollar, excessive speculation, and misguided government policies in both developed and developing countries—have exacerbated the situation. Climate change also looms ominously over the entire global food system.

In short, an array of agricultural, economic, and political connections among commodities and across nations are now working together to the detriment of the world’s food-insecure people.

* * *

Cereals form the core of the global food system. In 2007 the world produced a record 2,100 million metric tons of grain. Most of these cereals were consumed in the countries in which they were produced. Some 260 million metric tons, or about 15 percent of production, were traded internationally. Food aid was about 6 million metric tons, about 0.3 percent of production. Although only 15 percent of production is traded in global markets, conditions in those markets have a large direct and indirect impact on cereal prices and demand in every country.

A world with oil at $125 per barrel, gasoline at $4 per gallon, and corn at $6 per bushel seemed unthinkable five years ago.

World grain production was exceptionally strong in 2007, and had actually grown in five of the eight years prior to 2007. Despite this success, demand exceeded supply in six of those years. This excess demand was met by drawing down global reserves. When, in 2007, the reserve-to-usage ratio dropped to a near-historic low, buyers and sellers reacted in ways that rapidly pushed up prices. Nonetheless, the current crisis of food security is not a result of some absolute shortage of basic staples. If all the cereals grown in 2007 had magically been spread equally among earth’s 6.6 billion persons and used directly as food, there would have been no crisis. Cereals alone could have supplied everyone with the required amounts of calories and proteins, with about 30 percent left over. (Children would have also needed some concentrated calories and proteins, because of the bulkiness of cereals and their inability to consume sufficient quantities of them.)

Of course, food is not distributed evenly across the globe. Average income levels as well as income inequalities vary by country and are major determinants of access to food. And because cereals and oilseeds can be used in multiple ways, not only for food, competition for these commodities spans many different firms and households. These pressures on supply and price are powerfully exemplified by the case of corn, whose price dramatically affects the broader structure of global food markets.

Corn is quintessentially American. It is the country’s largest crop in terms of area: in 2007, 94 million acres produced a record 330 million metric tons of grain. How is it possible that a record U.S. corn crop was centrally involved with the current high food prices? The answer lies mostly in corn’s versatility. It provides about half of the 18 million metric tons of sweeteners that Americans consume annually, much of it in the ninety-six gallons of beer and soda they drink per capita. Some 46 percent of the crop went to feed livestock to produce the 270 pounds of pork, poultry, and beef the average American consumed in 2007, and about 19 percent went for exports. Ethanol, which had taken only a tiny fraction of corn output a few years earlier, took a full 25 percent.

A world with oil at $125 per barrel, gasoline at $4 per gallon, and corn at $6 per bushel (fifty-six pounds) seemed unthinkable five years ago. A new constellation of market forces has drastically altered price levels and the correlations among them. In particular, the enormous growth in the use of corn for fuel now links corn and gasoline prices in profoundly important ways.

The current corn-petroleum price connections in the United States arguably can be traced to the 2005 environmental regulations to eliminate methyl tertiary butyl ether (MTBE) as a gasoline additive because of environmental and health risks. Corn-based ethanol has since become the preferred additive, offering the same octane ratings and beneficial properties as MTBE. Ethanol is typically used in the form of a 10/90 mixture with gasoline, and consumers pay for this ethanol as they fill their cars with fuel at the pump. As gas prices rise, so does the potential value of corn ethanol. Most of the ethanol now produced—some 6.5 billion gallons from the 139 plants in operation in 2007—was used as an oxygenate for the 142 billion gallons of fuel used by Americans last year.

China imported an incredible 34 million metric tons of soybeans for its pigs, poultry, and farmed-fish sectors and also its expanding urban population.

The sudden burst in demand explains the rapid increase in the portion of the corn crop being used for fuel. That demand might be expected to level off, as the market for additives will largely be supplied by 2009. But the United States is now poised on the brink of a second phase of ethanol use.

Ethanol can also be used in place of gasoline, even though it provides only about two-thirds the energy of gasoline on a volume basis. In other words, rational consumers would pay about 65 percent of the price of gasoline for their ethanol, since their cars would go about 65 percent as far on a tank of fuel. Because ethanol must be shipped and stored separately, only with substantial new infrastructure could ethanol be a large-scale choice for fuel. And cars would require so-called “flex” technology to use fuel containing high percentages of ethanol.

Whether more than 25 percent of the corn crop is used for fuel in the future is critically dependent on the price of oil and also on the politics of biofuels. The latter include mandatory minimum levels of ethanol production and the explicit and implicit subsidies contained in various pieces of agricultural and energy legislation. Senators McCain and Obama both expressed strong support for ethanol in the politically important Iowa caucuses.

The ethanol-production mandate for 2008 is 9 billion gallons. That number will grow to 15 billion gallons in 2015 and 36 billion (total renewables) in 2022. Rescinding these increased mandates would likely stabilize demand for corn-based ethanol. (High enough oil prices, coupled with low enough corn prices could, of course, make ethanol economical even at 65 percent of the efficiency of gasoline.) But if the higher mandates are indeed imposed, then an increasing portion of the U.S. corn crop will be fed to cars, rather than to animals or people. Consumers of corn tortillas in poor countries will find themselves increasingly in competition with S.U.V. owners in rich countries. At the margins that matter, corn prices would be linked to gasoline prices, and the entire price structure for cereals would adjust accordingly.

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food insecurity

 

In addition to mandates, current legislation also provides for credits (subsidy) of $0.51 per gallon to blenders and a $0.54 per gallon tax on imported ethanol plus a 2.5 percent additional duty on its value. Thus, in the United States, the economics of ethanol are fundamentally linked to specific legislative provisions. And what Congress has given, Congress can also take away.

Whether the mandates should be waived, the tariff on imported ethanol dropped, and the blender credits modified are all matters of intense debate. Corn farmers and investors in some 200 bio-refineries (on-line or under construction) are pushing for higher mandates; others believe that corn-based ethanol, however well-intended, is the wrong way to promote U.S. energy independence because of ethanol’s effect on food prices. The stakes are huge. The United States is by far the largest corn exporter in the world. Further reductions in exports resulting from greater ethanol use would greatly amplify price instability in corn and other global food markets.

Many technical experts have argued that corn is not the appropriatecommodity for use in biofuels. However, industrial-scale production from sources other than corn (and sugar) is as yet unproven. Although the chemistry for alternative feedstocks has been developed, credit-worthy business plans, including supply chains, have not. Proponents of other crops tend to overlook the extensive experience the corn industry has had with enzyme technologies that derive from its twenty-five-year history making corn sweeteners. As a consequence, and for better or worse, larger biofuel mandates mean a corn-dominated ethanol industry for at least the next five years, accompanied by the inevitable price pressures on food.

Very poor consumers in low-income countries rarely consume meat of any sort, and for them [cereal] cutbacks may be an encouraging sign: their best hope is more grain available on world markets.

An additional oil-corn connection is also important for farmers. The high oil prices that help drive the demand for biofuels also raise the energy costs of growing corn. Corn prices that have risen from less than $3 per bushel in 2005 to over $7 per bushel in 2008 have been a boon to farmers. Yet farmers (sometimes on their way to the bank!) are quick to point out that high oil prices are strongly and negatively affecting their businesses. Iowa State University maintains farm records that indicate the total cost for growing an acre of corn was $450 in 2005. By 2008, these costs had risen to more than $600 per acre. Seed and chemical costs have accelerated sharply and now constitute some 45 percent of total costs, including land-rental charges. Nonetheless, with rising yields and corn prices that have more than doubled, corn-based farm enterprises seem clearly better off in 2008 than in 2005.

Ethanol, then, is the beginning of the corn story, but far from the end of it. Corn’s other linkages to soybeans, wheat, and meat illustrate why it is the keystone in the food system. Midwestern farmers produced the record corn crop in 2007 in anticipation of high prices. But the focus on corn implied a series of acreage decisions that reverberated around the world. The more than 15-million-acre increase in corn planting came mainly at the expense of soybeans, which saw a decline of twelve million acres, or 16 percent of total soybean acreage. The United States consequently played a reduced role as a soybean exporter. Brazil, another major exporter, picked up some of the slack. Nonetheless the world’s production of soybeans declined in 2007 while three of the four largest countries in the world—China, India, and Indonesia—registered very strong economic growth. China imported an incredible 34 million metric tons of soybeans (45 percent of total world trade), which it used to produce soybean meal for some of its 600 million pigs and its large and rapidly growing poultry and farmed-fish sectors and also vegetable oil for its expanding urban population. In India and Indonesia, oilseed demand was driven less by livestock-feed requirements and much more by human demand for vegetable oils. India, for example, is one of the world’s largest users and importers of cooking oils.

The tightened supply of vegetable oils and the accelerated Asian demand for oilseed crops—soybeans, rapeseed, and palm oil—explain some of the price increases. For example, during the period July 2006 to June 2008, oil palm prices tripled. But as with corn, the use of oilseed crops in the production of fuel—about 7 percent of global vegetable oil production went to biodiesel—was another significant factor. Most of the latter was driven by biodiesel policies in Europe, using rapeseed (canola) as the main feedstock.

Prospects for lowered vegetable oil prices in the short run, like those for corn, are not obvious. U.S. farmers rebalanced their plantings in 2008, in part because of a late spring and in part because soybean prices had risen to $13 per bushel, making it again an economically attractive crop for farmers. Brazil continues to expand soybean acreage in several states as well, but, interestingly, the most likely sources of greatly increased vegetable oil supplies will come from Indonesia and Malaysia. Palm oil has long been among the cheapest sources of vegetable oil, and Indonesia has been planning a major expansion of area devoted to oil palm production. This expansion is complicated, however, by the potentially high environmental costs of clearing tropical forests, and because palm trees take up to three years before they yield economical harvests. Indonesia had originally planned the oil-palm expansion for biodiesel production for European and domestic fleets; however, the food value of vegetable oils has been so high that it does not pay to make biodiesel. So the expansion goes forward, but with food in mind more than fuel. As a consequence, supply/demand balances for oil palm may change appreciably in five years, although it is not at all clear that near-term supplies of vegetable oil can be accelerated very much.

In addition to fuel and oils, wheat prices, which went off the charts in 2008, are closely tied to the corn economy. Corn and wheat are both used by the animal-feed industry, and, in some years, one quarter of the wheat crop is fed directly to animals. As the cost of using corn for feed rose in 2007, producers of livestock products looked to other grains. Since the feed value of wheat is slightly higher than that of corn, it is not surprising that their prices initially moved in tandem as livestock producers moved among markets to find the cheapest rations for their animals.

The wheat market has several distinguishing features. For example, soft wheat is used primarily for pastries (and feed), whereas hard wheat is preferred for bread. In the United States, the market for hard-red spring wheat was especially volatile. Prices doubled between February 2007 and February 2008, although new supplies from this year’s harvest have begun to ease prices.

Wheat contributes less than 10 percent of the cost of a typical loaf of bread in the United States. Nevertheless, its sharp price increase triggered broad increases in the prices of baked goods to cover the rising costs of raw materials, packaging, and distribution. For poor consumers in developing countries who get many of their calories from wheat products, the rising prices of bread, wheat tortillas, chapatis, and naan had immediate and profound nutritional consequences.

Two other disruptive forces were at work on the wheat crop overseas. The continuing drought in Australia, a major wheat-exporting country, was one of the few instances of supply failure in 2007. Exports from Australia fell by half, and since Australia traditionally supplies about 15 percent of global wheat exports, the drop added to rising bread prices around the world.

Second, one of the most ominous issues for the longer-run is the outbreak of a new wheat rust, Ug99. As the name suggests, this rust was discovered in Uganda in 1999, and its spores then spread by wind into North Africa and the Middle East. The rust has serious consequences for wheat yields. While actual losses to date have been rather small, future losses could be immense. Virtually none of the world’s wheat varieties are resistant to the rust. Especially worrisome is its spread into South Asia where tens of millions of poor people depend directly on wheat for the bulk of their calories. The perception of a Ug99 threat has already had significant food-policy consequences in India (a point we return to later).

Finally, livestock products are part of this story about connections among commodities. In part, they help to push prices up. The growing pork sector in China, for example, exerted substantial upward pressures on world soybean markets. Most livestock producers in the United States and Europe, however, struggled to accommodate high-priced corn and other feeds. (One important exception took the form of distillers grains, a co-product of ethanol production. This residual is high in protein, and, if hauled in “wet” form directly from plants to dairies and feedlots, it provides cost advantages significant enough to transform feed rations, and potentially, to alter the geography of beef feedlots in the United States.)

In developed nations such as the United States, shrinking margins on livestock production are creating cutbacks. For example cattle have long gestation and maturation periods, and many cowherds are now being culled. Available meat on the market will increase in the short run, but a smaller supply of meat will eventually push prices up. Such price hikes will be felt mainly by middle- to upper-income households. Very poor consumers in low-income countries rarely consume meat of any sort, and for them the cutbacks may be an encouraging sign: their best hope is more grain available on world markets, rather than used as livestock feed or fuel in rich countries.

Governments that cannot provide their constituents food at affordable prices are often overthrown.

Much more could (and should) be said about individual commodities and about how recent macroeconomic trends have influenced the structures of markets. The expanded role of large hedge funds in commodity markets has increased price volatility for agricultural goods such as corn and wheat. For example, the number of corn contracts traded on the Chicago exchange has grown from 1 million in January 2002 to nearly 6 million in January 2008, leading some observers to conclude that there has been excessive financial speculation in these markets. The dollar has also depreciated rapidly during the past several years, virtually mirroring the rise in the price of oil. The dollar/euro price ratio is now only about 55 percent of what it was in 2000. If all commodity prices were quoted in euros, the price rises we have witnessed over the last two years would have been less steep. This obvious but important point underscores the central role that exchange rates play in both the world-food and oil economies.

* * *

The story thus far has focused on commodities and their market connections. But food is much more than an economic commodity. It is also a political commodity and the foundation for human survival. Governments that cannot provide their constituents food at affordable prices are often overthrown. And for those that remain in power during times of high prices, particularly in poor countries, the challenge of feeding a growing hungry population looms. Food riots, politics, and new policies have all been on the forefront of the current crisis. As of April 2008, eighteen countries had reported food riots, from Bangladesh to Egypt, Haiti to Mexico, Uzbekistan to Senegal. About the same number of countries, including India, Argentina, and Vietnam, erected trade barriers on food to protect their domestic constituents.

Governments have reacted to the crisis in different ways, and these policy responses can have far-reaching effects in the world food economy. India, in particular, played a pivotal role in shaping the current crisis when its national food authority placed restrictions on staple cereal exports in October 2007. Higher prices in the international wheat market, coupled with the escalating threat of Ug99 and poor weather conditions within India’s main cereal producing regions, triggered the new policy. Faced with less domestic wheat for public distribution and costly wheat imports, the government moved to guarantee supplies of its other main staple crop, rice, for its constituency. Bans were placed on exports of non-basmati varieties of rice, wheat, and wheat flour, and wheat imports were restricted for disease control. The move was geared in part to electoral politics—the upcoming 2009 elections—yet it had echoes, linking rice to the seemingly disconnected biofuels sector in the global commodity market.

Rice has historically carried great political weight in Asia. Unlike wheat and corn, which are much more freely traded in international markets, rice is consumed largely in countries where it is produced, and is exchanged to a great extent through government-to-government contracts. Although private sector investment and trade have expanded in recent decades, rice trade accounts for only 6 to 7 percent of total production, and Asian governments continue to keep a close eye on prices and availability for the sake of political stability.

Given India’s role as the world’s second largest rice exporter—in recent years supplying about five million metric tons or one-sixth of the world market—its export ban sent a shock to the system. The international rice price immediately jumped from about $300 to $400 per ton for standard grade rice and continued to soar to unprecedented levels as other countries reacted to the change. Shortly after India placed restrictions on rice exports, Vietnam, China, Cambodia, Indonesia, and Egypt followed suit. Meanwhile the Philippines—the world’s largest importer of rice—began to place open tenders in the world market (bids for imports at any price) in April 2008 in a desperate act to secure adequate stocks of rice for its citizens. At this point, the price of rice rose to $850 per ton, and soon surpassed $1,000 per ton in May with additional tenders. But still the Philippines struggled to secure sufficient rice at even this high price.

Other countries fared even worse. Bangladesh suffered a major tropical storm in November 2007 that killed 3,400 people, left millions homeless, and demolished large tracts of agricultural land. The country lacked the financial reserves needed to import rice, even though India made an exception to sell limited quantities of non-basmati rice at $650 per ton. Similarly, Sub-Saharan African countries, which import on average 40 percent of their rice consumption (in southern African countries the number is as high as 80 percent), had no access to their usual supplies of Indian rice, and could neither find nor afford other sources of rice in the market. Reduced cereal imports triggered price increases in regionally grown crops such as millet and sorghum. Although farmers who produce a surplus of those crops have benefited, the poorest households that consume more than they produce have had to go with less, and have no doubt suffered increased malnutrition.

 

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food aid

We are only beginning to understand the toll of price increases on the world’s least developed and low-income food-deficit countries, many of which are in Sub-Saharan Africa. The Food and Agriculture Organization estimates that the 2008 food-import bill for these countries will rise up to 40 percent above 2007 costs, after rising 30 and 37 percent, respectively, the previous two years. The cost of annual food imports for these regions is now four times what it was at the beginning of the decade, even though import volumes have declined. The World Bank predicts that with these rising costs, declining imports, and increasing domestic prices of agricultural commodities, millions of people will fall quickly into chronic hunger.

Cameroon has experienced some of the worst strife as a result of high consumer prices. Roughly 1,600 protesters were arrested and 200 were sentenced in the first few weeks after riots broke out in February 2008. In an attempt to extend his quarter-century run in office, President Paul Biya’s government not only clamped down on riots but also cut import duties and pledged to increase agricultural investments and public-sector wages.

In Argentina, a different form of food riot broke out against the newly elected President Cristina Fernandez de Kirchner when she raised export taxes on soybeans and implemented new taxes on wheat and other farm exports in order to hold domestic food prices down. Four months of nationwide protests by farm groups eventually persuaded the government to revoke these tax increases in mid-July, but political tension remains.

Governments thus walk a thin line between consumer- and producer-oriented incentives. Export restrictions in times of high world prices may help consumers, but they prevent agricultural producers from realizing economic gains. Interventions of this sort may help in the short-term, but they are extremely hard to retract. For example, many Asian countries implemented trade restrictions on rice in the mid-1970s in response to high prices, short supplies, and political unrest, and these policies remained in effect for over two decades. It is clear that policies designed to stabilize domestic prices often destabilize international ones. And advocating international cooperation as a solution is naïve, as evidenced by the repeated (and recent) failure of World Trade Organization negotiations over the topic of coordinated agricultural policies.

* * *

The international community is addressing the mounting crisis in different ways. The United Nations World Food Program (WFP) received $2.6 billion in contributions for the first six months of 2008—almost as much as it received for the full year in 2007, but still below the amount needed to feed the growing number of starving people worldwide. Food aid deliveries in 2007 fell to their lowest levels since 1961, and the outlook for 2008 remains sobering.

The United States has earmarked about $2 billion for food aid through its Public Law 480 program, more than any other country. However, only about 40 percent of this amount is spent on food; the rest goes to transportation and administration to meet Congressional mandates that U.S.-produced commodities committed as aid must be shipped to their destinations on U.S.-flagged vessels. With energy prices soaring, the cost of shipping food aid over long distances has increased by more than 50 percent during the past year, and the actual amount of food aid has decreased. An increasingly embarrassing cycle has evolved whereby U.S. food aid is reduced when costs are high and food is most needed by the poor (see U.S. Food Aid Shipments and Grain Prices, 1980-2007).

The food system is indeed global, yet the principal actors are national governments, not international agencies. The latter can help with solutions, but fundamental improvements require more enlightened national policies.

Canada and the European Union, meanwhile, have followed the WFP strategy by providing food aid in the form of cash to relief agencies in needy countries. The agencies then purchase supplies regionally, a practice that reduces transportation costs and boosts local agricultural markets. A proposal to endorse this strategy in the United States fell flat in the Congress and was countered in the Senate by a bill that would spend $60 million over four years to study the idea.

Food assistance, however, is a band-aid, not a cure, especially because it may provide major disincentives for agricultural development in poor regions. Ironically, the United States, the largest donor of food aid, is one of the smallest donors (relative to GDP) of international development aid. Agricultural development has been largely eliminated from the agenda of the U.S. Agency for International Development in recent decades and the agency has lost most of its agricultural expertise. (When polled, Americans believe that up to one-quarter of the U.S. federal budget is spent on foreign aid, when in fact the share is less than 1 percent. If voters had the numbers in better perspective, perhaps they would push for an increase in assistance.)

Over the longer run, only sustained growth in agricultural productivity can reduce the vulnerability of all countries to the chaos created by food crises. This conclusion is especially true for poor countries where over half of the workforce derive their principal income from agriculture, and the farm sector accounts for a sizeable share of GDP. But even rich countries such as the United States require continued investments in agricultural productivity—a point made clear by the fact that a large share of the corn crop now goes to fuel American gas tanks. Unfortunately, growth in public-sector investments in agricultural productivity research has slowed in many countries, rich and poor, although China, India, and Brazil have been clear exceptions. Private-sector agricultural investments have been more robust but have been focused mainly in rich countries and have resulted in the proliferation of biotechnology patents that have kept innovation largely out of public hands. The gap between the “haves” and “have-nots” of agricultural research is thus widening.

This pattern of agricultural investments is a key culprit in the current crisis, and it will continue to create serious problems for consumers worldwide if crop-based biofuel use expands further. Globally, agricultural productivity growth (2 percent per year from 1980-2004) is barely outpacing population growth (1.6 percent per annum). And even this minimal progress has not been evenly spread. Asia, and in particular China, has dominated the positive trend, while Sub-Saharan Africa has faltered with its grain yield at one-quarter that of East Asia’s 1.6 tons per acre. (The industrialized world produced 2.4 tons per acre in 2004). Fortunately, bilateral donors are now taking an increasing interest in Sub-Saharan Africa, as are several important private foundations (a point discussed more thoroughly in the May / June 2008 issue of Boston Review).

The World Bank is in a position to reinvigorate agricultural development, both financially and symbolically. What is it currently doing to help? Fortunately, Robert Zoellick is providing international leadership on global agriculture that has long been overdue at the Bank. Allocations for agricultural development are now up; for example, the Bank has pledged to double agricultural lending in Africa from $400 million to $800 million in 2009. Yet the steady decline in the Bank’s investments in agricultural research and development, cuts in its technical staff on agricultural development, and reductions in overall allocations to agriculture (from about 25 percent of total Bank lending in the mid-1980s to 10 percent in 2000) have done little to bolster infrastructure and agricultural capacity in the countries worst hit by the crisis. The non-trivial issues of corruption and poor governance in several African countries are partially to blame for this decline: Bank leaders have argued for funding cuts on the grounds that money given directly to governments for agricultural development never reaches targeted projects. But the Bank’s leadership (prior to Paul Wolfowitz and now Zoellick) also lacked vision regarding the importance of agricultural development. The World Bank does not stand alone in this neglect; for example, the Asian Development Bank recently decided to omit agriculture from its lending portfolio. It is time for the international community of aid institutions and national governments to change direction on this issue.

* * *

It is one thing to commit to the new forms of food aid and additional investments in crop productivity needed to work through the current food crisis. It is quite another to plan for what will be needed to keep the world out of a perpetual food crisis in the face of global climate change. With increasing temperatures, rising sea levels, changing precipitation patterns, new pest and pathogen pressures, and reduced soil moisture in many regions, the impact on the agricultural sector is likely to be especially severe. How can the international community grapple with the present challenges in the world food economy and still keep agricultural productivity ahead of a changing climate?

Predicting climate conditions decades in advance involves many uncertainties. Nonetheless, some twenty global climate models (also known as general circulation models) considered by the Intergovernmental Panel on Climate Change broadly agree on three points. First, all regions will become warmer. The marginal change in temperature will be greater at higher latitudes, although tropical regions are likely to be more sensitive to projected temperature changes because they have experienced less variation in the past. Second, soil moisture is expected to decline with higher temperatures and increased rates of evapotranspiration in many sub-tropical areas. These factors will lead to sustained drought conditions in some areas and flooding in others where rainfall intensity increases but soil moisture decreases. And third, sea levels will rise globally with thermal expansion of the oceans and glacial melt, with especially devastating consequences for small island states and for low-lying and highly populated regions.

Large areas of Bangladesh already flood on an annual basis and are likely to be submerged completely in the future. Moreover, the rapid melting of the Himalayan glaciers, which regulate the perennial flow in large rivers such as the Indus, Ganges, Brahmaputra, and Mekong, is expected to cause these river systems to experience shorter and more intense seasonal flow and more flooding, thus affecting large tracts of agricultural land.

Increased temperature and drought will pose large risks to food insecure populations, particularly in Sub-Saharan Africa and South Asia. Research at the University of Washington and Stanford University predicts that average growing season temperatures throughout the tropics and sub-tropics will rise above the bounds of historical extremes by the end of the century. Yield losses are expected be as high as 30-50 percent for corn in southern Africa if major adaptation measures are not pursued. Africa as a whole is particularly vulnerable to climate change since over half of the economic activity in most of the continent’s poorest countries is derived from agriculture, and over 90 percent of the farming is on rain-fed lands.

Given the inevitable changes in climate over the coming decades, what forms of adaptation are needed, and how can the international community help?

One strategy is based on developing new crop varieties resistant to climate-induced stresses (heat, drought, new pests and pathogens). Introducing these climate-tolerant traits in crops will require continued collection, evaluation, deployment, and conservation of diverse crop genetic material, because the diversity of genetic resources is the building block for crop breeding. In the absence of such efforts, even temperate agricultural systems will suffer yield losses with large increases in seasonal temperature.

Misguided domestic policies [in the U.S. and abroad] are also driving the crisis.

Additional adaptation strategies include investments in irrigation and transportation infrastructure and the design of climate information and insurance networks for farmers. The creation of non-farm employment will also help reduce climate change impacts in cases like the Sahel (the northern section of Africa below the Sahara desert and above the tropical zone) where agriculture may simply be unviable in the future.

All of these strategies involve large-scale investments in “public goods” that the private sector cannot be expected to fill. The U.S. government, for one, needs to recognize the global consequences of climate change and contribute to such public investments. Other governing bodies (e.g., those of Canada, the European Union, and East Asian countries) and international development organizations also need to play a greater role. Promoting pro-poor investments in agricultural productivity research and implementation—not allowing such investments to fall off the agenda—is the key to food security in the face of climate change. The future will look very much like a continuation of the current crisis—or indeed much worse—without such investments.

* * *

The complexity of the food crisis across commodities, space, and time makes it difficult to give a precise statement of causes. That said, the direct and indirect effects of increased ethanol production in response to rising oil prices seem to have pushed an already tight food system (with weak investment in innovation) over the edge. The U.S. Department of Agriculture’s assessment that biofuels were 3 percent of the problem completely lacks credibility, and the International Food Policy Research Center’s estimate of 30 percent may also be too low. What happens to future corn and vegetable oil prices, and therefore to the entire structure of food prices, is dependent primarily on the price of oil and on whether the new biofuel mandates for ethanol in the United States and biodiesel in Europe are imposed or rescinded.

The price of oil, in particular, is a fundamental factor in the overall equation. In a world of $50-per-barrel oil, growth in biofuels would have been more limited, with a much smaller spillover onto food prices. But the links that have emerged between agricultural and energy sectors will shape future investments and the well-being of farmers and consumers worldwide.

Misguided domestic policies serving particular groups of constituents in a wide range of countries are also driving the crisis. Export bans on food in response to populist pressures are likely to yield small and short-lived gains, while producing large and long-term damage to low-income consumers in other countries. The food system is indeed global, yet the principal actors are national governments, not international agencies. The latter can help with solutions, but fundamental improvements require more enlightened national policies.

As Zoellick’s passage at the beginning of this essay implies, much of the current crisis could have been avoided and can be fixed over time. Individuals, national governments, and international institutions took agriculture for granted for twenty years, and their neglect has now caught up with the world. Fortunately, high food prices and the resulting political upheaval have induced national governments and such international institutions as the World Bank to pledge greater investments in agricultural development. Unfortunately, these pledges only came as a response to widespread malnutrition among the world’s poorest households.

In response to rising demand and higher prices, some new sources of supply are emerging, including soybean expansion in Brazil and oil palm expansion in Indonesia. However, the environmental impacts of such expansion, particularly when it involves clearing tropical rainforests, are potentially serious. Similarly, efforts to increase crop yields in existing agricultural areas are leading to greater fertilizer inputs and losses to the surrounding environment. The trade-offs between agricultural productivity and environmental sustainability, particularly in an era of climate change, appear to be more extreme than ever before.

The current food crisis has different origins than previous global food crises, and will require different solutions. It also differs from famines in isolated geographic areas for which food aid and other palliatives can provide quick fixes. The present situation is instead reflected in higher infant mortality and poverty rates over a much wider geography. Given the underlying pressures of growing population, increasing global incomes, and the search for oil substitutes, leaders in both the public and private sectors in developed and developing nations need to be serious about expanded agricultural investments and improved food policies. Otherwise, the current situation will only get worse, especially for the 40 percent of the world’s population that is already living so close to the edge.

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