China’s commitment to agricultural development over the last thirty years has dramatically transformed the country’s economy. Rural income per capita has risen an astounding 20 times after 30 prior years of stagnation. Its poverty rate (US$1.25/day) has dropped from 40 percent to less than five, and 350 million rural people between the ages of 18-65 are now working in the industrial or service sector, enjoying rising wages and new economic opportunities.

This rapid transformation is largely the result of three key agricultural policy decisions: putting land in the hands of farmers, market deregulation, and major public investment in the agricultural sector. Although China must now contend with extreme inequality, high levels of pollution, and an aging farming sector there are still lessons to draw from China’s experience that could hasten the transformation of other developing countries.

China expert and agricultural economist Scott Rozelle broke these lessons down at FSE’s fourteenth Global Food Policy and Food Security Symposium Series last week, opening with an underlying theme of the series.

“Growth and development starts with agriculture,” said Rozelle. “Agriculture provides the basis for sound, sustained economic growth needed to build housing, invest in education for kids, start self-employed enterprises, and finance moves off the farm.”

To prove this point he referenced China’s ‘lost decades’ (1950s-1970s) when 80 percent of the population lived in the rural sector and relied on communal, subsistence agriculture. Poor land rights, weak incentives, incomplete markets and inappropriate investments left the average rural farmer poorer at the end of 70s than they were in the 50s with almost no off-farm employment growth.

So what changed? Incentives, market deregulation and strategic investments by the state were key.

Creating the right incentives

In 1978 the Chinese government broke the communes down into small “family farms” such that every rural resident was allocated a small parcel of land. A family of five farmed an area the size of a football field. While they did not own nor could sell the land, they had the right to choose what crops and inputs they used and the right to the income generated from their land.

“Incentives are important, and can be enough in the short run,” said Rozelle. “Hard work led to money in the pockets of farmers and China was off.”

“Every two and half years China added another California in term of agriculture,” said Rozelle.

Between 1979 and 1985 productivity for wheat, maize, and rice went up 50 percent using the same amount of labor, land and inputs. Agriculture across the spectrum has grown at an astounding rate of 5 percent since 1988 (about four times the population growth rate). Livestock and fisheries have grown even faster – accounting for most of the output of the agricultural sector by 2005.

Income growth from farming enabled family members to begin to seek work off the farm. Between 1980 and 2011, off-farm work increased 71 percent with more than 90 percent of households reporting that at least one family member worked off the farm.

Increasing efficiency through liberalization and investment

Another key policy decision was China’s commitment to market liberalization and investment in public goods.

“Markets can be an effective, pro-poor tool of development,” said Rozelle. “A remarkable partnership is formed when you let farmers do production and government do infrastructure…let markets guide decisions.”

The government dismantled state-owned grain trading companies and deregulated trading rules. Prices were set once a week the same day across China to better integrate markets, and eventually prices for major crops closely mirrored those of world prices. Villages began specializing in crops and livestock and incomes of the poor increased. By not providing government input subsidies (e.g, pesticides, fertilizers), traders were incentivized to participate in the market.

“Giving land to farmers and letting the private sector emerge is an easy thing for governments, even without a lot of money, to do,” said Rozelle.

The government provided more indirect market support by publicly investing in better roads, communications, and surface water irrigation. Groundwater was left to the private sector. There were no water or pumping fees nor subsidies for electricity, keeping it completely deregulated. As a result, 50 percent of cultivated land in China is irrigated, compared to 10 percent in the US and only four percent in sub-Saharan Africa.

Finally, China has invested heavily in agricultural research and development (R&D). One percent of China’s agricultural GDP is now invested in agricultural R&D while US investment has fallen over time. US$2 billion alone goes to investments in Chinese biotechnology.

Despite major investment, China only has one major success story to show for so far. The introduction of Bt cotton led to a significant drop in pesticide use (with important health benefits for farmers), and drop in labor and seed price; resulting in a huge 30 percent increase in net income.

“GM technology benefits exist but big policy decisions still need to be made in the face of much resistance both in China and elsewhere in the world on its application,” said Rozelle.

Status of China’s economy

China has largely solved the country’s macro-nutrient food security problem at the household level (>3000 Kcal/day/person) and millions have been lifted out of poverty. Practically all 16-25 years old are now working off the farm.

“This is a real transformation, and one that could not have happened without a major investment in agriculture,” said Rozelle.

While China’s agricultural accomplishments have been major, Rozelle recognizes the system is far from perfect. For starters, there are serious food safety concerns due to lack of traceability. An astounding 98 percent of Beijing consumers think their food is tainted, said Rozelle.

Water is being pumped like crazy and farmers are aging. The younger generation is neither willing nor interested in following in their parents’ farming footsteps. To make up for a labor deficit farmers are applying huge amounts of fertilizer on their land with serious environmental consequences. As a result of changing demographics and an increasing demand for meat, fish, fruits and vegetables, China is likely to be a net importer of food in the long run.

China also faces major urban and rural inequality issues. Even though wages have risen, inequality has not fallen, largely a result of China’s decision not to privatize rural land.

“Rural people have no assets on which to build wealth while urban people were given assets in the form of housing,” said Rozelle. “Housing prices in major cities in China now rival those in the Bay Area!”

The Chinese government fears losing control of the land, but this comes at a price of less individual incentive to invest and inability to build larger farmers. As agricultural growth slows, Rozelle worries high levels of inequality could lead to instability.

Adding fuel to the fire, investment in rural health, nutrition, and education remains far from sufficient. Only 40 percent of the rural poor go to high school resulting in 200 million people who can barely read or write.

“What’s going to happen in 20 years when low skill manufacturing jobs move to other countries?” asked Rozelle. “The rural, uneducated poor are going to become unemployable.”

China’s record leaves room for improvement, but presents a strong case for supporting smallholder agriculture. For those countries emerging out of their own lost decades, smallholder agriculture should remain a primary focus of investment and development.

It’s no secret that China is faced with some of the world’s worst pollution. Until now, however, information on the magnitude, scope and impacts of a major contributor to that pollution – human-caused nitrogen emissions – was lacking.

A new study co-authored by Stanford Woods Institute Senior Fellow Peter Vitousek (Biology) reveals, among other findings, that amounts of nitrogen deposited on land and water in China by way of rain, dust and other carriers increased by 60 percent annually from the 1980s to the 2000s, with profound consequences for the country’s people and ecosystems. Xuejun Liu and Fusuo Zhang at China Agricultural University in Beijing led the study, which is part of an ongoing collaboration with Stanford aimed at reducing agricultural nutrient pollution while increasing food production in China – a collaboration that includes Vitousek and Pamela Matson, a Stanford Woods Institute senior fellow and dean of the School of Earth Sciences. The researchers analyzed all available data on bulk nitrogen deposition results from monitoring sites throughout China from 1980 to 2010.

During the past 30 years, China has become by far the largest creator and emitter of nitrogen globally. The country’s use of nitrogen as a fertilizer increased about threefold from the 1980s to 2000s, while livestock numbers and coal combustion increased about fourfold, and the number of automobiles about 20-fold. All of these activities release reactive nitrogen into the environment. Increased levels of nitrogen have led to a range of deleterious impacts, including decreased air quality, acidification of soil and water, increased greenhouse gas concentrations and reduced biological diversity.

“All these changes can be linked to a common driving factor: strong economic growth, which has led to continuous increases in agricultural and nonagricultural reactive nitrogen emissions and consequently increased nitrogen deposition,” the study’s authors write.

Researchers found highly significant increases in bulk nitrogen deposition since the 1980s in China’s industrialized north, southeast and southwest regions. Nitrogen levels on the North China Plain are much higher than those observed in any region in the U.S., and are comparable to the maximum values observed in the U.K. and the Netherlands when nitrogen deposition was at its peak in the 1980s.

China’s rapid industrialization and agricultural expansion have led to continuous increases in nitrogen emissions and nitrogen deposition. China’s production and use of nitrogen-based fertilizers is greater than that of the U.S. and the E.U. combined. Because of inefficiencies, more than half of that fertilizer is lost to the environment in gaseous or dissolved forms.

China’s nitrogen deposition problem could be brought under control, the study’s authors state, if the country’s environmental policy focused on improving nitrogen agricultural use efficiency and reducing nitrogen emissions from all sources, including industry and transit.

President Obama and Mitt Romney meet for their third debate to discuss foreign policy on Monday, when moderator Bob Schieffer is sure to ask them about last month's terrorist attack in Libya and the nuclear capabilities of Iran.

In anticipation of the final match between the presidential candidates, researchers from five centers at Stanford’s Freeman Spogli Institute for International Studies ask the additional questions they want answered and explain what voters should keep in mind.

What can we learn from the Arab Spring about how to balance our values and our interests when people in authoritarian regimes rise up to demand freedom?  

What to listen for: First, the candidates should address whether they believe the U.S. has a moral obligation to support other peoples’ aspirations for freedom and democracy. Second, they need to say how we should respond when longtime allies like Egypt’s Hosni Mubarak confront movements for democratic change.

And that leads to more specific questions pertaining to Arab states that the candidates need to answer: What price have we paid in terms of our moral standing in the region by tacitly accepting the savage repression by the monarchy in Bahrain of that country's movement for democracy and human rights?  How much would they risk in terms of our strategic relationship with Bahrain and Saudi Arabia by denouncing and seeking to restrain this repression? What human rights and humanitarian obligations do we have in the Syrian crisis?  And do we have a national interest in taking more concrete steps to assist the Syrian resistance?  On the other hand, how can we assist the resistance in a way that does not empower Islamist extremists or draw us into another regional war?  

Look for how the candidates will wrestle with difficult trade-offs, and whether either will rise above the partisan debate to recognize the enduring bipartisan commitment in the Congress to supporting democratic development abroad.  And watch for some sign of where they stand on the spectrum between “idealism” and “realism” in American foreign policy.  Will they see that pressing Arab states to move in the direction of democracy, and supporting other efforts around the world to build and sustain democracy, is positioning the United States on “the right side of history”?

~Larry Diamond, director of the Center on Democracy, Development, and the Rule of Law

What do you consider to be the greatest threats our country faces, and how would you address them in an environment of profound partisan divisions and tightly constrained budgets? 

What to listen for: History teaches that some of the most effective presidential administrations understand America's external challenges but also recognize the interdependence between America's place in the world and its domestic situation.

Accordingly, Americans should expect their president to be deeply knowledgeable about the United States and its larger global context, but also possessed of the vision and determination to build the country's domestic strength.

The president should understand the threats posed by nuclear proliferation and terrorist organizations. The president should be ready to lead in managing the complex risks Americans face from potential pandemics, global warming, possible cyber attacks on a vulnerable infrastructure, and failing states.

Just as important, the president needs to be capable of leading an often-polarized legislative process and effectively addressing fiscal challenges such as the looming sequestration of budgets for the Department of Defense and other key agencies. The president needs to recognize that America's place in the world is at risk when the vast bulk of middle class students are performing at levels comparable to students in Estonia, Latvia and Bulgaria, and needs to be capable of engaging American citizens fully in addressing these shared domestic and international challenges.

~Mariano-Florentino Cuéllar, co-director of the Center for International Security and Cooperation

Should our government help American farmers cope with climate impacts on food production, and should this assistance be extended to other countries – particularly poor countries – whose food production is also threatened by climate variability and climate change?

What to listen for: Most representatives in Congress would like to eliminate government handouts, and many would also like to turn away from any discussion of climate change. Yet this year, U.S. taxpayers are set to pay up to $20 billion to farmers for crop insurance after extreme drought and heat conditions damaged yields in the Midwest.

With the 2012 farm bill stalled in Congress, the candidates need to be clear about whether they support government subsidized crop insurance for American farmers. They should also articulate their views on climate threats to food production in the U.S. and abroad.

Without a substantial crop insurance program, American farmers will face serious risks of income losses and loan defaults. And without foreign assistance for climate adaptation, the number of people going hungry could well exceed 15 percent of the world's population. 

~Rosamond L. Naylor, director of the Center on Food Security and the Environment

What is your vision for the United States’ future relationship with Europe? 

What to listen for: Between the end of World War II and the end of the Cold War, it was the United States and Europe that ensured world peace. But in recent years, it seems that “Europe” and “European” have become pejoratives in American political discourse. There’s been an uneasiness over whether we’re still friends and whether we still need each other. But of course we do.

Europe and the European Union share with the United States of America the most fundamental values, such as individual freedom, freedom of speech, freedom to live and work where you choose. There’s a shared respect of basic human rights. There are big differences with the Chinese, and big differences with the Russians. When you look around, it’s really the U.S. and Europe together with robust democracies such as Canada and Australia that have the strongest sense of shared values.

So the candidates should talk about what they would do as president to make sure those values are preserved and protected and how they would make the cooperation between the U.S. and Europe more effective and substantive as the world is confronting so many challenges like international terrorism, cyber security threats, human rights abuses, underdevelopment and bad governance.

~Amir Eshel, director of The Europe Center

Historical and territorial issues are bedeviling relations in East Asia, particularly among Japan, China, South Korea, and Southeast Asian countries. What should the United States do to try to reduce tensions and resolve these issues?

What to listen for: Far from easing as time passes, unresolved historical, territorial, and maritime issues in East Asia have worsened over the past few years. There have been naval clashes, major demonstrations, assaults on individuals, economic boycotts, and harsh diplomatic exchanges. If the present trend continues, military clashes – possibly involving American allies – are possible.

All of the issues are rooted in history. Many stem from Imperial Japan’s aggression a century ago, and some derive from China’s more assertive behavior toward its neighbors as it continues its dramatic economic and military growth. But almost all of problems are related in some way or another to decisions that the United States took—or did not take—in its leadership of the postwar settlement with Japan.

The United States’ response to the worsening situation so far has been to declare a strategic “rebalancing” toward East Asia, aimed largely at maintaining its military presence in the region during a time of increasing fiscal constraint at home. Meanwhile, the historic roots of the controversies go unaddressed.

The United States should no longer assume that the regional tensions will ease by themselves and rely on its military presence to manage the situation. It should conduct a major policy review, aimed at using its influence creatively and to the maximum to resolve the historical issues that threaten peace in the present day.

~David Straub, associate director of the Korea Studies Program at the Walter H. Shorentein Asia-Pacific Research Center

Compiled by Adam Gorlick.