Feeding humanity

* Posts on agriculture represent my personal opinions on the subject.*

Yesterday, Rory made an important observation: the global food crisis isn’t over. Indeed, many of the long-term changes in global food supply and demand haven’t changed since last year’s price spikes. And as the world’s population continues to grow, finding a way to feed everyone will become an increasingly central challenge for humanity.

When it comes to the feasibility of significantly increased food production, I am no Malthusian. The great promise of genetically-modified crops, combined with current low levels of agricultural productivity in most of the developed world, suggest that current yields can be substantially increased. To this end, we should support programs that aim to increase productivity in the developing world through better rural infrastructure, mechanization of agriculture, increased fertilizer use, seed pilot programs, etc. We should also encourage biotechnology research and development in rich countries.

However, agricultural land, like any natural resource, is distributed unevenly. Some countries are better positioned to grow food than others. Because of this, we need to advocate strongly for total liberalization of international agricultural trade. This is the only way to ensure that every country, including those with poor resource endowments, has equal access to market-priced agricultural staples. Let’s not forget that a significant trigger of global food price spikes were temporary export controls enacted by major wheat and rice exporting countries. Improve agricultural productivity wherever possible and work simultaneously toward agricultural free trade.

But agricultural trade liberalization would require an unprecedented degree of global policy cooperation. I am particularly worried that the economic crisis will actually result in a breakdown of international cooperation, which could herald a significant domestic retrenchment of politics. History shows us that globalization is hardly the natural state of international affairs. However, some of the most dangerous problems that humanity faces, like climate change and food security, will require global solutions. If we can’t find a way to cooperate, our shared future will be bleak.

Double, double oil and trouble

Little publicized fact: the $787 billion stimulus bill that Obama signed last week contains $16.6 billion for the Energy Efficiency and Renewable Energy (EERE) Office of the Dept of Energy. This increases the EERE’s budget tenfold, and it’s yet another signal that Obama is serious about alternative energy. That’s good.

Also this week, crude oil dipped below $40 for the first time in 2009, which has caused a stall in new energy projects. That’s bad. Oil prices are low because the economy is in terrible shape, which stifles demand. But the longer prices stay low, the harder it will be to commercialize advanced biofuels, which by one estimate will need an oil price of $80-$120 in order to be competitive in a reasonable timeframe.

This is a paradox worth watching as it plays out over the next 25 years. Ideally, you want clean and cheap energy. But that's still a ways off, and for now it seems like you can mainly have one or the other. Which is more important? How do you balance the two demands?

(photo from ifijay's photostream)

Comics in crisis

I always knew Bill Watterson was prescient, but this is just scary.

(Nice job World Bank; really, I didn't think you had it in you) 

What are the consequences of farming abroad?

*As with any writing that pertains to trade and agricultural issues, I would like to note explicitly that this post represents solely my own opinions.*

A couple weeks ago, there was a fascinating story about the South Korean corporation Daewoo leasing land in Madagascar for the purpose of farming. This is especially notable because it is the latest in a series of land deals, whereby rich countries with limited agricultural production capacity are acquiring land in the developing world for the purpose of growing food to ship back home. A number of Middle Eastern countries have made similar arrangements in Africa, particularly Sudan, and China has been actively pursuing land deals in Brazil.

The scope of this deal is particularly staggering: if it is finalized, Daewoo would acquire a 99-year lease on 1.3 million hectares (half the size of Belgium) for no money, but Madagascar would presumably benefit from increased employment and rural development. I suspect the potential gains are highly skewed toward Daewoo, though I don’t want to fault a sovereign government for negotiating a deal presumably in its best interests.

However, I’m interested in the larger implications of this ‘farming abroad’ trend. In my mind, it’s inherently a sensitive issue because it involves food, which we all consume. Necessarily, agricultural investment will be more controversial and visible than, say, a sovereign wealth fund acquiring a stake in a foreign bank. The countries that are seeking these deals need to be very careful to avoid looking like imperialists, and there certainly needs to be a careful balance between how much food is exported and how well the domestic market is served. I wouldn’t bet on these contracts being honored very long if there were food shortages in the host country. How does any government allow food to be exported if locals are starving without full-throated international condemnation and vicious domestic civil unrest? My point is, land lease contracts ought to be managed with the utmost care to balance public relations and, more importantly, ethical concerns. A contract that looks skewed toward the foreign party is in neither side’s interests, in my mind.

Second, the lesson which these countries appear to have gleaned from the food crisis earlier this year is that self-sufficiency is the best option. If we follow this thinking to its logical conclusion, we risk severe resource-driven competition and conflict, especially as the world population continues to expand. For humanity to secure its food future, we absolutely need free and non-distorted agricultural trade at the multilateral level. That countries are drawing the opposite conclusion and adopting what I would describe as “beggar-thy-neighbor” food policies is troubling, to say the least.

(Photo from Quack A Duck's photostream)

I see ethanol's underpants

WHY?! It does not surprise as much as disappoint me that the EPA has decided not to ease requirements for ethanol use in gas production. It is no secret that the EPA has been rendered almost irrelevant and powerless under Bush. Unless McCain takes the White House, which seems unlikely given the numerous prediction models my co-author has mentioned, it seems almost impossible that ethanol subsidies will be cut any time soon given the EPA's weakness and the fact that "energy security" is the catchphrase of the moment.

For those of you who may be confused by why we here at Zeitgeist think ethanol is such a bad idea let me offer a few points.

1) Ethanol is not really energy efficient (and we've known for years!). The amount of fossil fuel required to produce ethanol is more than the actual ethanol output. This renders the rest of my points moot, but just in case...

2) Ethanol production is a huge factor behind the recent rises in global food prices (and we've known this for years too!). The diversion of corn to ethanol production has limited supply at a time when this is certainly not needed, thus driving up the price. The fact that our own protectionist policies contribute to hunger probably did not help our attempts to get China and India to liberalize their trade policies at Doha.

3) It is not sustainable! Corn is an extremely erosive crop. Though already planted on a wide scale, farmers trying to get a piece of the rising food prices and government subsidies have started planting even more. This has a host of environmental ramifications, mainly to do with water scarcity and increasing fertilizer use.

4) The subsidies are wasting valuable time and money for all Americans. Not only has ethanol not lowered prices at the pump, it diverts huge tax sums from "second-gen" biofuels and other renewable energy sources that actually need the investment and offer some glint of hope.

It's no surprise that Obama supports ethanol. He's from Illinois after all. But coupled with his talk on NAFTA his position is not exactly encouraging and almost makes McCain attractive. If only he wasn't so damn old!