[BELLS TOLLING] SPEAKER 1: This is a production of Cornell University.
[LIVELY INSTRUMENTAL MUSIC]
SPEAKER 2: Nearly a billion people around the world suffer from hunger and poor nutrition, while a billion are overweight or obese. This imbalance highlights the need not only to focus on food production, but also to implement successful food policies.
In a Chats in the Stacks Book Talk at Mann Library in March 2012, Cornell University economist Per Pinstrup-Andersen discusses his new book, Food Policy for Developing Countries, co-authored with economist Derrill Watson II of the American University of Nigeria, as a comprehensive roadmap for understanding how governments and markets shape food policies and production. Food Policy for Developing Countries addresses the complex challenges for reducing hunger and achieving better human nutrition.
PER PINSTRUP-ANDERSEN: Thank you very much for your kind words. I can't really live up to all of the accolades that you sent my way, but thank you very much, Catherine.
I'm so pleased to see so much interest for the subject of food policy. It is, as far as I'm concerned, one of the most important areas for developing countries. One of the areas where policymakers need to do a lot more than what they've been doing in the past.
But why do we need a book on food policy? There are a number of reasons. I have listed five up there. First of all, government policy plays a very important role in assuring food security and good nutrition for all. Policy should be based on evidence and not just emotion. Yes, passion is a good thing, but passion has to be combined with evidence. We need to understand the policy process that is essential for a constructive debate and for giving good advice to policymakers.
And there is a lot of misinformation out there. The world is coming to an end because we're all going to starve to death. The food apocalypse, the coming famine, et cetera, et cetera, et cetera. And I'm just citing titles of books and articles that have been coming out during the last four, five, six years.
This is all misinformation. No, we are not running out of food. No, we're not going to starve. No, there are enough resources in the world to feed future generations, even the 10 billion that we're going to be by year 2100.
All of that, unfortunately, is making policymakers nervous, and they are making decisions not based on evidence but based on misinformation. And there is no comprehensive book on the subject that has been published during the last 15 years. The last one was, in fact, about 15 years ago. It was authored by Peter Timmer, who used to occupy the position that I now have as the Babcock Professor.
So let me very quickly run through the content. And there is a brochure on the table-- or at least there was. I didn't expect quite so many people. I may not have brought enough. But there was a brochure back there that provides much more detail about what's in these various chapters.
We start out the book-- which by the way, is written jointly with Derrill Watson, who was a postdoctoral fellow at Cornell. He is now a professor at the American University in Nigeria. So we start out the book with two chapters setting the stage.
The global food system is not a static thing. It's a dynamic behavioral system. This is important, because that means it can be influenced by behavioral changes, by action, whether by government, or the private sector, or civil society. It's dynamic in its behavior. The behavior of the agents within the system determine what the system is going to look like tomorrow. Behavioral changes change the system. I'm going to say a little bit more about what I mean by food policy in a few minutes.
Chapter 3 talks about what I believe is the beginning and the end of any food system, and that is good health and good nutrition. Not all my economist friends agree with me that that's the beginning and the end, but I'm firmly convinced that that is the case.
Poor health, poor nutrition results in low productivity of workers, many of whom work in the food system, therefore, the productivity of the food system is low. So yes, the food system begins with good health and good nutrition. I don't think I have to say much about how it ends, because it ends with providing the food, and providing all of the services and the goods that are necessary for maintaining good health and nutrition.
Chapter 4 looks at food security policies. And then we then look at poverty alleviation policies. You see the trend beginning with the end goal, if you like-- good health, good nutrition-- then moving towards what eventually becomes globalization, the broadest of the areas for food policy.
We move toward domestic market policies after we've talked about poverty. We then go to the production policies, the farm, the agricultural, the farm policies. We then have a chapter on climate change, energy and natural resource management policies. We then spend a chapter on talking about governance institutions and macroeconomic policies. Yes, macroeconomic policies are extremely important for the food system.
Now, this may be obvious to all of you, but it was not obvious to the literature 20 years ago. 20 years ago, macro policies were something else. No, no. The food system was totally guided by agricultural policies. No, that's not true. We need to understand the macro policies.
And then we end the book with a chapter on ethical aspects of the food system. And the reason we put that last is that we wanted to keep the best for last-- in other words, the most important [INAUDIBLE]. It cuts across all of the other chapters. Ethics is in every one of those chapters, and we want to pull it together at the end.
This book is supported with a large number of case studies that are available in open access on the web. And I'm showing the website right there in case you want to take a look at those case studies. There are 73 case studies at this point. We're still producing new ones. We just finished producing one on the zero hunger program in Brazil. And we have two case studies coming in on health policies in Tanzania, so we keep producing cases.
The idea is that these cases will be used in university-level training. In fact, we're also using them now in high schools. So that together with the book-- the book provides kind of the framework. Then the students get into something very specific. If we're lucky, if we're good, the student feels that he or she is actually in the location where this case is playing out. And I see some of you who've taken the course that I teach where we do use those cases, and as far as I know, I didn't hear a lot of complaints about them. So apparently, that's one way-- now, they may have complained to somebody else, but that's one way of getting these things across.
The case studies are also available in Cornell University Press books. They're a three-volume book with other cases as well.
So what's food policy? It's a plan of collective action. I'm going to focus on government policy, on public policy. But obviously, we can equally well talk about private sector policies. We can talk about civil society policies. But I'm going to talk today almost exclusively about the government policy.
There are only three things that governments can do to change the food system. Regulation. You shall do this, you shall not do that. Incentives. If you do this, you get free ice cream. If you come to this seminar, you get free cookies. Those are incentives. Or a government can generate or disseminate knowledge. Those are the only three things that governments can do that will change the food system.
But why do we need a government in the first place? Why not let the food system be handled by the private sector? I'm listing four reasons-- and there may be others, but at least four reasons why the private sector cannot do its job without the public sector doing its job. That's very different from saying, do we need a private sector, a public sector? You have to pick one or the other. No, you don't. You don't. You need both.
And you need them in sequence. We need public goods in order for the private sector to work, to do its job. We need weights, measurements, contract enforcement, roads, primary education, primary health care, et cetera, et cetera, et cetera. Most of that will only be developed by the public sector. Some of it can be privatized, some of it cannot.
Imagine you're sitting in London trying to buy a pile of cassava in Malawi, in Africa. You don't know how big the pile is. You don't know what the quality of the cassava is. You don't know whether the contract you enter into can be enforced, et cetera. Those public goods are taken for granted in countries like the United States and mine, but they are not present in all other countries. So we need investment in public goods.
A merit good is a good that has benefit for society, but also has benefit for the individual. Education. Some of you are are in education at Cornell. There is a public good associated with that, because it is going to benefit your society that you are better educated. But there's also a private good on the assumption that you can find a job when you get out of here. So that would be a merit good which calls for some public financing and some private financing. And that, of course, is more or less the way most education programs are run.
Except in my country, where the government pays for it all, but then in return, we don't get much of a salary increase after we finish university. You can't have it both ways. We need public policy to regulate and provide incentives for market power, because we've got huge concentrations. Large supermarket chains, for example. Unequal competition in the system. The government needs to regulate, to make sure that the system operates fairly and squarely. Where there's competition, you have better efficiency.
There are externalities. Environmental externalities, for example. Society is going to pay for that unless government puts in place regulations, and incentives, and provide knowledge to avoid unacceptable externalities. Society will pay for the negative externalities and benefit from the positive ones. In other words, the idea is to try to match the private costs to the agents that undertake the action with social costs, the costs to society.
And finally, we need government to generate the kind of information that cannot be readily copyrighted, or patented, and therefore won't be done unless the government does it.
And I have, in each chapter, a list of policies, and I discuss each of these policies for health, and production, and environment, and so on. And I'm not going to do this today. I'm just going to say, the four types of policies that we talk about in this book, the fiscal policies, government policies, where they spend your and my tax money, monetary policies, how much money to print, what kind of exchange rates, and so on, sectorial policies, agricultural policies of various kinds, other kinds of food policies. And then we talk about micro, meso, and macroeconomic policies, and we can go come back to definitions, if you like, in the Q&A period.
What are the driving forces for the food systems? We really need to understand that in order to help governments do the right thing. And I'll come back to what I mean by "right." So we got a set of macroeconomic forces. We got globalization, trade liberalization, for example, movement of capital, movement of labor. We've got urbanization, people moving from rural areas to urban areas. We've got income increases. That set of macroeconomic forces will influence what is happening to the food system.
We've got a set of demographic shifts. We've got population growth. And I'll come back to that in a minute. We've got population aging. We've got a change in the age distribution in the population of virtually every country.
And we've got a change in the gender roles. What do women do? What do men do? How is the responsibility and the workload distributed between the two groups?
There are other driving forces. Market concentration. I already talked about the multinational supermarket chains. We've got technological change, agriculture research, the kind of stuff that Cornell does, and many others. Technological change in the food system, not just in agriculture, but also in post-harvest activities.
Degradation of natural resources. We are lowering the groundwater level. We are contributing to climate change. We are doing damage to the quality of the soils, et cetera, et cetera. So we've got degradation going on big time. We've got energy price changes, which operates in the food system in two ways, partly through the biofuel production, and partly through the production costs in agriculture.
Climate change. I already mentioned that. I'm going to come back to it. The changing roles of key agents. We talked about the changing roles, the gender roles, but there are other changes. For example, are the national governments of small developing countries basically being pushed out by globalization so they really don't have any decision-making power left? I don't believe so, but some people are arguing that. So we need to understand how the roles of these various groups of decision-makers, how these roles are changing between government, multinational corporation, civil society, and so on.
Conflict. Where you have conflict, you are likely to have human misery. That, we don't need to do any research to figure out. Just take a look. The open question still is, where you have human misery, do you then have a higher probability of conflict?
Now, my heart tells me yes. My brain tells me I need to do some more research, because the literature is not clear on that. In other words, where you have a lot of human misery, whether it's hunger, malnutrition, or other livelihood problems that result in grievances, do those grievances cause conflict? Or are these poor people so busy trying to survive that they do not cause conflict?
Based on the research I've done-- and it's very limited-- I have concluded that no, it's not the poorest of the poor that cause the conflict. It is the lower middle class, particularly in urban areas, that use the extreme poverty and human misery as a reason for achieving their own agendas by means of conflict.
So why do governments do what they do? Well, I have two [INAUDIBLE] here. I got the good guys and the bad guys. The good guys are those that maximize social welfare. We're going to look at society. We're going to do everything we can to make sure that society as a whole is much better off.
We're going to seek efficiency gains. We're going to allocate our resources in the most efficient way, get the most welfare, happiness, utility, whatever you want to call it, out of it. We want to correct the market failures. And we want to dominate-- we want to have the benefit to society dominate the private bunch. Those are the good guys. Not very many of those around.
The bad guys, I call a political economy approach. They have as objective number one to assure their own legitimacy. Whatever it takes, I want to stay in power. Whether I was voted in, or I got it in a violent way, I was appointed, however I got in there, I'm going to protect my legitimacy.
Almost every government does that. That in itself may not be bad. It's the consequence of seeking policies to assure the legitimacy that sometimes is bad.
These governments may also be corrupt. Economists call it rent-seeking. It sound better. It's corruption. They're siphoning off resources from the economy any which way they can, including through market distortions. Governments are supposed to rectify market distortions so that the market will work so we have competition so that resources are spent efficiently and max the happiness of the society is maximized. Well, some governments are doing the exact opposite. They are creating market distortions in such a way that they can siphon off more money for themselves, whether we're talking about individuals, or groups, or institutions.
That's why a food policy book, in my opinion, has to be based on a political economy analysis. We have to understand the stakeholders, and their power, and their interests. And that's what this list shows.
It isn't good enough to say, well, as an economist, I have figured out what the most efficient way is for solving this particular problem. And then when governments don't listen to me, I say, that's because politicians are stupid.
No. I'm sure there are stupid politicians like there are stupid economists, but the prevalence is probably not higher among politicians than among others. But we don't understand their agenda. And we don't understand the pressure that they are under from so many different stakeholder groups, some of which are threatening their legitimacy. That's why it's so important that we have stakeholder analysis, and the whole book is based on that premise.
Let me now move to chapter 3. And I'm going to move rather fast through this. I'm not going to try to cover the book. I can't even do that in a semester, never mind 40 minutes.
But what we're looking at here is the links between the food system, and human health, and nutrition. And of course, we have the box all the way to your-- in the right-hand corner, energy and nutrient balances. At the bottom, we have food safety, water safety, sanitation, hygiene. And in the middle, we have a number of different health issues that link the food system and health and nutrition, or the health status, if you like.
And every one of these is described in the book. I don't have time to go into it. But something like HIV/AIDS, for example. Surely, that has nothing to do with the food system. That's an illness. That's a horrible disease.
It has everything to do with the food system. Because people in the working age may get AIDS, they may be sick, they may die. That reduces the labor available in the food system. There are whole villages where there are very few working age people who can do agricultural jobs, for example. And so on.
So HIV/AIDS, again, is a very important link between the food system and human health. So do we do research on that? No. We do research on HIV/AIDS over here in health, and we do research on productivity, and agriculture, and other kinds of food things over here. We don't look at what's in the middle, because it kind of falls between the stools, or through the crack, or whatever the term is.
Point here is we need multidisciplinary approaches if we are to solve the health problems, and the food problems, and the nutrition problems. And I know that the dean is absolutely with me on that. He's been arguing this for, I think, much longer than I have.
So what kind of nutrition problems am I talking about? I'm talking about the triple burden. I'm talking about people don't getting enough to eat. They're hungry. I'm talking about people who don't get the right kind of nutrients in the right quantities. We call that hidden hunger, because if every child in the village suffers from, say, iron deficiency, it may not be entirely clear that there is a problem. I'm way beyond economics here, and I have nutritionists in the room, so I got to be real careful here. But certainly, we have those three.
And the third one, of course, is overweight, obesity, and chronic disease. And that, of course, is what we worry mostly about in this country. One third of the US population is obese, another third is overweight, but not obese, and the last third is on its way to become overweight.
That last part, I added. The first 2/3 are correct. But let me come back-- let me leave obesity for now and come back to the question that, in my mind, is much more important.
That is, how many people go to bed hungry, if they have a bed? And this shows the number of hungry people-- undernourished, as FAO would call them-- hungry people over this time span from '91 to 2009. And it shows where we should be-- namely, the blue line-- if we adhere to the commitment that 190 countries-- and I think it was 186 countries-- agreed in 1996 called the World Food Summit Goal to reduce by half the number of hungry people between 1990 and 2015. That's the blue line.
The green line is a horizontal line, which is what you would get if you run a regression analysis through the numbers up to 2005. You just extend that. It's a horizontal line. Nothing is happening.
Then something happened. We had a food crisis with rapidly-increasing food prices. And FAO says that means that we now have 150 million more hungry people. That's why it jumped up to more than a billion. A billion-- 1.02 billion, as you see out there. Then came down a bit because food prices began to come down.
That's pure fiction. That's why we didn't draw the green line through those points. They don't know. They don't have a clue. They just figured that somehow, the world needed numbers, so they gave us numbers.
Probably, there are more hungry people today than there were in 2005 because of the food price increases, but we don't know how many. We really do not know. And that is a seminar in and of itself, but I'll be glad to expand on it if we have time in the Q&A.
So here's what's happening in Africa. It's a lot worse. It's going up. Going up. The green line is a regression analysis and extrapolation of all the numbers, and you can see where we're going. Where we should be would be down having 169 million. And we are probably going to end up around 250, 260 million by 2015.
In year 2000, we had the Millennium Development or the Millennium Summit and they generated the Millennium Development Goals. And they are easier to achieve, because those goals say that you have to reduce by half the percent of the population that is hungry. The percent, not the number. So since population growth still takes place, that ratio is easier to achieve.
So that has to be reduced from 20% to 10% over that same time period. And you can see what's happening. We're at about 17%. We're not achieving that goal either. Not even close.
So some people will say, well, you know what? The world can't feed all these people. We're going to be so many people, it's hopeless. Might as well lie down and die because population keeps growing.
Yes, it does, but at a much reduced rate. Look at this. Between 2050 and 2100, the population growth rate is somewhere around 0.3%, dropping from-- look at the red bar, which reflects the growth rate between 1950 and year 2000. For the developing countries, it was about 2%. For the world as a whole, it was about 1.8%. Tremendous drop in the rate of growth in the population.
Chances are that we're going to be about 9 billion by 2050, and another billion or so by 2100. And around that time, around 10 billion or so, chances are that it's going to stabilize, and then it will start falling. And if that is not true, call me.
I found out when I worked for IFPRI that if you're going to predict, make sure you predict far enough into the future so you won't be around when you [INAUDIBLE].
We move now to the chapter on poverty.
Look at this tremendous gain that China has made in poverty. From 84% 30 years ago to 16% six years ago. Those are the most recent data I have. It's probably decreased a little more since then.
Dramatic improvement. Look at India. Not as dramatic, but still. Even sub-Saharan Africa. The prevalence of poverty has dropped. Yes, it's still very high. It's still about 50%. There's a new estimate out by the World Bank, came out last week, that shows that it has decreased even more.
This is interesting, because while food prices were going up and we had more hungry people according to FAO, the number of poor people was going down, according to the World Bank. Now, that was the estimate they gave us last week. They estimate they gave us a year and a half ago was that it was going up. So you see the need for some better evidence on these things? And the World Bank is not exactly a pushover. They know what they're doing, right, Dave?
So therefore, these numbers are probably not right either. But it's the best we got. What it shows is that the number of ultra poor, the people who are so poor that they're at the border of dying, that number is going up in sub-Saharan Africa at a very rapid rate.
Look at the yellow part of this pie. To your left, you have 1990. To your right, you have 2004. Dramatic increase in sub-Saharan Africa. Dramatic decrease in East Asia. It reflects what I just showed you for China. China is driving most of the East Asia statistics. In fact, it's driving most of the global statistics on certain things.
Let me move now to the chapter on markets. And we're looking at the supply chains. We're looking at the value chains. We're looking at contract farming. We're looking at vertical integration. We're looking at all of the things that we think are important for the food system. I'm not going to talk more about it because I would exceed the time allocated to me.
So let me move to the production side. I want you to look at the graph to the left, because that is a very powerful finding. This work actually comes out of the World Bank, and in this case, the numbers are correct. At least, you can't prove me wrong, I don't think.
When yields go up, poverty goes down. The World Bank doesn't stick its neck out and say there's a causal link, but there is. By increasing yields, particularly on smallholder farms, you are generating an economic surplus which can either be used to increase farmer income or to reduce food prices. And in fact, both happened during the Green Revolution.
So what you see there on the left is a very high negative correlation between yield level and poverty. Yield levels go up, poverty goes down. Key finding, it's not the only place we can see this. There's a lot of literature that backs this up. But this is a nice and handy slide.
Now look to your right, sub-Saharan Africa. The yields went up a tiny bit. Poverty went down a tiny bit. Then the yields began to go down a bit, poverty stayed constant. Not much is happening in sub-Saharan Africa on yield or on poverty. As I showed you a few minutes ago, poverty is going down. The prevalence is going down, but very, very little.
So what do we need to do to make this happen? To produce more food, to increase productivity in agriculture, to make small farmers better off, and to benefit consumers who buy food. Need to focus on the smallholder. Do we? Yes, we do, as the intended beneficiary, because most of the rural poor, most of the world's poor people are in rural areas. They depend on agriculture one way or the other.
Many of them are smallholders. They have a small piece of land. Many of them do not produce enough to feed themselves. There may be a net bias. But nevertheless, they have resources. They are farmers. So we need to focus on them as intended beneficiaries, but not as the change agent, because they're stuck. They're stuck. They're in a straitjacket. Because at the environment within which they operate-- I'm not talking about natural resources. I'm talking about a socioeconomic environment. Lack of markets. Lack of infrastructure. Lack of access to fertilizer, et cetera, et cetera, et cetera. They're stuck. They can't move.
So we're going to tell the small farmer, look, we want to send extension agent out to tell you what to do. Sure. But nothing happens. Now, something happens when a project comes in and establishes this bridge-- see the arrow?-- going from right to left.
How does that happen? When a project comes in and alleviates the external constraints, assures the farmer fertilizers and seeds at reasonable prices, assures the farmer a market for the product, assures the farmer access to credit, removing those external constraints, the farmer doubles, triples, quadruples her yield. Did I just make this up? No. Project after project after project is showing this. [INAUDIBLE] projects, the One Acre Fund, the Millennium Villages, et cetera, et cetera.
When these projects, as long as they operate, the farmers are producing a lot more. We're dealing with a yield gap, the gap between what the farmer is producing and what she could produce. We're reducing that.
The project ends. The project people go somewhere else. And because no structural changes were made in this adverse environment, the farmers go right back to where they were before the project came in. Yeah, they had a good time, but it didn't last. We need those structural changes in the environment that surrounds the farmer. Doesn't do any good to send a better extension agent out to the farmer if the farmer is stuck. Can't move.
The African farmer pays five to six times more for fertilizers than many of the Asian farmers. So no wonder the African farmer is not using fertilizer. The infrastructure is so poor that a large number of African farmers, if they have a bag of corn or maize they want to sell, they have to carry it on their back maybe 20, 30 kilometers in order to get to something like a road, or something like a market. So they don't produce for sale. They produce for themselves. So no wonder productivity is low.
Let me move now to natural resources. This is the list of natural resources we're talking about. I'm only going to talk a little bit about climate change in this one. And it's something that I've done some research on, and I'm very concerned about it. And it relates to the extreme weather events that I'm quite convinced are related to climate change. Not everybody is convinced.
These volatile weather events cause production volatility. Droughts in Australia, floods in Pakistan, droughts in Russia, et cetera, et cetera, et cetera. We read about it in the papers.
What we don't read about in the papers is that the rains don't come when they used to come. I have talked to thousands of people from many different developing countries who are in contact with farmers, some of them farmers themselves. They all say the same thing. We used to rely on the rain coming around this time, so we planted around this time. We can't anymore. The rains may never come. They may come at a different time. They may come as a burst, killing everything that we planted.
That doesn't get into the papers. Only the big droughts and the big floods. This is a much more serious issue than what we can read in the papers.
It results in production volatility, which results in price volatility. And this is what we've seen since, what, shall we say, 2006, 2007. Got tremendous fluctuations in food prices, both internationally and at the national level. And that is caused to a considerable extent by these production fluctuations, which in turn are caused to a considerable extent by extreme weather events, which are caused, I believe, by temperature increase, part of the climate change.
Now, just to make sure that nature gets some help, governments are contributing to food price fluctuations. And the way they do that is when they are worried that international prices are going to go up, they close the markets if they are exporters or they open up the markets if they're importers.
You know what that does? That transfers the risk of price changes from the national market to the rest of us. So when India closed exports of rice-- India is an important rice exporter-- when they closed export of rice, they closed the market, the rice prices tripled. Not just because India did that, but India was part of the cause why that happened.
The rice price tripled in a matter of seven to eight months. India closed its export. Vietnam did the same. Cambodia did the same, et cetera. When Russia had a drought, it closed wheat exports. Russia is a significant wheat exporter. Not a major one, but a significant one. Wheat prices jumped on the Chicago futures market.
So governments are doing a good job adding to the problems created by nature. And then we have speculators, of course. We've got this huge amount of money flowing around, looking for either gold, or maize, or soybeans, or something else they can invest in. And the speculation played a major role in these huge price fluctuations that we saw in 2007, 2008, and again in '09 and '10.
Energy prices, I already mentioned, operates in two ways. When energy prices are high, investments are made in biofuel production. And also, when energy prices are high, the production costs go up.
The demand changes, on the other hand. India and China have been accused of causing the price fluctuations because they're eating too much meaning. If they just would stop doing that, then we wouldn't have price fluctuations. No, baloney. Perfectly baloney. It's not as though the Chinese go from no beef to a cow in one day. There is really no fluctua-- there's a steady increase in the demand for certain things like animal products in, say, China, who's primarily meat. Dairy products in India.
But there isn't much of a fluctuation. It's just a steady increase. Yes, it puts pressure on the system, but it doesn't cause these kinds of fluctuations. So let's blame China for what it should be blamed for, but nothing more.
Then, of course, there's a feedback from the farmers and from the traders to the price volatility. And this is what we call supply response. But coming back to the little guy in the little circle, the price response may be close to zero because he's stuck. And the price goes up. What am I going to do? I'm still not going to buy fertilizers at a price that's five times higher than it should be. I still don't have a market. So the price response may be very limited.
We have to live, as the dean said in the introduction, we have to learn to live with price volatility. It's going to be a very long time before we get back to anything close to stable food prices over time. We'll get back to that once we decide that we can do something about global warming. But until we decide that, we're going to have these fluctuations. I'm only showing fluctuations for corn, but I could show it for rice and wheat as well. It's very similar. You see the tremendous fluctuations to your right.
One other point we deal with in the book is the sustainability question. We're going to have to produce food sustainably, meaning we can't continue to damage natural resources in the process of producing food. We keep drawing down the groundwater level, we keep overusing the surface water, we keep doing damage to the natural resources in a number of other ways, we will eventually get into a situation where the doomsday people may be right. It won't be in my lifetime, but it may be in some of yours.
But look, we're stuck. We can't do this, because according to this, when income goes up, degradation goes up. So we can have one or the other. You can help people out of poverty, but then you're ruining the environment. Or you can protect the environment and keep people in poverty. And that is, in fact, what China has illustrated. They had tremendous economic growth and tremendous degradation of natural resources.
It doesn't have to be that way. Here's the new curve. And I'm showing this for deforestation and soil mining. There is a stage 1 in this curve where you have win/wins. Poor people in rural areas cause degradation to natural resources, not because they are mean, not because they don't know, but because they are trying to survive. So they're cutting down trees on the slopes. They're moving up that slope. They know full well that five years from now, that slope is going to be so eroded, they can't use that land anymore, but in the meantime, they survive.
Now, suppose a catalyst could come in and help those farmers, for example, by helping them to improve the soil fertility, whether by organic products or inorganic fertilizers. That would increase yields, it would reduce soil mining, and it would help the farmer earn a little more money. Triple win right there. You move down that graph. At some point, that farmer becomes a commercial farmer, and he's going to jump on the old fashioned curve.
That's why we need a second component, which I call full casting. We need to put into the production costs the cost of the damage we're doing to natural resources. We have to find a way of estimating the cost of doing damage to natural resources, then add that cost to the private production costs, and presumably, it ends up in the consumer price. I've given a number of speeches on precisely this topic, and the response is always the same. We can't afford it.
Guess what? Food prices are going to go up. We can't afford it-- particularly poor people can't afford that. Remember, they're paying 60% of their income on food. Yes, they are. So they can't afford to pay more.
Well, so we're saying that the living standard we have now has to be subsidized by future generations? That is what we're saying. We can't continue to say that.
The other fallacy in this argument is that if we don't do something now, the cost of production in the future will be much higher. As we degrade natural resources, the cost of production will go up, up, up. Whereas if we can maintain sustainable management of natural resources, the production costs will not go up. So yes, in the short run, food prices will go up. In the longer run, they will be lower. Not everybody agrees with that.
Say a few words about globalization. One of the issues we're looking at in this book is to what extent does globalization penetrate society? Is it really just the elites in the various countries playing a game called globalization, or does it actually penetrate into low-income people, people suffering from food insecurity? And of course, it depends on the particular context, but it's something that we need to pay attention to.
I'm going to skip this one because I've spent too much time already, but the book identifies eight pathways through which globalization-- actually, seven pathways and a solution through which globalization affect food security. We're going to skip that one. I got to leave something for you to read as you get hold of the book.
Finally, on ethical issues, we talk about social welfare functions. Can societies create social welfare functions by setting relative weights on material goods? So Dave Cole, who is a very wealthy person, would have a very low weight of additional income because he's already got so much. I'm a very poor person, so my weight would be very high. I'm just picking on you because you're sitting in the front row.
DAVE COLE: You sure are.
PER PINSTRUP-ANDERSEN: Yeah.
So the question is, can society agree on a set of relative weights so that you can transfer money from the well-to-do to the starving? Are we doing that? At least some societies are doing it. Can we be a little more concrete in this? Probably not.
So what do we do? We keep it under the carpet. We don't talk about it. Yes, we have transfer programs. We have various kinds of poverty relief programs in various countries. But we don't really talk about it.
Neither do we talk about some of the other socially-sensitive trade-off, namely, let's suppose that you want to help poor people. Do you then focus on the poorest of the poor? Very difficult to help the poorest of the poor above the poverty line. Or do you focus on those that are right below the poverty line, and just tip over the line?
Well, it depends on what your goal is. If your goal is to show that you have pulled as many people as possible per dollar spent out of poverty, you focus on those that are right below the line. Never mind the poorest of the poor. It's too difficult. Too costly.
If, on the other hand, you have a more humanitarian perspective, you might well focus on the poorest of the poor, knowing that you're going to spend a lot more resources for every one person you bring out of poverty. But those are the kinds of very sensitive ethical issues that we should talk about in class, and that we should talk about in the debate, because we are making implicit assumptions, if not explicit.
And then there's a question of freedom from hunger as a basic human right. The Supreme Court of India has just decided, after much debate, that every Indian has a basic human right to food. Now, just think about this for a minute. How would you implement that? They don't know either.
Two more slides and I'm done. What do we do about all of this? What are the priority-- what's the priority action? Well, each chapter has a set of priority actions, but the point here is that national policy interventions are context-specific. We cannot sit in Ithaca and design a policy that would solve a problem in some other country. It's context-specific, both spatially and time-wise.
But it's likely to include that list of things that I mentioned, and you will notice that most of those things have to do with the external constraint to the farmer, except for a couple at the bottom that really looks at small-scale traders-- because remember, they're poor, too. They're not nasty, as some people would say-- and transfers safety nets, health care, education, which of course, is not limited to the rural poor.
And I put this last one in red, because I want to make sure that I get this point across, and I mentioned it a couple of times already. Public action is essential for effective private sector to operate. It isn't an ideological question to get government off your back, because if you get government off your back before government has done what it needs to do, the private sector can't operate. You don't believe me? There are loads of examples from sub-Saharan Africa particularly where the public sector was pulled out and the private sector could not operate.
Priority action at the international level. In this country, we have anti-trust legislation. Sometimes it's enforced, sometimes it's not, but it exists. In most other countries, you have something like that. Internationally, we have nothing. Absolutely nothing regarding antitrust. Multinational corporations can do whatever they want.
We need land acquisition rules. The land grabbing in parts of Africa and in parts of Asia needs more transparency and rules. We don't have international rules for that. And when you have negotiations between a strong partner and a weak partner, and you have no regulations, you know how that's going to end.
We need orderly trade policies. We need the World Trade Organization to come around and say, India, if you want to stop exporting rice and cause so many millions of people to pay three times as much for rice, you can't be a member of our organization. Can we get them to do that? Probably not.
We need to protect the price signals. The market has to work. The market allocates resources. So when the food prices begin to go up, many governments put price control on. That's at best a Band-Aid solution, because it doesn't hold, of course. There will be gray markets, and black markets, and all kinds of other things going on.
But what's more important still is that the high price will not bring about more production because it's not permitted to penetrate into the farmer. And the low price won't create more consumption because it's not permitted to penetrate to the consumer.
My last point, we need objective monitoring and dissemination. There is so much misinformation out there, and that brings me back to my very first slide, or my second slide. There's so much misinformation.
Some of it is intentional. Look, if I am paid by public funds, if my organization depends on how much money I can raise from development assistance agencies like USAID, and I'm in food policy or something related to food and agriculture, I'm going to paint the picture as black as I can. And then I have my hand out.
Would I accuse any organization of having done that? Of course not. But every time the director general of FAO gave a speech during the period '07, '08, he had 50 million more hungry people to add to the statistics. There's a real moral hazard problem. That's what economists call when it's really interest conflict, whatever you want to call it.
The newspapers sell better with bad news. They exaggerate it beyond reason when food prices begin to go up. In fact, there were blogs that kept talking about the rapidly-increasing food prices six months after the food prices had dropped by 50%. Was it because they didn't know? No, probably not, but because they wanted more readers for the blog. And if I haven't offended everybody by know, I'll keep working on it. Thank you.
SPEAKER 1: This has been a production of Cornell University. On the web at cornell.edu.
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Nearly a billion people around the world still suffer from hunger and poor nutrition while a billion are overweight or obese. This imbalance highlights the need not only to focus on food production but also to implement successful food policies.
In a Chats in the Stacks book talk at Mann Library on March 8, 2012, Cornell economist Per Pinstrup-Andersen discusses his new book, "Food Policy for Developing Countries," coauthored with economist Derrill Watson II of the American University of Nigeria. As a comprehensive road map for understanding how governments and markets shape food policies and production, the book addresses the complex challenges--from issues of poverty and climate change to demographic and dietary transitions--for reducing hunger and achieving better human nutrition.
Dr. Pinstrup-Andersen is the H. E. Babcock Professor of Food, Nutrition, and Public Policy; the J. Thomas Clark Professor of Entrepreneurship and Professor of Applied Economics at Cornell University; and an adjunct professor at Copenhagen University. He has received numerous awards for his research and was named the World Food Prize Laureate in 2001.