Never mind the rice and wheat, Try potatoes!!

To Counter Problems of Food Aid, Try Spuds By ELISABETHROSENTHAL<http://query.nytimes.com/search/query?ppds=bylL&v1=ELISABETH%20ROSENTH\AL&fdq=19960101&td=sysdate&sort=newest&ac=ELISABETH%20ROSENTHAL&inline=nyt-per>VITORIA-GASTEIZ, Spain — With governments having trouble feeding the growingnumber of hungry poor and grain prices fluctuating wildly, food scientistsare proposing a novel solution for the global food crisis: Let them eatpotatoes.Grains like wheat and rice have long been staples of diets in most of theworld and the main currency of foodaid<http://topics.nytimes.com/top/reference/timestopics/subjects/f/food_aid/inde\x.html?inline=nyt-classifier>.Now, a number of scientists, nutritionists and aid specialists areincreasingly convinced that the potato should be playing a much larger roleto ensure a steady supply of food in the developing world.Poor countries could grow more potatoes, they say, to supplement or evenreplace grains that are most often shipped in from far away and are subjectto severe market gyrations.Even before a sharp price spike earlier this year, governments in countriesfromChina<http://topics.nytimes.com/top/news/international/countriesandterritories/c\hina/index.html?inline=nyt-geo>toPeru<http://topics.nytimes.com/top/news/international/countriesandterritories/pe\ru/index.html?inline=nyt-geo>toMalawi had begun urging both potato growing and eating as a way toensurefood security and build rural income.Production in China rose 50 percent from 2005 to 2007, and the governmenthas called potatoes "a way out of poverty." In Peru, where potatoes aretraditionally part of the highland diet, President AlanGarcía<http://topics.nytimes.com/top/reference/timestopics/people/g/alan_garcia/\index.html?inline=nyt-per>hasled a campaign to promote potato eating in cities. Schools, prisonsandarmy canteens are serving papapan, bread made with potatoes, helping toincrease potato consumption by 20 percent increase this year.A decade ago, the vast majority of potatoes were grown and eaten in thedeveloped world, mostly in Europe and the Americas. Today, China and India —neither big potato-eating countries in the past — rank first and third,respectively, in global potato production. In 2005, for the first time,developing countries produced a majority of the world's potatoes."Increasingly, the potato is being seen as a vital food-security crop and asubstitute for costly grain imports," said NeBambi Lutaladio, an expert onroots and tubers at the UnitedNations<http://topics.nytimes.com/top/reference/timestopics/organizations/u/unit\ed_nations/index.html?inline=nyt-org>Foodand Agriculture Organization in Rome. "Potato consumption is expandingstrongly in developing countries, where potato is an increasingly importantsource of food, employment and income."Though the price of grains has receded in recent months from historic highs,grains are still far more expensive than they were just two years ago. TheUnited Nations agency continues to strongly encourage countries to diversifyinto potato production, Mr. Lutaladio said, adding: "The world economy hasentered a phase of wild swings. New and even more severe high price eventscould be just around the corner."And so the potato's image is shifting from that of a food fit for peasantsand pigs (and associated mostly with a devastating famine in Ireland) to aserious nutritional aid and an object of scientific study. When the UnitedNations announced last year that 2008 would be the Year of the Potato, fewtook it seriously. That was before grain prices doubled between early 2007and spring 2008, and the United Nations World FoodProgram<http://topics.nytimes.com/top/reference/timestopics/organizations/w/worl\d_food_program/index.html?inline=nyt-org>announcedthat it needed an extra half billion dollars to buy grain.Dr. Pamela K. Anderson, director of the International Potato Center, aglobal scientific research center in Lima, Peru, said that as recently lastyear, the most common question she fielded concerned her favorite potatorecipe. "Now the food system is so fragile that people have stoppedlaughing. People are asking, 'How can potatoes help solve the problem?' "Dr. Anderson was one of dozens of international scientists who met thismonth here in the heart of Basque country at Neiker Tecnalia, a 200-year-oldpotato research center. Their goal: to discuss advances in potato farming,like the development of pest- and drought-resistant strains that could usedin poorer countries.Potatoes are a good source of protein, starch, vitamins and nutrients likezinc and iron. As a crop, they require less energy and water to grow thanwheat, taking just three months from planting to harvest. Since they areheavy and do not transport well, they are not generally traded on worldfinancial markets, making their price less vulnerable to speculation. Theyare not generally used to producebiofuels<http://topics.nytimes.com/top/reference/timestopics/subjects/b/biofuels\/index.html?inline=nyt-classifier>,a new use for food crops that has helped drive up grain prices. When grainprices skyrocketed, potato prices remained stable.Beyond that, potato yields can be easily increased in most of the world,where they are grown inefficiently and in small numbers.Thanks to the "green revolution" of the 1970s, yields of wheat, rice andcorn jumped by more than 50 percent in a decade as fertilizers and newplanting techniques were used. Potatoes never got that kind of attention.In poor countries, potato yields are still relatively low, at just one tofive tons of potatoes per hectare (about 2 1/2 acres), less than 15 percentthe yield in the developed world.From the perspective of traditional food aid programs — which buy or receivefood from where it can be produced cheaply and efficiently and send it towhere it is needed — potatoes have limitations.Because they spoil easily and are heavy to ship, groups like the World FoodProgram avoid them. Pound for pound, they contain less protein than wheat,although, looked at another way, an acre of potatoes yields more proteinthan an acre of wheat."They are quite perishable, especially in hotter climates; they sprout androt quite quickly," said Tina van den Briel, a nutrition expert at the WorldFood Program. She said, too, that potatoes were currently a staple food invery few countries, although they were widely used in stews."Moving from rice to potatoes is a big leap for people," she said.Nonetheless, the agency has made it a priority to increase production offood for aid in the countries where it is needed, both to lessentransportation costs when fuel costs are high and to aid local economies.Potato growth and consumption have already markedly increased in Africancountries in the past five years, although potatoes were introduced to thecontinent only about 100 years ago. In Rwanda potatoes have become thesecond-most important source of calories, after cassavas. Potato productionand consumption are also expanding rapidly in Nigeria and Egypt, accordingto the Food and Agriculture Organization.One sign that potato growing is spreading: The world's largest potatoprocessing company, McCain Foods Ltd., has opened factories in China andIndia in the past two years.The yield at a number of farms inIndia<http://topics.nytimes.com/top/news/international/countriesandterritories/i\ndia/index.html?inline=nyt-geo>doubledin the past two years, to 20 tons a hectare, after McCain gavebetter seeds to small farmers who supply its new factory, said DanielCaldiz, a company executive.In Chile, where about 50 percent of production comes from small farmers,government projects to provide better seeds have increased yields by 25percent in the past decade, said Horacio Lopez, a government potato expert.In poor countries, farmers seed new potatoes using leftovers from theprevious year's crop, which are often infected with pests. Internationalagricultural companies cultivate and export germ-free "clean seed" potatoesthat are much more productive, but these are expensive.The International Potato Center is trying to help poor countries producetheir own clean seed potato lines."When you plant a potato it gives you food security," Dr. Anderson said. "Itstrengthens the local economy, instead of just sending in food."

How to think about the crisis

Michael Perelman The Financial Crisis Goes Beyond FinanceThe crisis today in mortgage lending does not come as a surprise to me. I discussed the build up to the crisis in a book published last year, The Confiscation of American Prosperity (1). The book describes more than three decades of concerted efforts to restructure the economy to respond to the antiauthoritarian spirit of the 1960s. Most important of all, the counterrevolution to the 60s was concerned about a decline in the rate of profits. The objective was to remake the United States as a capitalist's utopia with strict market discipline for ordinary people, while showing special favors on business. Tax cuts, deregulation, and a more business-friendly legal structure became the order of the day.In this environment, the legal framework for union organization soon became unfriendly. Success showed up relatively quickly in the labor market, where capital halted the increase of wages by 1972 - the year when real hourly wages peaked. Since then wages have oscillated but never again reached that level.Profits began to recover, but on closer examination the recovery was unusual. In competitive industries, profits were not particularly high. Profits in producing goods concentrated in industries protected by intellectual property or government favoritism were better. But the big profits came in finance. Even major industrial firms, such as General Motors, Ford, or General Electric began relying on their financial divisions for much of their profits.What was happening? According to the textbook model of economic growth, new productivity translates into higher wages, which, in turn, create more demand, which spurs industry to produce newer or better products, increasing productivity. In recent decades, debt rather than income spurred demand.As profits recovered, more affluent people saw their portfolios increasing, creating what economists call the wealth effect: the increasing value of their stocks, and later of their houses, was treated as income, which generated demand. Frequently, people used their houses to borrow money to support this demand.Production of physical goods was largely neglected. I am reminded of a conversation between Samuel Johnson and James Boswell, a quarter millennium ago. Boswell observed:
"Very little business appeared to be going forward in Lichfield. I found however two strange manufactures for so inland a place, sail-cloth and streamers for ships: and I observed them making some saddle-cloths, and dressing sheep skins: but upon the whole, the busy hand of industry seemed to be quite slackened. "Surely, Sir, (said I,) you are an idle set of people.""Sir (said Johnson) "We are a City of Philosophers: we work with our Heads, and make the Boobies of Birmingham work for us with their hands."(2)Johnson, of course, was being ironic. The philosophers of the new economy were not. They breathlessly referred to a weightless economy (3). Tom Peters, the management guru, derided old-line businesses as "Lumpy-object purveyors" (4). Even Alan Greenspan is fond of rhapsodizing about how modern production techniques are making the economy lighter and lighter:
"The world of 1948 was vastly different from the world of 1996. The American economy, more then than now, was viewed as the ultimate in technology and productivity in virtually all fields of economic endeavor. The quintessential model of industrial might in those days was the array of vast, smoke-encased integrated steel mills in the Pittsburgh district and on the shores of Lake Michigan. Output was things, big physical things."Virtually unimaginable a half century ago was the extent to which concepts and ideas would substitute for physical resources and human brawn in the production of goods and services. In 1948 radios were still being powered by vacuum tubes. Today, transistors deliver far higher quality with a mere fraction of the bulk. Fiber-optics has [sic] replaced huge tonnages of copper wire, and advances in architectural and engineering design have made possible the construction of buildings with much greater floor space but significantly less physical material than the buildings erected just after World War II. Accordingly, while the weight of current economic output is probably only modestly higher than it was a half century ago, value added, adjusted for price change, has risen well over threefold".(5) Nobody seemed to sense that anything was awry. Leaders in the U.S. were content to let the modern equivalent of the boobies of Manchester produce their goods in Asian sweatshops, and then borrow the proceeds from their masters to support their consumption.The game depended upon continued growth, whether illusory or real. Deregulation helped to promote illusions of prosperity. So did the dot.com hysteria of the late 1990s. When the bubble burst, the Federal Reserve came to the rescue with low interest rates. Temporarily lacking sufficient confidence in the stock market, real estate seemed a better bet.Real estate prices soared. People could borrow more on their houses. And with rapidly rising real estate prices, people could comfortably lend money to people who could not afford the loans because, after all, real estate would always increase in value.To make the illusion even more solid, people believed that they could avoid risk. Ratings agencies told investors that paper based on this real estate was just a shade more risky than U.S. government bonds. To seal the deal, investors sold "insurance," which promised to cover losses if the investment would go sour.This insurance business was so brisk that the amount of insurance sold was many times more than the face value of the investments. After all, selling this insurance was an easy way to profit from real estate market, which had ahead to go nowhere but up.When the music stopped playing, the regulators discovered that nobody was watching the store. Far more insurance was sold than the insurers could afford to cover. The ratings agencies are putting their seal of approval on the paper to get more fees.The government just agreed to buy up bad debt to the tune of $700 billion, bailing out both crooks and incompetents. The government debt will give the neoliberals excuse to cut more programs to help needy people, while bailing out the rich.Something similar happened a few decades ago with another war, a different Bush, and the same John McCain. Many years ago, Lyndon Johnson, who would have just celebrated his hundredth birthday, found himself stuck in a war he couldn't win. He also knew that if he raised taxes to pay for the war, the public would demand an immediate halt with a fury that he could not resist. Johnson relied on borrowing, which raised interest rates.Savings and loan institutions, like the investment banks today, borrowed short and lent long. In this case, people put their savings in the banks and the banks lent out money on 30-year mortgages. To prevent gouging and make mortgages affordable, the savings and loans were prevented from paying interest rates high enough to keep depositors from exiting, which could leave them bankrupt.The Reagan administration, including daddy Bush, moved to deregulate the savings and loans. Given this newfound freedom, crooks and nincompoops (including the current President Bush's younger brother) rushed in to take advantage of profiting from other people's money. As the scope of this disaster was becoming obvious, five senators, including John McCain along with Alan Greenspan (perhaps the Godfather of the recent financial crisis), rushed in to defend one of the more egregious Savings and Loan operations run by Charles Keating. Oh, yes, a small savings-and-loan in Arkansas, which was connected with Bill Clinton (who later allowed Congress to deregulate the current financial system, led by Senator Phil Gramm, John McCain's chief economic adviser) also ran into difficulties.The savings-and-loan scam crashed leaving the government to pick up the pieces at a cost that is still debated, but which was still well over $100 billion - pocket change today.The difference today is that our politicians now promise effective regulation this time around, just as they did with Sarbanes-Oxley in the wake of crash of Enron and the rest of the dot.com boom.The Financial Side of the Financial CrisisThis crisis should be a teachable moment, but speculative excesses are a part of the DNA of capitalism. Leo Tolstoy began his epic novel, Anna Karenina, with the famous observation, "All happy families resemble one another, but each unhappy family is unhappy in its own way". Much the same can be said about depressions. Each depression seems unique and subject to as many interpretations as the most dysfunctional family. Hence what is unique to this crisis is the way that its build up departs from the general textbook model. Also, as I mentioned above, the other defining characteristic of this crisis is that debt rather than income spurred demand.Financial assets demand a different treatment. Capital reacts with horror when wages increase, demanding the Federal Reserve to slam on the brakes. In contrast, soaring prices of financial assets are presumed to be incontrovertible evidence of a healthy economy.The increasing value of these assets spurs people to increase consumption, often taking on debt, confident that their assets will appreciate even more. As Mark Twain observed about an earlier Gilded Age: "Beautiful credit! The foundation of modern society ... "I wasn't worth a cent two years ago, and now I owe two millions of dollars"."In 2000, when the excesses and frauds of Enron, World Com, and the dot.com boom came to light, financial markets shuddered. The Federal Reserve came to the rescue lowering interest rates, which reduced monthly mortgage payments, allowing people to buy more expensive housing.Once housing prices begin to rise, housing becomes an investment as well as the source of shelter. In addition, people, who suffered losses during the dot.com bust, saw housing is a safer investment than the stock market. Housing then transmuted into personal ATM machines, allowing people to borrow freely on the rising value of their property.Underlying this financial froth, something more ominous was occurring. Business refused to spend much for investment in productive activities. Again, the textbooks tell a different story. They teach that high profits translate into investment, which create jobs, spurring demand, and making the economy grow. Such was not the case this time around.Earlier this year, the British financial journalist, Martin Wolf, observed:
"The US itself looks almost like a giant hedge fund. The profits of financial companies jumped from below 5 per cent of total corporate profits, after tax, in 1982 to 41 per cent in 2007."(6)This estimate is probably too conservative because many nonfinancial companies increasingly depend upon finance. General Electric, and in their more prosperous years, Ford and General Motors, largely depended upon finance. Retail companies offer credit cards in effect, selling insurance on their products in the form of extended warranties.The U.S. Department of Commerce reported that in 1992 about a third of all workers employed in U.S. manufacturing industries were actually doing service-type jobs (e.g., in finance, purchasing, marketing, and administration). Updating this work, needless to say, has not been a high priority for government agencies.Corporations also spend mind-boggling quantities of money just to purchase their own stock. After all, increasing stock prices boost executives' bonuses. For years, Exxon has been spending more money for stock buybacks than capital expenditures, all the while whining that the company needs more incentives to drill for oil.What investment does occur is largely financed by depreciation allowances rather than previous profits. John Bellamy Foster offers an important measure of this reluctance to invest:
"Nine out of the ten years with the lowest net non-residential fixed investment as a percent of GDP over the last half century (up through 2006) were in the 1990s and 2000s. Between 1986 and 2006, in only one year - 2000, just before the stock market crash-did the percent of GDP represented by net private non-residential fixed investment reach the average for 1960-79 (4.2 percent). This failure to invest is clearly not due to a lack of investment-seeking surplus. One indicator of this is that corporations are now sitting on a mountain of cash - in excess of $600 billion in corporate savings that have built up at the same time that investment has been declining due to a lack of profitable outlets."(7)Finance is attractive for another reason: it employs relatively few people. The intriguingly-named FIRE sector, which includes finance, investment, and real estate, employs only about 8 percent of the private labor force. So, 8 percent of the workers generate 41 percent of the profits. Massive investments in information processing make such results possible.Of the investment that does appear, finance may represent a disproportionate share. The government does not have recent data on types of investment by industry. The data do show that investment on information processing and software is about 37 percent greater than investment in industrial equipment and manufacturing equipment. Of course, information processing is also important in manufacturing, but the data is suggestive. Where Did The Money Go and Will Jobs Also Disappear?On Monday, September 29 the stock market lost more than $1 trillion, about as much money as the Gross Domestic Product for an entire month. The next day, two thirds of the value suddenly reappeared. Yet, for the most part the tumult left most people unaffected, at least for the moment. More important, will the evaporation of all of this wealth affect ordinary people?Karl Marx's concept of fictitious capital is very useful in understanding these wild swings. I have explored this subject in more detail in an earlier book, entitled Marx's Crises Theory: Scarcity, Labor, and Finance.(8)For Marx, capitalism uses markets to distribute labor into productive activities, but it does so very imperfectly. Part of the problem is that lack of knowledge about the future causes imperfect investments. These imperfections magnify as the economy seems to prosper making people become giddy about their chances of success.Crises are capitalism's way of purging unproductive investments. In this way, crises eventually make the economy stronger, unless they become so severe that they shatter the foundation of capitalism.The crises will become more violent if the distribution of income becomes too lopsided, leaving investors flush with money, while consumers are relatively strapped. Massive amounts of money will flow into speculative ventures, creating bubbles. In effect, a market which is supposed to be a wonderful feedback system to inform capitalists about the needs of society, takes on a perverse logic of its own.Eventually, the bubble pops and there is hell to pay. The question today is how extreme this shock will be. Capitalism has shown quite a bit of resilience in the past. What is happening now could turn out to be relatively mild or could be severe.I use San Francisco as an analogy for my students. There will eventually be a serious earthquake that will do enormous damage. Nobody can predict what will happen. Even when the earth begins to tremble, the severity of the event may be in doubt.Wall Street uses a somewhat related term, leverage, to describe the ability to magnify potential profits by investing borrowed money. When the economy begins leveraging, business borrows money to invest - not necessarily in productive assets. Leveraging can continue as long as people feel confident enough to finance these investments.The government's modest limits on leverage have been systematically weakened, to the point where investment banks would be putting up as little as 3 cents, and even less, for each dollar invested. The riskiness of such practice should be obvious. A mere 3% drop in the investment would wipe out the bank's own share of the investment.The Federal Reserve also promoted increased leverage by holding interest rates low. Other regulators also paved the way for more leverage. Companies that choose the path of lower profits and lower risks are written off as stodgy and old-fashioned. Their stocks will flounder, reducing executive' bonuses. So, Wall Street investors willingly increased their leverage and risk. After all, investors prefer companies with high profits. Few are willing to take the time or have the expertise to understand the risks that might make profits appear high. In Wall Street-talk, increasing leverage works so long as investors maintain a balance between fear and greed. By fear, Wall Street means a reluctance to take on too much risk. Although Wall Street normally applauds greed, it associates excess greed with a foolhardy approach toward risk. During euphoric times when fear of risk subsides, people put money in ridiculous schemes.In his delightful book, Charles Mackay, related tales of shady operators bilking early investors a few centuries ago.
"One projector set up a company to profit from a wheel for perpetual motion. Another projector proposed "A company for carrying on an undertaking of great advantage, but nobody to know what it is." "Next morning, at nine o'clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when be shut up at three o'clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2000 pounds. He set off the same evening for the Continent. He was never heard of again."(9)
The newfound wealth during times of growing leverage can create more demand, which can increase jobs and wages. As noted previously, such has not been the case. Speculative wealth has not produced growth in wages for ordinary people or any significant growth in jobs. In fact, cutting jobs to increase profits has been a major factor in sustaining the boom. A few years ago, the business press praised this practice as financial engineering, as if it were providing a productive service.One factor that contributed to the lopsided economic growth without jobs, which characterized the recent decades, is the practice of leveraged buyouts. Private equity companies, as they are known, buy up other companies using borrowed money, often based on the assets of the target companies. The takeover artists claim that they can create managerial efficiencies, making their takeover look attractive to potential investors. In reality, they charge their targets exorbitant fees, often paid for by debt that the companies must eventually pay back. Then, to cover this burden, the companies must cut both wages and jobs, as well as looting significant value from pension plans. Private equity businesses than turn around and sell these supposedly rejuvenated, but actually hobbled companies to an unsuspecting public, which fail to see the similarity between such investments and the perpetual motion machine that Mackay described.In describing the necessity of a bailout for finance, the alarmists, who are not necessarily wrong, point to the job losses associated with the corporate restructurings that will follow bankruptcies. But these restructurings have been going on for decades. The bailout, however, is intended to facilitate a continuation of the destructive financial practices, which have also caused significant hardship to labor.Obviously, a collapse will also harm workers and other ordinary people, but in the wake of a collapse the country will stand a better chance to restore some sanity to the economy.Conclusion: Capitalism 101 (A Foundational Course)Capitalism is the most efficient system known to mankind. Central to this efficiency is the supposed ability of markets to channel capital where it is most effective. The current financial crisis might be expected to throw some doubts on this dogma, but I do not expect that to be the case.For example, in 2001, in the wake of dot.com bubble, the New York Times reported on one of the many excesses of the period:
"In the last two years, 100 million miles of optical fiber - more than enough to reach the sun - were laid around the world as companies spent $35 billion to build Internet-inspired communications networks. But after a string of corporate bankruptcies, fears are spreading that it will be many years before these grandiose systems are ever fully used."(10)
As mentioned earlier, the response was not to rethink the system, but to double down lowering interest rates to re-ignite the stock market. Investors, the government, and even ordinary people applauded the decision of Federal Reserve Chairman Greenspan, who appeared to be the wisest man in the universe at the time.Greenspan's manipulation of the interest rate appeared to be so beneficial, because it occurred without any direct effect on the proverbial taxpayer. Parenthetically, why is it that this taxpayer ranks so much higher in our concern relative to the workers who make everything possible?In retrospect, Greenspan's policy provided the fuel that helped to make the current crisis more threatening. Just as the solution to the dot.com crisis produced the current crisis, the present bailout, if it works at all, will create the preconditions for the next one.The purpose of the bailout is to create confidence. Back in the 19th-century, the governor of Illinois gave an excellent analysis of the way confidence worked in financial markets. He said that confidence "could only exist when the bulk of the people were under a delusion. According to their views, if the banks owed five times as much as they were able to pay and yet if the whole people could be persuaded to believe this incredible falsehood that all were able to pay, this was 'confidence'."His words may perhaps be the most succinct analysis of fictitious capital that I have read.Now class, here is the question for all the students in Capitalism 101: explain to me how is that markets are so efficient in directing capital where it is most needed. Extra credit if you can do so without any giggles.
Michael Perelman is professor of economics at California State University at Chico, and the author of fifteen books, including Steal This Idea: Intellectual Property Rights and the Corporate Confiscation of Creativity, The Perverse Economy: The Impact of Markets on People and the Environment, Railroading Economics: The Creation of the Free Market Mythology, and The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. His daily reflections on various political economic issues can be found at his blog, Unsettling Economics.
References:(1) Michael Perelman, The Confiscation of American Prosperity: From Right Wing Extremism and Economic Ideology to the Next Great Depression, Palgrave Macmillan (2007)
(2) James Boswell, Life of Johnson, 6 vols., Oxford University Press (1934-64)
(3) Diane Coyle, The Weightless World: Strategies for Managing the Digital Economy, MIT Press (1998).
(4) Tom Peters, The Circle of Innovation: You can't shrink your way to greatness, Knopf (1997).(5) Alan Greenspan, "Remarks" at the 80th Anniversary Awards Dinner of The Conference Board, New York, October 16, 1996.
(6) Martin Wolf, "Why it is so hard to keep the financial sector caged", Financial Times, February 6, 2008.
(7) John Bellamy Foster, "The Financialization of Capital and the Crisis", Monthly Review, April 2008.
(8) Michael Perelman, Marx's crises theory: Scarcity, labor, and finance, Greenwood Press (1987)
(9) Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (1852)(10) Simon Romero, "Shining Future Of Fiber Optics Loses Glimmer", The New York Times, June 18, 2001.

Rice Scientists Call for Increased Funding for Research to Boost Crops

As the world grapples with high rice prices, scientists are racing to find new varieties that could feed more people, using fewer resources. Scientists say the world needs to invest more in rice research if it is to hold off famine. Heda Bayron reports from the headquarters of the International Rice Research Institute in Los Baños, Philippines.
Farmers tend a rice field ripe for harvest. The rice stalks bend in the wind, heavy with golden grains.
The farmers chase birds away from the rice growing at the International Rice Research Institute, in the town of Los Baños.
As prices skyrocket, many fear that 700 million of the world's poor will be unable to afford rice.
At the institute, scientists race to find rice varieties that feed more people, but require fewer resources to grow.
Robert Zeigler, the institute's director, says there are no shortcut solutions to the rise in prices.
"Demand growth has continued steadily for the past 50 years, population growth continues, we have economic growth and development, all of which drive up food consumption... But production hasn't kept up with demand," he said.
Many factors have made it hard for rice farmers around the world to keep up with rising demand: increased competition for water, rising fuel and fertilizer costs and bad weather.
And land for farming grows scarce. Along the highway to the rice institute, factories, malls and houses stand on land that once held rice paddies. The problem is found all over Asia.
Zeigler says a second Green Revolution is the best way to solve the problem.
Scientific developments in the 1960s and 70s led to the first Green Revolution - increased farm yields in many developing nations, and lower rice prices, yet improved farm incomes. But for several years, yields have been flat in Asia's major rice growing region.
"This time around it's going to be much more complex," he said. "We can't depend upon area expansion or new land for agriculture, so we're going to have to increase productivity on existing land. So that's going to involve far better practices by farmers in terms of managing their water, managing their fertilizer, managing their labor. It would mean rice varieties, wheat varieties and maize varieties that are able to produce far more yield with the same inputs."
The institute says average rice yields must rise at an annual rate of at least 50 kilograms a hectare over the next 10 years to keep up with demand. But public investment in agriculture has fallen by a third from its level in the mid-1970s.
"We need a major commitment on the part of major national and international agencies to make sure the resources are there to drive that second Green Revolution. … That includes irrigation infrastructure, farm-to-market roads and of course it includes research capacity," he said.
It is not lost on some people in the Philippines that the world's best rice researchers are based in the country, but still it suffers from rising prices. Just a few decades ago, the country grew enough to feed itself, but now it must import rice.
These poor Filipinos line up for hours to buy government-subsidized rice. Each person gets just three kilos at a time.
Inside the institute's seed vaults are 100,000 varieties of rice from all over the world, safeguarded for future generations.
Scientists study the genetics of the seeds, trying to breed more nutritious varieties and ones that can withstand floods and droughts. Successful varieties are given to farmers for planting.
But Zeigler says more studies must be done.
"We need to much more effectively tap into the genetic potential of rice," he said. "We need to understand better the ecology of the rice fields and how we can manage the rice fields such that insects, pests and diseases don't cause losses. We need to understand the soil and water ecology much better."
The institute needs $60 million a year to continue research and development. But its current budget is short by a third of that amount.
Zeigler and other institute officials have been knocking on donors' doors, carrying the message that now, more than ever, research may be the world's last line of defense against hunger. (VOA)

China is major contributor to world food security: minister

China is a major contributor to world food security by feeding nearly a quarter of the global population and involving in aid to other countries, China's agriculture minister said on Tuesday.
"China has managed to feed 1.3 billion people, mostly relying on domestic production, which in itself is a major contribution to the world food security," Agriculture Minister Sun Zhengcai told a world summit on food security hosted by the UN Food and Agriculture Organization (FAO).
The three-day summit, which kicked off Tuesday, was called at a time when the world is experiencing a dramatic increase in food prices.
Sun said besides the success of feeding almost a quarter of the world population, China is also committed to contributing to the development of the world food and agriculture.
"China actively makes contributions and donations, within the limits of its capacity, to international food and agriculture agencies and provides food assistance to countries in food emergencies," he said.
"On the other hand, China is taking advantage of its agricultural expertise such as hybrid rice to assist other developing countries to increase agriculture and food production," the minister added.
China has established or is establishing over 20 demonstration centers of agriculture technology in Asia, Africa and Latin America, and has dispatched nearly 1,000 agricultural experts and technicians to other developing countries to train locals, according to the Chinese official.
China will continue to strengthen the exchange and cooperation with other countries in the field of food and agriculture, he said. (China Daily)

UN chief calls for food output hike

UN chief Ban Ki-moon called for a huge rise in food production today as world leaders opened a summit on the food price crisis that threatens hunger, poverty and conflict worldwide.
In talks clouded by controversy focused on the presidents of Zimbabwe and Iran, the UN secretary general said food output had to rise 50 per cent by 2030 to meet rising demand.
"We have a historic opportunity to revitalise agriculture," Mr Ban told some 50 heads of state and government, gathered for the three-day summit.
"I call on you to take bold and urgent steps to address the root causes of this global food crisis," he said at the Food and Agriculture Organisation headquarters in Rome.
With food prices at a 30-year high, the UN secretary general warned that while the world must "respond immediately", it must also put the long-term focus on "improving food security."
Prices have doubled in three years, according to the World Bank, sparking riots in Egypt and Haiti and in many African nations. Brazil, Vietnam, India and Egypt have all imposed food export restrictions.
Rising use of biofuels, trade restrictions, increased demand from Asia to serve changing diets, poor harvests and increasing transport costs have all been blamed for the price rise.
World Bank President Robert Zoellick has said two billion people across the world are struggling with high food prices, and 100 million extra people in poor countries may be pushed into poverty by the crisis.
The UN chief said it was also essential for the Doha round of World Trade Organisation talks to be completed as quickly as possible to alleviate the crisis.
UN agencies have launched appeals for more than $US1 billion ($1.05 billion) to alleviate the food crisis. Saudi Arabia has already given $US500 million ($523.62 million) to a World Food Program appeal.
But the charity Oxfam has accused the international community of spending a "pittance" on supporting agriculture in developing countries compared to the huge support given to farmers in rich Western countries.
Oxfam stressed that European and North American biofuel policies are only one of several factors causing higher food prices.
Estimates vary on the extent to which demand for biofuels has pushed up food prices, ranging from 30 per cent by some experts to less than three per cent according to the US Agriculture Department.
Brazilian President Luiz Inacio Lula da Silva defended biofuels, saying they could be an "important tool" against food insecurity.
"Biofuels are not bandits ... We must remove the smokescreen of powerful lobbies that blame ethanol production for the rise in food prices. It's a mockery, an affront," he said.
Japanese Prime Minister Yasuo Fukuda urged fellow leaders to release excess stockpiles of food to ease shortages in poorer countries, offering more than 300,000 tonnes of imported rice held by Japan.
The president of Senegal, Abdoulaye Wade, voiced disappointment with the UN food body.
"We can't continue to be helped like beggars," he said. "I have been disappointed ... Don't keep imposing institutions (and) experts on us. Africa is not what it was 20 years ago. Stop this farce."
The summit opened amid controversy over the presence of Zimbabwean President Robert Mugabe, whose attendance at the talks was described as "obscene" by Britain's International Development Minister Douglas Alexander.
Mr Mugabe defied the criticism when he took the podium at the Rome meeting, claiming that Britain was seeking to "cripple Zimbabwe's economy and thereby effect illegal regime change in our country".
Iranian President Mahmoud Ahmadinejad meanwhile slammed the West over its handling of the food crisis, accusing certain "big powers" of acting with sometimes "devilish" motives.
He also questioned whether the crisis should be handled within the UN system at all.
"How can the mechanism of the UN improve the situation when some of these powers decide for the Security Council which is the highest decision-making body and make instrumental use of it?" he said. (The Australian)

Food crisis? What food crisis?

FINALLY, a voice from the UN is saying something sensible about the world food crisis. John Holmes, the UN's humanitarian aid chief, is asking UN agencies to cool some of their dire rhetoric about the impact of high food prices.
By the yardstick of the last big food crisis in 1974, that had US Secretary of State Henry Kissinger running to an emergency UN conference in Rome to pledge that "within a decade no child should go to bed hungry", it is not such a severe event. In terms of real prices the price hike is not so high as it seems; in terms of the rise of consumer buying power over the last 34 years it is not biting so deeply.
Moreover, take wheat and rice out of the equation and many food prices have not risen so significantly — millet and barley among grains and most root staples — potatoes, yams, cassava. Not least, the crisis's immediate solution, as it was in 1974, is only a harvest away. The sharp price rises of 1974 encouraged farmers to plant more and sell more and very soon the price of food was at historic lows.
Most of the Third World's poor — almost 75 per cent — live on the land, farming in small villagers. For them the food crisis could be a great opportunity. At last they can get a decent price for their produce — but only if governments allow the local market to pass along the price increases of the international market. Alas, many governments, fearful of alienating their more vocal urban electorates, are introducing policies that, as always in most developing countries, protect the urban dweller at the expense of the farmer.
The "world food crisis" of 2008 is a historic opportunity to allow the terms of trade to shift in favour of the rural poor. Food prices will fall of their own accord within six months to a year, but they are unlikely to fall as fast and far as they did in 1974 because the demand for food is increasing thanks to the pace of development not just in China and India but in Africa and Latin America too.
If governments can help the process along by stepping up the pace of building small rural feeder roads so crops can be moved to market, encouraging the use of fertilizer, even with subsidies, and allowing the introduction of genetically improved crops despite the Luddite policies of the European Union, then enormous steps can be taken in improving the lives of the rural poor. One has only to look at Nigeria and Malawi, two countries which in the last few years have engineered a revolution in agriculture by doing some of this.
In Nigeria, according to the International Monetary Fund, agricultural growth is now 8 per cent a year, almost as good as the growth in the oil sector. (However, this figure is regarded as somewhat too high by others) Malawi's maize harvest has increased by a third in a single year.
When the great Irish famine got under way 170 years ago, Charles Trevelyan, the British Treasury official responsible for famine policy, refused to allow the procurement of home cereals for relief because it would "disturb the market". In Bernard Shaw's "Man and Superman", the returned Irish American Malone, insists on calling the famine "the starvation".
"Me father died of starvation in the black '47. Maybe you've heard of it?" "The famine?"
"No, the starvation. When a country is full of food and exporting it, there can be no famine. Me father was starved dead and I was starved out to America in me mother's arms."
Those governments who insist on imposing a status quo in their local rural market place are condemned to have their poorest people suffering or even dying because of it. A professor of economics at Oxford, Paul Collier, who is well known for his exploration of what makes people poor, has recently written that "the most realistic way to raise global food supply is to replicate the Brazilian model of large technologically sophisticated agro-companies supplying for the world market". This is nonsense. In some sparsely inhabited countries this might make sense. But where peasants are thick on the ground the most productive policy is to give peasants their head.
The countries that pioneered the East Asian miracle, Japan, Taiwan and South Korea, were the countries that had vigorous land reform and split up their feudal estates in favour of the peasant. More recently, it was done in West Bengal, India. As long ago as the 1970s the World Bank found in study after study that a smaller average size of holding and a low concentration of ownership produced an increase in output per hectare.
The solution to the current "world food crisis" is right under most developing countries' noses. They should trust and help the peasant to respond to market forces. If some very poor people remain hungry then governments can buy locally and feed them at special low price shops. (Khaleej Times)
Jonathan Power is a widely published commentator and can be reached at JonatPower@aol.com

Irrational policies making food crisis worse

By Sebastian Mallaby
WASHINGTON: We are now several months into the global food crisis, which is a much bigger deal than the sub-prime meltdown for most people in the world. Food prices have almost doubled in three years, threatening to push 100 million people into absolute poverty, undoing much of the development progress of the past few years. The new hunger has triggered riots from Haiti to Egypt to Ethiopia, threatening political stability; it has conjured up a raft of protectionist policies, threatening globalisation. And yet the response to this crisis from governments the world over has been lackadaisical or worse.Start with the lunatic story of rice stockpiles in Japan. A new paper from the Center for Global Development describes how Japan’s government imports rice in order to comply with its global trade commitments but withholds most of that rice from consumers lest they decide they prefer it to the local sort. Japanese traditionalists view the consumption of sticky, short-grained rice as a patriotic duty. So rather than letting Mrs Watanabe corrupt her children’s dietary habits, Japan stores much of its imported rice until it has become unfit for human consumption, whereupon it is sold to feed livestock.From the perspective of Japan, stockpiling rice is a costly exercise in chauvinism, but Japan can afford that. From the world’s perspective, the stockpiling is more serious. More than 3 billion people depend on rice as their daily staple, and half of them are very poor. Japan could save many of them from hunger if it released its stocks.The scandal is not just Japanese, however. In order for Japan to sell its rice outside its borders, it needs permission from the countries that supplied it the United States, Thailand and Vietnam. A bit of US leadership could deliver that permission easily, but the Bush administration is apparently worried about a backlash from American rice growers who see no downside in high prices, thank you very much. Not for the first time in Washington do the fat welfare queens of the farm lobby trample on the poorest people in the world.Speaking of welfare queens, Congress passed a farm bill last week with thunderous bipartisan support. The bill includes reasonable subsidies for low-income Americans hit by high food prices, but it also sprays money at farmers who already earn more than the average taxpayer and contains shockingly little for the world’s poor. Congress is considering a separate bill that would boost international food aid more substantially. But that measure has been met with shameful indifference by lawmakers and consequently has stalled.Congress won’t even act on a common-sense proposal from the Bush administration that food aid be reformed. If the United States bought some of the food that it donates from other countries, it could get aid to the needy faster and more cheaply. But that would upset American farmers and shipping interests, as a new Council on Foreign Relations paper emphasizes. The president’s proposal has few takers on the Hill.The Europeans, for their part, have their own way of entrenching hunger. Just as Japan is wedded to its rice culture, Europe is irrationally hostile to genetically modified food. Study after study has found no danger in seeds that have been manipulated to grow better, withstand insects or survive in arid soil. But the Europeans still feel squeamish, and their hang-up deters Africans from taking advantage of crop science lest their exports be barred from European markets. Again, a peccadillo that to Europeans is affordable starves people in the poor world.Finally, poor countries themselves have made things worse. Panicked at the prospect of food riots, countries with crop surpluses have forbidden exports in an attempt to bottle up supply and keep prices down. More than 40 countries have imposed some kind of export restraint, with the result that countries suffering food deficits have seen prices hit the roof. This nationalised hoarding is frustrating international relief efforts. The World Food Programme has sought to buy food from countries with surpluses, such as Pakistan, to ship to desperate neighbours such as Afghanistan. But Pakistan drags its feet about selling.Part of the solution to the food crisis, as the Oxford economist Paul Collier has written, is to promote large-scale commercial agriculture in the poor world. But for that to happen, investors have to know that there will be a market for their exports. They won’t risk their money if Congress is going to subsidise their American competitors. They won’t risk their money if European prejudice is going to prevent them from using the best seeds that scientists offer. And they won’t risk their money if the governments of developing countries short-circuit their profits with crazy export bans.In short, the governments of the world are conspiring to undermine farming in developing countries. Do they MEAN to inflict hunger on tens of millions of people?—Dawn/ The LAT-WP News Service © The Washington Post