Stanford University

Agriculture

A walk on the wild side

Authors
David Lobell
News Type
Commentary
Date
Paragraphs

Feeding a growing population in a hotter world will require exploiting a far broader range of crop diversity than now — and that means valuing wild genes.

Over much of the world, the growing season of 2050 will probably be warmer than the hottest of recent years, with more variable rainfall. If we continue to grow the same crops in the same way, climate change will contribute to yield declines in many places. With potentially less food to feed more people, we have no choice but to adapt agriculture to the new conditions.

To some extent, adaptation can be done by moving crops to more favourable areas and by agronomic tweaks. But that will almost certainly not be enough. We will have to give crops a genetic helping hand, infusing them with new genes to allow them to better cope with new climates, and the new pests and diseases they will bring. Where are these genes going to come from?

Hero Image
NCC 11 11
All News button
1

Worldwide Inflation and International Monetary Reform: Exchange Rates or Interest Rates?

-

Ronald I. McKinnon is an applied economist whose primary interests are international economics and economic development-with strong secondary interests in transitional economies and fiscal federalism. Understanding financial institutions in general, and monetary institutions in particular, is central to his teaching and research. His interests range from the proper regulation of banks and financial markets in poorer countries to the historical evolution of global and regional monetary systems. His books, numerous articles in professional journals, and op-eds in the financial press such as The Economist, The Financial Times, and The Wall Street Journal reflect this range of interests.

 

 

Event Summary

Professor McKinnon first outlines the two major assumptions behind his paper (available on this page). First, that from December 2008 to August 2011, an inflow of "hot money" to emerging economies resulted from low U.S., European, and Japanese interest rates. Since then, the trend has reversed in the wake of the European banking crisis and bank lending has fallen. Second, the dollar remains the widespread central bank reserve currency despite instability in the U.S. system. 

 

McKinnon voices concern about Federal Reserve Chairman Ben Bernanke's zero interest rate policy, calling it an overreaction to the crisis and a "lose-lose" policy as it deters investment in the U.S. while simultaneously spurring destabilizing hot money flows to surrounding emerging markets. These countries are in turn forced to suppress interest rates to mitigate the inflows, and to build up dollar reserves to keep exchange rates in check. The zero interest rate policy also stimulates carry trades in commodities by speculators.

 

The belief that under a zero interest rate regime, inflation will stimulate the economy by bringing real interest rates to negative levels, is misplaced in McKinnon's view. He argues that this simply adds uncertainty and interferes with efficient bank intermediation, as banks hold high excess reserves and tighten lending, causing a procyclical contraction as has been seen in the United States and Europe. He contrasts this approach with China, which stabilized its economy following the “dot-com” bust by expanding rather than contracting bank credit. He criticizes U.S. pressure on China to appreciate or float its currency, asserting that these strategies would fail to reduce China's trade surplus.

 

McKinnon suggests that international reforms should target interest rates instead of exchange rates.  He recommends coordination between central banks of the major industrialized countries, especially the United States, European countries, and Japan - to collectively raise interest rates to approximately 2%. This would improve overall bank intermediation, and would benefit both central and peripheral countries in Europe.

 

A question and answer session following the talked addressed topics including: the likelihood of a coordinated effort between central banks; the potential effects of Kucinich's monetary reform proposal; the potential negative effects on real growth from carry trades, and whether this is a cause for concern; and the effects of bank borrowing trends in Europe on the European monetary system.

Download pdf

CISAC Conference Room

Ronald I. McKinnon

Shorenstein APARC
Stanford University
Encina Hall, Room E301
Stanford, CA 94305-6055

(650) 723-9741 (650) 723-6530
0
William D. Eberle Professor of International Economics
R_McKinnon_headshot.jpg PhD

Ronald McKinnon is the William D. Eberle Professor of International Economics at Stanford University. Currently, he is researching trade and financial policy in less-developed countries, the transition from socialism in Asia and Eastern Europe, the foreign exchange market and U.S.-Japan trade disputes, European monetary unification and international monetary reform, and the economics of market-preserving federalism.

Recent books by McKinnon include The Order of Economic Liberalization: Financial Control on the Transition to a Market Economy, 2nd edition (1993); The Rules of the Game: International Money and Exchange Rates (1996); and Dollar and Yen: Resolving Economic Conflict between the United States and Japan (with K. Ohno, 1997). Recent (1997) articles include "Credible Liberalizations and International Capital Flows: The Overborrowing Syndrome" (with H. Pill); "The East Asian Dollar Standard, Life after Death?" (1999); and "The Syndrome of the Ever-Higher Yen: American Mercantile Pressure on Japanese Monetary Policy" (with K. Ohno and K. Shirono, 1999). McKinnon teaches international trade and finance, economic development, money and banking, and financial control in developing and transitional socialist economies.

Ronald I. McKinnon William D. Eberle Professor of International Economics (Emeritus) Speaker Stanford University
Seminars
European and Global Economic Crisis Series

Eric Lambin

473 Via Ortega
Y2E2 room 371
Stanford, CA 94305-4205

(650) 724-9825
0
George and Setsuko Ishiyama Provostial Professor
Senior Fellow, Stanford Woods Institute for the Environment
FSE Affiliated Faculty
Screen_shot_2011-10-21_at_12.14.24_PM.png MS, PhD

Dr. Lambin's research is in the area of human-environment interactions in land systems. He develops integrated approaches to study land use change by linking remote sensing and socio-economic data. This includes research to better detect subtle land changes based on time series of Earth observation satellites at multiple scales. He aims at better modeling causes and impacts of deforestation, dryland degradation, agricultural intensification, and conflicts between wildlife and agriculture around natural reserves. He also studies responses by rural communities to environmental changes. He focuses on land use transitions - i.e., the shift from deforestation (or land degradation) to reforestation (or land sparing for nature) that is taking place in some forest countries or drylands. This research identifies the conditions for a sustainable land use by rural communities. He also conducts projects on the impact of land change on vector-borne disease, through integrated analyzes of interactions between people, vectors, animal hosts and land. His research is mostly focused on tropical regions.

Quantification and reduction of uncertainties in projections of climate impacts on drought and agriculture for North America

Introduction to the Problem: Agricultural productivity is highly dependent on climate variability and is thus susceptible to future changes including temperature extremes and drought. The latter is expected to increase in frequency regionally over this century.

U.S. ethanol policy major contributor to global food price volatility

Authors
News Type
News
Date
Paragraphs
U.S. ethanol policy may be the single most significant contributor to world food price instability, states a Stanford study on the global costs of American ethanol. The rapid rise of biofuels has tied energy and agricultural markets together, making it difficult to assess one without understanding the other.

The price of corn recently hit an all time high, a departure from a long-term trend that has seen the cost of corn decline with each passing decade. Price spikes have happened before, and some experts viewed the latest jump as part of this familiar cycle. Stanford food policy economists Rosamond L. Naylor and Walter P. Falcon alternatively argue in a new paper released in The American Interest that we have entered a new era where agricultural commodity prices are increasingly driven by U.S. biofuel policies. This food and fuel linkage has, and will continue to have, major implications for global food prices and the world’s poor.

Over the last decade, the U.S. ethanol industry experienced a major increase in production and consumption as a result of beneficiary of tax breaks, tariffs and government mandates. In 2005, MTBE was phased out as a gasoline additive because of environmental and health risks, and ethanol became the preferred MTBE substitute. Production was further supported with a mandate to reach a minimum target of 15 billion gallons by 2015. 

A jump in the price of crude oil gave a further boost to ethanol as a potential replacement for petroleum. As a result, 40% of the U.S. corn crop is now devoted to ethanol production. These policies have been promoted under the banner of protecting the American farm industry, securing energy independence, and decreasing greenhouse gas emissions, and they have succeeded on a number of these fronts.

However, as a major global producer and exporter of corn, the rapid rise of ethanol production in the U.S. during such a short period of time has produced a fundamental change in the structure of demand for corn. Increased demand has led to higher and more volatile food prices, not only for corn but other agricultural commodities. If the United States, along with the rest of the G-20, is serious about stabilizing global food prices, U.S. domestic biofuels policy in its entirety will need to be re-examined.

High prices are a boon to the U.S. farm sector, but can be devastating for poor consumers with minimal income to spend on food. Food riots have broken out in several countries suggesting the new volatility in the price of staple crops has had a severe impact on developing economies. Where once the policies of the U.S. helped keep agricultural prices on an even keel, current support for the production of corn-based ethanol has reversed this stabilizing role. 

Given the bullish financial outlook for the U.S. agricultural sector, this is an ideal time to begin dismantling both ethanol and corn (and other major commodity) subsidies. Corn-based ethanol tax and tariff provisions together cost the federal government around $6 billion annually. Cutting these subsidies would help reduce the Federal budget deficit without harming the rural economy.

The trickier political and economic questions relate to reassessing mandates, and are likely off the table with the 2012 elections approaching. This is unfortunate, for these policies will continue to cause unrest in food markets far beyond American shores.

Hero Image
trackor logo
All News button
1

World Food and Agriculture Problems

-

David Lobell is a guest speaker for SLAC's fall colloquium series. All colloquium events are open to the public. SLAC Colloquium details.

Panofsky Auditorium
SLAC

David Lobell

Energy and Environment Building
473 Via Ortega
Stanford CA 94305

(650) 721-6207
0
Professor, Earth System Science
Senior Fellow at the Freeman Spogli Institute for International Studies
Senior Fellow at the Stanford Woods Institute for the Environment
Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR)
Affiliate, Precourt Institute of Energy
shg_ff1a1284.jpg PhD

David Lobell is the Benjamin M. Page Professor at Stanford University in the Department of Earth System Science and the Gloria and Richard Kushel Director of the Center on Food Security and the Environment. He is also the William Wrigley Senior Fellow at the Stanford Woods Institute for the Environment, and a senior fellow at the Freeman Spogli Institute for International Studies (FSI) and the Stanford Institute for Economic Policy and Research (SIEPR).

Lobell's research focuses on agriculture and food security, specifically on generating and using unique datasets to study rural areas throughout the world. His early research focused on climate change risks and adaptations in cropping systems, and he served on the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report as lead author for the food chapter and core writing team member for the Summary for Policymakers. More recent work has developed new techniques to measure progress on sustainable development goals and study the impacts of climate-smart practices in agriculture. His work has been recognized with various awards, including the Macelwane Medal from the American Geophysical Union (2010), a Macarthur Fellowship (2013), the National Academy of Sciences Prize in Food and Agriculture Sciences (2022) and election to the National Academy of Sciences (2023).

Prior to his Stanford appointment, Lobell was a Lawrence Post-doctoral Fellow at Lawrence Livermore National Laboratory. He holds a PhD in Geological and Environmental Sciences from Stanford University and a Sc.B. in Applied Mathematics from Brown University.

Lobell Lab

A project to advance the science that guides investment in food security and crop productivity, and to effectively communicate this science to a broad audience.
More Information

G-FEED: Global Food, Environment and Economic Dynamics

An interdisciplinary group working cooperatively to understand the relationship between society and the environment by examining regional and global scale phenomena using statistical analyses of real world data.
More Information
CV
Hide publication sections
On
Date Label
David Lobell Speaker
Seminars

African Agricultural Productivity Growth and R&D in a Global Setting

Paragraphs

This paper was prepared for Stanford University’s Global Food Policy and Food Security Symposium Series, hosted by the Center on Food Security and the Environment, and supported by the Bill and Melinda Gates Foundation.

Relative to other regions of the world, most African economies are still heavily reliant on agriculture as a source of income and employment. And with more than 70 percent of the continent’s poor residing in rural areas, the production and productivity performance of African agriculture is pivotal to overall economic growth and the well-being of the poorest people in the region. After a dismal decade of output growth in the 1970s, the rate of aggregate agricultural output growth picked up for each of the subsequent three decades, and averaged 2.83 percent per year during the 2000s. With population growing at still record rates by world standards, per capita output grew much more slowly, just 0.36 percent per year during the past decade. 

The productivity evidence is mixed and difficult to summarize. The rate of African crop yield growth (at least for the four crops given closer attention in this paper: corn, wheat, rice and soybean) is generally slower than elsewhere in the world, and in keeping with patterns seen elsewhere there has been a slowdown in the pace of average crop yield growth in Africa since around 1990. African land and labor productivity levels also generally lag those found elsewhere in the world, although aggregate land productivity in Africa outperformed that of Australia and New Zealand, another region of the world with challenging agricultural soils and heavy reliance on erratic (and often agriculturally marginal) weather. The reported rates of growth in multi-factor productivity (MFP) for African agriculture are also low by world standards, but the body of available evidence suggests that African MFP growth rates picked up in recent years. Unfortunately, the lack of reliable data and differences in the analytical details between the available studies makes it hard to reconcile the evidence and reach robust conclusions about MFP performance throughout sub-Saharan Africa.

Productivity levels and growth rates are affected by a host of factors, not least the technologies linking inputs to outputs and, by implication, the amount, nature and effectiveness of the innovative effort that develops and deploys these technologies. Although overall investments in African public agricultural research and development (R&D) have increased during the past decade or so, the growth in spending is not especially widespread and dominated by growth in just a few countries. Nigeria and Ethiopia account for half the region’s increase in agricultural R&D spending from 2000-2005—the latest year for which data are presently available. The intensity of public investment (i.e., agricultural R&D spending relative to the value of agricultural output) has increased as well. However, during the 2000-2005 period Africa spent just $0.54 on public research for every $100 of agricultural output, almost half the corresponding rest-of-world intensity ($1.05) and one-fifth of the rich country average ($2.70). Fragmented and typically small research agencies, and unstable funding streams still bedevil African agricultural research endeavors and undermine efficiencies in agricultural research that are intrinsically long-term in nature. Turning around these research realties in a meaningful and sustained fashion will be critical to realizing the long-term growth in African agriculture productivity that will be required to grow that sector in particular and the region’s economies more generally.


All Publications button
1
Publication Type
Books
Publication Date
Journal Publisher
Center on Food Security and the Environment
Authors

Oil palm development in Indonesia: Demand, trade, and land use

Indonesia is currently the world’s top palm oil producer. Since the 1980s total land area planted to palm oil has increased by over 2,100 percent growing to 4.6 million hectares – the equivalent of six Yosemite National Parks. Plantation growth has predominately occurred on deforested native rainforest with major implications for global carbon emissions and biodiversity.

The Global Costs of American Ethanol

Paragraphs

World leaders are focused on agricultural supply data, insurance schemes and speculation as they try to quell volatility in global food markets. They should also turn their attention to perhaps the leading cause of price instability: U.S. ethanol policy.

Five years ago, few if any food or energy experts predicted that 40 percent of the U.S. corn crop in 2011 would be devoted to ethanol production. Nor did they imagine: that corn prices would reach all-time highs at $8 per bushel ($275 per metric ton); that July futures prices for corn in Chicago would exceed those for wheat; that the United States would be exporting ethanol to Brazil; or that an Iowa Senator would co-sponsor a bill to reduce corn-based subsidies just prior to the Iowa Caucuses for the 2012 primary season. What has caused these extraordinary circumstances? And what are the economic, political and food-security implications of a revolution in demand that has caught both economists and political leaders unaware?

All Publications button
1
Publication Type
Journal Articles
Publication Date
Journal Publisher
The American Interest
Authors
Rosamond L. Naylor
External URL

The European and Global Economic Crisis: "The Eurozone Crisis and Prospects for Future European Integration or Disintegration"

-

Synopsis:

Robin Niblett, Director of Chatham House, delivered the following talk in The Europe Center series “The European and Global Economic Crisis”.

With measured optimism about the prospect for a way out of the current Eurozone crisis, Dr. Niblett argues that the introduction of the common Euro, seen by many in past years as a vanguard tool for European integration, is now potentially a functional wedge between ‘debtor’ and strongly capitalized nations.  

Dr. Niblett, arriving directly from participating in the World Economic Forum in Dubai, and based on Chatham House research, described the “perfect storm” of the past two decades of credit-driven growth, divergence within the EU, rising debt-to GDP ratios of member nations especially in the cases of Italy and Greece.  His analysis combines these economic details with the following:

  • Demographics – high levels of unassimilated immigrants
  • European welfare economies still distributing resources at twentieth-century levels now in the twenty-first century
  • The rise of anti-immigrant and anti-free-trade populist parties
  • The weakening of Europe’s center parties
  • The “Russification” of Europe’s East – especially in recent events in Ukraine
  • The stalled integration of Turkey into the EU

The totality of the above paints a grim portrait of Europe under the weight of nearly impossible conditions.   And yet, Dr. Niblett underlines evidence for measured optimism:

  • Ireland is making strides to reform its economy
  • Ireland’s educated and yet unemployed workforce does have the possibility to immigrate to Europe
  • The UK is finally rebalancing its state budget and market liberalization
  • France is facing, albeit with massive labor protest, its state budget levels
  • Spain will likely turn over its government in the face of its massive youth protest
  • Italy is evaluating in its political process a series of budget reforms

These are the structural side of what Dr. Niblett sees as Europe’s tools for recovery.

On the side of European practice, the Franco-German proposals for European Central Bank “bailout funds” include new rules for transparency of internal government operations. This promises innovation to make the EU into an area of political and financial transparency, and to enable the EU to engage in direct investment, as evidence is beginning to show, in the world’s emerging economies.  In this sense, Dr. Niblett sees for Europe a competitive edge over the US in engaging in world markets.

Perhaps most sanguine of Dr. Niblett’s analysis is his reading of the Eurozone crisis as a force to push the member nations of Europe further towards supra-national economic strategies.  In order to participate in the investment in emerging markets, the Benelux countries, not to mention France, Germany, and neighboring European states, are responding to the crisis by considering policy that promotes investment and outsourcing for service-sector employment, instead of export commodities which have been undercut in recent years.

There is a risk, in Dr. Niblett’s view, that Europe will respond to the Eurozone crisis by fracturing into rival “clubs” of small and large or debt-restructuring and creditor nation-states.  But the European nations, especially those currently participating in the Eurozone, have untapped capacities for growth:

  • Educated youth
  • Underemployed female laborers
  • Outstanding higher educational institutions
  • Pent-up small- and medium-enterprise markets
  • Potential for growth in the service sector labor market
  • Room for more tightly integrating and rationalizing the region’s energy market.

Those interested in further detail and analysis are invited to visit the work and productivity at:

The Europe Center, at Stanford’s Freeman Spogli Institute for International Studies: http://tec.fsi.stanford.edu

Chatham House, at the Royal Institute for International Studies: http://www.chathamhouse.org/

 

Speaker bio:

Robin Niblett became the Director of Chatham House (the Royal Institute of International
Affairs) in January 2007. Before joining Chatham House, from 2001 to 2006, Dr. Niblett
was the Executive Vice President and Chief Operating Officer of Washington based
Center for Strategic & International Studies (CSIS). During his last two years at CSIS, he
also served as Director of the CSIS Europe Program and its Initiative for a Renewed
Transatlantic Partnership.

Most recently Dr. Niblett is the author of the Chatham House Report Playing to its
Strengths: Rethinking the UK’s Role in a Changing World (Chatham House, 2010) and
Ready to Lead? Rethinking America’s Role in a Changed World (Chatham House,
2009), and editor and contributing author to America and a Changed World: A Question
of Leadership (Chatham House/Wiley-Blackwell, 2010). He is also the author or
contributor to a number of CSIS reports on transatlantic relations and is contributing
author and co-editor with William Wallace of the book Rethinking European Order
(Palgrave, 2001). Dr Niblett is a frequent panellist at conferences on transatlantic
relations. He has testified on a number of occasions to the House of Commons Defence
Select Committee and Foreign Affairs Committee as well as US Senate and House
Committees on European Affairs.

Dr Niblett is a Non-Executive Director of Fidelity European Values Investment Trust. He
is a Council member of the Overseas Development Institute, a member of the World
Economic Forum’s Global Agenda Council on Global Institutional Governance and the
Chairman of the World Economic Forum's Global Agenda Council on Europe.

He received his BA in Modern Languages and MPhil and DPhil from New College,
Oxford.

CISAC Conference Room

Robin Niblett Director Speaker Chatham House, Royal Institute for International Affairs
Seminars
European and Global Economic Crisis Series
Subscribe to Agriculture