Has the global food price bubble  burst, and if so, does it matter? In the first installment of FSE's new Food and Nutrition Policy Symposium Series, Professor Thomas Hertel of Purdue University and Professor Johann Swinnen of Leuven University outlined global trends in the cost of food, and explained how a drop in prices after the food price shocks of 2007-2008 might affect global politics and economics.

What drives food prices?

As population growth and rising incomes put pressure on the global food supply, many scholars consider high food costs to be the "new normal," especially following the food price shocks of 2007-2008. Professor Thomas Hertel challenged this view, saying that "To look forward 45 years, you have to look back 45 years" at what factors actually impact food prices.

Prices for many food commodities fell between 1961 and 2006, despite strong population and income growth, because the world was able to triple crop production during the same period. Since the recent price spikes, the "food price bubble" seems to have burst, with prices falling steadily since 2009.

Although population will continue to grow over the next several decades, the rate of growth is slowing worldwide and is mostly concentrated in developing countries, where per capita purchasing power is relatively low. This minimizes the pressure that population growth puts on the global food supply.

Economic factors may be more influential. "For the first time in history," Hertel said, "income will surpass population as a driver of global food demand." As countries move up the income scale, they consume richer diets of input-intensive products like meat, dairy and processed foods.

Energy prices also influence global food costs. As oil and gas prices rise, demand grows for alternative fuels like ethanol. Half of the increase in corn production over the past several decades came from the growing demand for ethanol, which was fueled by government mandates and which drove up the global price of corn. These mandates have been rolled back in recent years, however, and demand growth for biofuels has waned.

Hertel added that issues around climate change, urbanization, water supply, food waste and deforestation may also impact global food prices in the future.

Many scholars point to crop yields as a way to close the gap between food supply and demand and keep prices low. But Hertel cautioned that scientists and policymakers may be constrained by technical and economic limits.

To further increase yields "is a bigger job than simply doing some more science in the lab," Hertel said. But he noted with optimism that new investments in research and development have risen sharply from both the public and private sector, particularly in countries like China, India and Brazil where food security is a pressing issue. 

Impacts of the food price bubble

Professor Johann Swinnen explained that if the food price bubble has in fact burst, the next several years are likely to bring a shift in the politics and economics of global food issues.

The recent bubble coincided with an increase in both policy attention and donor funding to combat food insecurity - a focus that has benefitted both farmers and consumers, but that could wane as prices fall.

While the high prices of 2007-2008 benefited farmers, they in turn hurt low-income consumers in urban areas. And because people in high-density areas find it easier to organize and voice their concerns over government policies, they are more likely to capture media attention.

This "urban bias," as Swinnen described it, influenced policymakers to respond to the heavy media coverage. His team found that after 2007, agricultural funding from the World Bank, United Nations Food and Agriculture Organization (FAO) and the International Maize and Wheat Improvement Center (CIMMYT) all rose sharply. The percentage of global development aid targeted toward agriculture also grew.

Swinnen described the social and political conditions of 2007-2008 as a "perfect storm" that shifted the attention of policymakers toward global food security investments. Paradoxically, Swinnen explained, this policy response to urban unrest over food prices ultimately benefitted both rural and urban populations, by boosting agricultural investments for food producers while also helping lower costs for consumers.

 The Food and Nutrition Policy Symposium Series will run for three years and will consist of a total of ten lectures spanning a wide range of issues around global food and nutrition policy. It is funded by Zachary Nelson, '84 and Elizabeth Horn. The series follows on the successful two-year Global Food Policy and Food Security Symposium Series which concluded in May 2013 and was funded by the Bill and Melinda Gates Foundation.

A recent news item in China on the country's extraordinary digital divide -- potentially the widest of any nation on earth -- was based in part on REAP findings. 

Read the article here (Chinese).

"Using data from a set of large-scale surveys in schools in different parts of the country, we find a wide gap between computer and Internet access of students in rural areas and those in urban public schools. The gap widens further when comparing urban students to students from minority areas... The digital divide in elementary schools may have implications for future employment, education and income inequality in China," the REAP report says. 

To learn more about China's digital divide, please see REAP's journal article on the matter.

Media reports suggest that China is moving its allegiance away from North Korea, following a series of recent provocative acts by Pyongyang. But Dr. Sunny Seong-Hyon Lee, a fellow at the Shorenstein Asia-Pacific Research Center, says there will be no real shift in the relationship anytime soon.

China harshly rebuked North Korea’s third nuclear test in words, yet stopped short of translating words into action. China quickly distanced itself when North Korea executed the young leader’s guardian Jang Song-thaek, saying that was an “internal affair” of North Korea. President Barack Obama said China was “recalculating” its policy toward North Korea. Looking at these signals, Lee asks: does this narrative match reality?

Lee, this year’s Pantech Fellow on Korean Affairs at Shorenstein APARC in the Freeman Spogli Institute, has been conducting research on Chinese perspectives on North Korea using primary and secondary sources. He has a lengthy career as a foreign correspondent at the Korea Times based in China for 11 years, reporting primarily on North Korea. Lee sat down with Shorenstein APARC to answer a few questions about his research and forthcoming book.

How important a role does media play in assessing North Korea?

News media are a central channel for understanding North Korea’s current affairs. Quite often, media are the only channel for the public. Journalists are challenged to deduce the on-the-ground situation in North Korea by examining various signals that North Korea chose to reveal to the outside. Journalists also turn to diplomats, academics and intelligence officials. Media allows us to piece together a telling picture of the DPRK’s current state of affairs. That doesn’t necessarily mean that the audience can take the media reports without critical attitudes either, especially when it comes to North Korea’s elite politics, which could be quite enthralling.

Lee describes the gap in perception among outside observers concerning the China-North Korea relationship. Photo Credit: Sunny Seong-Hyon Lee

How does your journalism background influence your research approach?

Diplomacy surrounding North Korea is a murky topic with its share of secrecy. Figuring out North Korea’s moves is like a religious experience. You often fail to comprehend why it happens. But as a journalist, you encounter so many “false prophets” who claim to know. (To illustrate this point, I wore religious attire during my lecture). It’s also the work of diplomats and you don’t normally strike a conversation with North Korean nuclear negotiator. Journalists, due to the nature of their work, have some access. We chase after these people, wait for them at the airport to get quotes, and attend their press conferences. Some of us get to develop personal relationships with them. In general, journalism allows you to get a glimpse of what is really happening. But the public often doesn’t know how journalism surrounding North Korea works either, for example, the delicate journalist-source relationship, as well as how journalists struggle to connect the dots when he or she hears a fragmented piece of information from an intelligence official. I was shocked when a very senior-level diplomat told me “90% of the media reports about North Korea are inaccurate.”  I think he was frank with me. So, I interviewed journalists who cover North Korea, asking them how they write the stories they write. I also interviewed diplomats, academics, and intelligence officials whom journalists turn to for their story quotes. To protect my sources, I have kept most of them anonymous in my upcoming book, which I hope to finish this summer.

How would you characterize Chinese public opinion toward North Korea?

It’s important to keep in mind that the Chinese government portrays a different position than the average citizen. We do see ebb and flow in the freedom to critically evaluate North Korea in China. On an individual level, many Chinese now use personal blogs and social media sites such as Weibo as forums for freer conversation on sensitive topics. A video clip depicting two boxers fighting in a ring, thought to be a metaphor for U.S.-North Korea relations, went ‘viral’ on social media and stirred up a great deal of conversation. Many Chinese are dissatisfied with the government’s tepid response to North Korea’s nuclear provocations. But the Chinese government approaches the issue from the point of national interest. A socialist political system is also pronounced in making rhetorical statements that don’t necessarily square with its actions. So, when it comes to the North Korean narrative, you see a state versus public sentiment divide, and also rhetoric versus action divide. It can be quite confusing to outside analysts. It’s hard to pin down China. China sees North Korea as a strategic benefit. Today, a very real perception gap exists among outside observers where China exactly stands on North Korea.

Will the Chinese government ever be persuaded by its citizens to change its policy toward North Korea?

Public discontent is unlikely to garner a reaction from the government. China is not structurally organized to respond to public opinion like the United States, nor does it want to. The Communist Party decision-making is insulated in many ways, and has been quite successful in closely monitoring activism. Even so, analysts do argue that a ‘threshold’ exists by which the government may be required to respond.

What factors suggest China’s policy has changed in style but not in substance?

Many factors exist that suggest China’s stance toward North Korea has changed. Most notably was Deng Yuwen’s Financial Times op-ed. Yuwen was the deputy editor of the Chinese Communist Party’s Central Party School; he wrote that China should “abandon” North Korea in Feb. 2013. His critical stance drew international interest since he was a government-associated leader pushing a counter-argument. A few weeks later, Chinese premier Xi Jinping also said, “no country should be allowed to throw the region or the whole world into chaos.” While North Korea was not pinpointed, analysts believe Xi was reprimanding Pyongyang in response to its nuclear brinkmanship. Those signals, coupled with severance of some trade and financial ties, provide leverage to the argument that China is changing its tolerance of ‘misbehavior’ from North Korea. But, those signals are not as substantive as the media has led many to believe.

Should we be optimistic that China-North Korea relations will improve?

I happen to be a bit of a pessimist. The phrase huan tang bu huan yao – a change in name but not in substance – illustrates my thesis. No tangible shift in China’s policy has occurred and the prospects for genuine change in the future are slim. A key point to remember is China determines its position based on America’s involvement. North Korea is effectively China’s ‘policy darling,’ ultimately used as a buffer (physical and psychological) against the American sphere of influence in East Asia, which China believes is meant to contain China. I believe the ‘pivot to Asia’ has created in some Chinese policymakers a certain paranoia. Thus, China still values North Korea and is unlikely to sever ties with its neighbor, as long as the strategic rivalry, competition for leadership, deep-rooted mutual mistrusts and suspicions of intentions between Washington and Beijing persist. Against that backdrop, for the short-term and medium-term, China-North Korea relations will not change because they need each other strategically in East Asia. Maybe in the long-term there is hope.

Lee presented his research at a seminar entitled, “Uncomfortable Relationship: Will China Abandon North Korea?” on April 18. The presentation slides from the event are available below.

In conversation with Shorenstein APARC, Karen Eggleston, center fellow and director of the Asia Health Policy Program, reflects on her initial draw to Asian studies and eventual focus on comparative Asia health policy. She also shares perspectives on health reform in China and demographic change across East Asia, and talks about related upcoming activities.

How did you begin in Asia health policy?

I have long been interested in Asia in general. My initial appeal to the region came from my family’s roots (my grandfather taught Korean history at Berkeley) and early international travel. Only much later in graduate school did I come to the area of economics as a discipline and health policy as my specialty; however, I had been attracted to economic development and social policy in Asia earlier on. I started with an undergraduate degree in Asian studies, which followed with a Masters degree in Asian studies specifically focused on China and Korea. During graduate school, my father-in-law introduced me to unique perspectives, as he was a physician in China. When he visited the United States to present his work, I helped translate his findings. As my career developed, I had the privilege of working with many inspiring health economists, and economists interested in health policy, some of whom acted as my mentors at Harvard and here at Stanford - János Kornai, Victor Fuchs, Joseph Newhouse, Richard Zeckhauser, and Jay Bhattacharya, to name a few. These experiences helped to further narrow my focus and interests.

What led you to Stanford?

It was extremely exciting when the opportunity arose to come to Stanford. The university is a world-class learning environment and is unique in having a health policy program focused on Asia. I was recruited to the Shorenstein Asia-Pacific Research Center at the founding of the Asia Health Policy Program. The Program is distinctive given its comparative approach focusing on the Asia-Pacific region, which differs from most other institutions. The west coast is also geographically closer to Asia, so you get a ‘flavor’ and infusion of Asian studies here more so than on the east coast. Not to mention, it was a delight to come back to my home state of California after many long years of New England winters.

To be a successful scholar of global health policy, what tools or perspectives should one be informed about?

Global health policy is a very complex field, and can be approached many ways. This, of course, makes it both exciting and challenging. My own approach is through the lens of economics. If you are looking at research and evidence-based policy, it can be beneficial to have either a social science background or a medical-clinical discipline (or both), perhaps combined with a specific geographic focus. Knowing about the history, culture, and institutions are very important for understanding health policy challenges. It also helps to build capacity within that region of focus. Partnering with practitioners and scholars in the country or region allows you to know what is really happening on-the-ground, and feed the research back into local policy decisions. I also think it is important to emphasize evidence over ideology – for example, to keep clear in your mind whether you are more of a policy advocate or academic. A scholar can play varying roles at different times in their careers, but it isn’t easy to do both fully at once. 

As China’s population and social inequalities continue to grow, are its current governance structures sustainable?

Even though political economy is not my expertise, institutions and how they adapt to a society’s needs is pertinent to anyone looking at health reform. For example, in China, there has been a lot of debate since the leadership transition and its implications for national health administration. Should health policy be led solely by the Ministry of Health, now the Health and Family Planning Commission? The Ministry runs the hospitals but is not in charge of the urban insurance system – this falls to Labor and Human Resources. Other branches of government administer regulation, pricing and other aspects of health policy. And of course the Ministry of Finance, and National Development and Reform Commission, play key roles. Like many countries, China has over 14 different ministries and agencies that are involved in the organization of its health system. Thus a relevant question is: who is in charge of taking the next step and coordinating between those entities? A health reform office was established directly under the State Council. Population aging is another issue that spans multiple sectors and policymaking entities. The Chinese government will be impelled to adapt its policies to face new challenges.

What are the connections between health policy and demographic change? Can you tell us about your upcoming work?

One important connection between health policy and demographic change is that the burden of disease changes as the population changes. A country with a large young population (like India) will have a different burden of disease than a country with a large older population (like Japan). If fertility and mortality rates decline, the burden of disease shifts toward chronic, non-communicable disease incidence. Partly, this trend reflects a ‘triumph’ from control of infectious disease and the demographic transition (with longer lives and lower fertility), but then it presents a new set of challenges for society to deal with problems of that older population. Some of my work compares China and India, which have similarities in size and socio-economic diversity. This May, I am helping to organize a conference at the Stanford Center at Peking University in Beijing with my Stanford colleagues Jean Oi, Scott Rozelle and Xueguang Zhou, and our collaborators at the PRC National Development and Reform Commission. The conference will compare urbanization and demographic trends in China and India. It is envisioned that the conference will lead to two separate book projects – one on urbanization in China in comparative perspective and another on demographic change in China and India. We will also present findings that were an outcome of a three-year research project, with initial findings published in The Journal of Asian Studies.

Tell us something we don’t know about you.

In my youth, I was very much into equestrian vaulting and played the violin. As one of my mentors said to all his students, ‘you might not be the world’s best at any one category, but if you look at the overlap between different categories, you could be distinctive.’ So I might very well be one of the world’s only horse-vaulting, violin-playing health economists, for what it’s worth.

The Faculty Spotlight Q&A series highlights a different faculty member at Shorenstein APARC each month giving a personal look at his or her scholarly approaches and outlook on related topics and upcoming activities.

President Barack Obama’s trip to four Asian nations – Japan, South Korea, Malaysia and the Philippines – set out to address an ambitious agenda, including trade negotiations, territorial disputes, and the threat of North Korea. Scholars at the Shorenstein Asia-Pacific Research Center in the Freeman Spogli Institute provided commentary to local and international media about the state tour.

Ambassador Michael Armacost, a distinguished fellow at Shorenstein APARC, evaluated the goals of the trip, saying it aimed to deliver a message of reassurance to East Asia that the U.S. rebalance is intact. Armacost highlighted the efforts to negotiate a 12-nation trade pact, the Trans-Pacific Partnership (TPP) as the centerpiece of the Obama trip to Asia. He was interviewed by Weekly Toyo Keizi, a Japanese political economy magazine. An English version of the Q&A is available on Dispatch Japan.

Many foreign policy issues shadowed the outset of President Obama’s Asia trip, the crisis in Ukraine and Syria, among others. Daniel Sneider, associate director of research at Shorenstein APARC, said in Slate that Asian nations notice where the United States focuses its time. Obama’s commitment to the region may have come across as distracted given the breadth of his current foreign policy agenda.

Sneider also spoke with LinkAsia on Obama’s stop in Tokyo. President Obama met with Japanese Prime Minister Shinzo Abe; the two leaders addressed issues surrounding territorial disputes and attempted to reach an agreement on outside market access issues in the TPP negotiations.

Donald Emmerson, director of Shorenstein APARC’s Southeast Asia Forum, offered an assessment of America’s ‘pivot to Asia’ and on the significance of the Malaysia and Philippines visits. He said the trip most notably reinforced America’s efforts to upgrade security commitments and promote freer trade negotiation in that region. The Q&A was carried by the Stanford News Service.

Emmerson spoke with McClatchyDC on two occasions about the Philippines leg of the tour. He commented on Obama’s statement reaffirming the United States’ security commitment to Japan, which recognized Japan’s administrative control over the Senkaku Islands. Emmerson suggested the greater context of claims in the South China Sea must be considered, including Manila’s. He also said maintenance of the security alliance is a positive step, but trade is a an essential part of the the pivot's sustainablility.

When President Barack Obama this week began a high-profile visit to Asia, it called into question how effective the "Asian pivot" in America's foreign policy has been. A few years ago, Obama announced that a rebalancing of U.S. interests toward Asia would be a central tenet of his legacy. Now he is visiting Japan, South Korea, Malaysia and the Philippines to reassert the message that America is truly focused on Asia – despite finding itself repeatedly pulled away by crises in Ukraine and the Middle East, and political battles in Washington, D.C.

Stanford political scientist Donald K. Emmerson, an expert on Asia, China-Southeast Asia relations, sovereignty disputes and the American "rebalance" toward Asia, sat down with the Stanford News Service to discuss Obama's trip. Emmerson is a senior fellow emeritus at the Walter H. Shorenstein Asia-Pacific Research Center in the Freeman Spogli Institute for International Studies.

President Obama started his Asian pivot a few years ago. Have problems in Ukraine, Syria, Iran and at home detracted from this new approach?

The pivot as practiced continues unabated. The pivot as perceived has suffered from its displacement on various attention spans by superseding events and concerns, both foreign and domestic. President Obama's current trip to Asia is itself a reflection of these distractions. Originally planned for October, it was postponed by extreme political discord in Washington. But the chief elements of the pivot remain in place and in progress. They are most notably the upgrading of American security commitments and the effort to negotiate freer trade.

Why does this rebalancing in U.S. foreign policy make sense – or not?

The pivot certainly serves U.S. interests. Americans cannot afford to deny themselves, or be denied by others, the opportunities for trade and investment that Asia's most dynamic economies will continue to generate. The U.S. also needs to work with China and its neighbors to help ensure that China's rise serves the wider security interests of Americans, Chinese, Asians and the world, however dissonant the day-to-day advocacy of those interests may be. Ironically, by obliterating Obama's proposed reset of U.S.-Russia relations, Vladimir Putin has become an unintentional friend of the rebalance toward Asia. His aggression in Crimea and eastern Ukraine has made all the more urgent the need for Washington to pursue mutually beneficial relations with Beijing and the rest of Asia that could moderate China's willingness and ability to force its ownfaits accomplis in the East and South China Seas.

Do Chinese leaders view Obama's Asian pivot as a de facto containment approach to a rising China?

China's leaders do question U.S. intentions. But one ought not ignore the dozens and dozens of venues and ways in which the two countries' governments continue to cooperate on multiple fronts. In domestic terms it is politically convenient for Chinese hardliners to disparage American motives. As with the pivot itself, however, perception and practice are not the same thing.

Are Asian countries more rattled than ever by China's behavior in places like the South and East China Seas?

Concerned, yes; rattled, no. There are six or seven different claimants to contested land features and/or sea space in the South China Sea, not to mention the territorial tensions that also bedevil interstate relations in Northeast Asia. East Asian leaders are not lined up in a united front against Beijing. They are themselves divided. The more assertive China becomes, the more pushback it can expect. But most of the states in Southeast Asia do not want to ally with the U.S. against China, or with China against the U.S.

The U.S. and the Philippines are poised to sign a treaty that will expand America's military presence in the island country. What's the significance of the treaty?

Articles 4 and 5 of the treaty commit Washington and Manila to "act to meet the common dangers" implied by "an armed attack in the Pacific Area" on the "metropolitan territory" of either party, or on the "island territories under its jurisdiction," or on "its armed forces, public vessels or aircraft in the Pacific," and to do so "in accordance with its constitutional processes." But these provisions are hardly self-implementing; they require interpretation. Even if China were to forcibly evict the Philippine marines who now occupy Second Thomas Shoal in the South China Sea, the treaty would not automatically trigger an American military response. Applied to that scenario, the treaty would not instantly entrap the U.S. in a war with China. But the treaty would require some action or statement on the part of Washington. In Manila, Obama will try to reassure his Philippine host in this regard without enraging its Chinese neighbor.

Obama will be the first U.S. president in five decades to visit Malaysia. What does that visit mean for that country?

Of the four countries that Obama is visiting, it is in Malaysia that the pivot's third face after security and economy – namely democracy – will be most visible. Obama will be careful not to appear to enter into the domestic political turbulence Malaysia is experiencing, but his visits with civil society actors and university students in Kuala Lumpur will send the nonpartisan message that America remains committed to democratic values for itself and for Asians as well.

Clifton Parker is a writer for the Stanford News Service.