Focus 580; Reform of Agricultural Trade

In this part of focus 580 we will be talking about reform of agricultural trade. We certainly know that in the future a demand for food is going to grow and we expect that as that happens more of the world's food production is expected to move through World Trade. Now depending upon who you ask you're going to get a different take on this. People with the World Bank for example say that if we could we could remove barriers to trade that would be a good thing it would boost the world economy and it would take a lot of people out of poverty however there are other people who don't see it that way they say that in fact we're more liberal trade policies work the opposite way and what has happened so far is that liberalizing trade has mostly benefited big farmers and multinational corporations and in fact rural poverty has increased. So we'll see if we can sort some of this out today. With a guest that we have here in the studio His name is Robert Thompson. He has recently retired from the World Bank where he served as director and senior adviser for rural development and also a senior adviser with agricultural trade policy. He's chairman of the

International Policy Council Agriculture Food and trade. He joined the World Bank in 1908 and before that served as president and CEO of the women Rock International Institute for agricultural development and then before that he was at Purdue where he in fact got his had got his degree got his Ph.D. He was dean of Agriculture and professor of agricultural economics at Purdue and then before that served as assistant secretary for economics at the US Department of Agriculture and he's a here visiting the campus going to be giving a talk. This is sponsored by the folks in Ace's College of Agriculture consumer and senior mental environmental. It was the acid and for sciences. OK see I my apology to the folks at aces. I always sort of use the. We always used just the initials and somebody says Now what does that stand for. And I actually have to think about it for a little while. He's is here visiting the campus will be giving a talk on this very subject

today and was we're pleased that he could here be with us and talk about this very topic so the questions comments are welcome as as always. If people would like to participate in the conversation all they need to do is pick up the telephone and give us a call and that number here in Champaign Urbana 3 3 3 9 4 5 5 and toll free 800 2 2 2 9 4 5 5 0 at any point here you want to give us a call. You can do that and I know he'll be doing his best to respond. Well thanks very much for being here. It's my pleasure. Just to start off with a few kind of Givens and then what we can go on and we talk can talk about about trade I guess as a given we have to say first of all over the next few decades we have every reason to believe that the population of the world is going to continue to to increase. And that's going to increase demand for food. And I think we have the expectation that the less developed countries will develop and as people get more money to spend

and get a little bit beyond just subsistence that's also going to increase demand for food. So certainly we know there's at least two things that in the future is if nothing else is because of increase in population the demand for food is going to go up. That's right. We're expecting the population to grow from about six million at the turn of this century to about 1.1 billion by the middle of the century this. So that's a little over half. And there are about a billion and a quarter people in the world who are living on less than a dollar a day. Eight hundred million of them go to bed hungry. And that's the group of people that can't even get access to a decent diet today. And as they get additional purchasing power they're going to eat more animal protein more fruits and vegetables more edible oils. And I see the demand for food doubling with about half coming from population growth in half coming from income growth by the middle of the century. So we know that's going to want to have and demand is definitely going up. I think something else that we we know for certain is that if there's

if you look around the world look at land that's in production now. We pretty much get the land that's really there and available for sustainable production if we take the stuff that's really marginal out of there. It is not the case that there is a lot of land around sitting waiting. We pretty much were pretty much using all of the land that there is to use. That's right there. We know that there's degradation of lot of land going on around the world there's also a lot of land being paved over as cities grow and as we build roads around the world. So therefore at most we can't we can't count on even maintaining the current land area in production but. According to the FAA Oh there's at most 12 percent more land that could be brought into production without cutting trees. Land it's reasonably fertile. But if we if we doubled food production by doubling the number of

acres under cultivation we will have massive destruction of our wildlife habitat reduce biodiversity whose carbon sequestration capacity and as a result. We have totally unacceptable environmental outcomes so therefore I have to double food production and not much more land. Yeah this is in a sense maybe we're going in the direction of a different kind of you don't have to worry about a different kind of a different conversation but I guess I do want at least touch on this point and that is what do we expect when we look at agriculture around the world particularly places where there are more there are subsist basically subsistence agriculture or people are growing things basically to feed themselves and if they have some left over well then they're going to sell it. That what's what's going to happen what's going to end up happening in the rest of the world is what we here probably saw a hundred years ago happen. And that is there will be fewer people farming. They will

be farming bigger farms. And in order to meet demand what's going to have to happen is that whatever is the most current cutting edge technologies are going to have to be applied to that because otherwise there's no way to meet the demand that we know we're going to have. That's absolutely right. We're going to have to double productivity on the land that we have in production and probably even more challenging is going to be the problem of water because farmers are already using 70 percent of the water for the freshwater in the world. And with her been ization going on that at the rate it is around the world cities are going to open water and farmers for their noble water and so farmers are going to have to figure out how to double more than double crop or drop or the average productivity of the water they're using so that after this is sort of oh we're taking a little walk here to get to the point of trade but here now I guess we do in deed come to the issue of trade because

given all of that we know that in individual places there's simply not going to be able to produce for themselves that it did to meet their demand so essentially what that means is that there's going to have to if that demand that global demand is going to be met then there's going to have to be a lot of food going going to other places from from the place that it's produced. That's right. In Asia there's less than 1 acre of good farmland available per person farming and there's no way you can lift all those farmers out of poverty on one acre The ONLY in fact the only thing you can grow on one acre of land that generate enough cash income and lift a family have a poverty is drugs. And obviously we're not in the business of promoting that but there's simply nothing else that's high enough value per acre. So. You just can't grow enough in Asia and that limited amount of land to feed its huge population and as incomes grow and population continues to

grow. You just can't reach any conclusion but that Asia's going to be a much much larger importer of grains. They may very well try to grow more fruits and vegetables even for export in order to get the maximum value out of each acre of land that they have and production. But that means a bigger market for us for corn and for beans and for wheat for that matter. Let me reintroduce our guest We're talking with Robert Thompson he is the now the chairman of the International Food and Agricultural trade policy council. He was for a while at the World Bank and just fairly recently retired from the World Bank. He was the director and senior adviser for rural development and also senior advisor for agricultural trade policy. He's here to give a talk on the U of I campus it's a part of a series of lectures on global food security sponsored by Ace's Global Connect that's the international arm of the College of agricultural consumer and environmental sciences. My apologies to the folks are up coming up with it right away. He's going to giving a talk this afternoon at 2:00

on the campus and he's here visiting with us talk about some of the same subject matter questions welcome 3 3 3 9 4 5 5 toll free 800 to 2 2 9 4 5 5. Well again here I guess now we've we've come to the issue of trade and it seems that the difficulty here is that there are a number of competing interests. We have interests of larger. Industrial countries and the ones that are developing and we have interests of big farmers and big agribusiness and we have interests of small farmers and so it seems that the issue of how is that possible to come up with a policy that's going to make everybody happy that's going to feed people that won't hurt little small farmers and will satisfy the need for food. Well it will also satisfy governments who are interested in protecting their own producers. So there we

get into the whole issue of tariffs and subsidies and so forth. I mean how how does one get work out a policy that makes everybody happy or is that even possible. No you can't make everybody happy. In in every country there are more and less efficient producers of different products. And some in some countries farmers have been pretty who produce certain products less than other others can produce them efficiently have been protected by high subsidies and as a result you've distorted what's produced where. But any time you liberalize trade you're going to have gainers and losers. I mean this is something that economists don't talk about often enough. Economists always talk about the gains from trade and it's reasonable to expect that net net the gains exceed the losses and therefore society as a whole and ends up better off. But if it turns out as many of the NGO civil asserted that. The people the losers are the already lowest income members of society some of this 1

1 and a quarter billion people live on less than a dollar a day then. Then if you're opening up agricultural imports and those farmers are not prepared to be able to compete. They may very well you may very well be because an increase in poverty. But there's no reason that that's necessarily the outcome we give a lot of foreign aid we and all the other rich countries of the world the World Bank lends and very favorable terms. And if those countries are using those resources appropriately to target low income people like building rural roads doing agriculture research to raise productivity and agriculture creating the enabling environment for investors to create nonfarm employment in rural areas so small holders that can't get a hold of more land can at least supplement what they earn in agriculture from non farm sources. Then there's no reason not to expect that opening up trade can. It can help everybody. Some may get in relatively more than others but society but

everybody can benefit. But it doesn't happen automatically. Well let me ask you about this basic sort of conflict in the way people see this issue of trade liberalization because as I said at the beginning and as you touch on if you take for example take an organization like the World Bank they will make this argument that says look we're taking down trade barriers is a good thing it's a good thing for everybody. It will generally speaking boost it's good for the world economy and that it's also good for some of the poorest people who are up there. And then other organizations and non As you say non-governmental organizations they're concerned with with food and agriculture policy. Well look at that and they will say the exact opposite. They will say well you know Mr. World Bank in fact it's not like that at all and that that they said they want this argument it says well what happens when you you liberalize trade is that indeed Yeah this it's good for big producers it's good for agribusiness. Maybe it's good for the the big industrialized countries who are doing well already. But in fact there's going to have the

opposite effect particularly on poor former farmers it is going to make poor people poorer now. Do you do you think that in fact one or the other of those perspectives is correct. Or is there some way in which both sides are right. Well for the first thing many of the NGOs talk about the liberalization of agricultural trade that's already occurred hurting farmers in the developing world. The reality is that we've got virtually no liberalization of agricultural trade. The last trade round are the so-called Ergo round agreement in agriculture. So it's it's inappropriate to attribute any any deterioration in the conditions of low income farmers in low income countries in the last five years to the to the outcome of the trade negotiations because we really didn't get much trade liberalization but that said the we know that those countries that have followed a more open trading system have benefited in the form of faster economic growth than countries that haven't.

And so in that sense I would say the World Bank and IMF are right where they both I think misled people there went astray is by the failure to admit that there are gainers and there are losers. Any time you liberalize trade if the losers are the most politically powerful people who are benefiting from protectionism now like sugar growers in most every high income country dairy farmers in most countries cotton produces rice growers and those those people wouldn't have the subsidies if they weren't politically powerful. And so they're going to be losers if you liberalise trade and they may be politically they may be powerful enough to block any liberalization agreement that might come come along. In the case of the developing countries as I suggested before if the if if the people who get hurt are low income farmers who are already at the bottom of the social ladder. Then it's simply unjust. If they're if they're living on less than a dollar a day

already and you knock them down even further so that that's why you really need to focus on make making the investments in the enabling environment the infrastructure the education the health care the securing clear title to farm land so that farmers can pledge as collateral against loans that they can transfer ownership of their property when they want to. That the contracts are are honored and there's a Jewish judiciary to enforce that in. If you have these and these components of an enabling environment in place then the private sector will create the jobs off the farm as well as in food processing and adding value to the raw products of the land. And then you get the economic engine moving in it accelerates faster and faster. But it isn't going to happen without government intervention in the form of investments in roads and in schools and health care facilities. But it does exist going back to where we talked about earlier. It sounds as if you're going to where

we've sort of made this point but you're saying that what's what is going to have to happen in developing countries is that it's going to be the same thing that happened here we people centrally people it's inevitable people are going to have to move off the farm. Everyone and and everyone's not going to be able to make their living that way and even as we see here in the United States people who do who are involved in agriculture are going to have to come up with ways to generate off farm income which we see here too. So there is that they seem to be. So those kind of trance just seem to be seem to be inevitable. Every country that solve the problem of rural poverty has done it by turning most of their small farmers into part time farmers. Most people don't realize about 75 percent of the people we count as farmers in the United States earn most of their family income from off the farm. In Germany before reunification it was 80 percent in Japan it's 90 percent. And so if if all of these countries haven't been able to do it there's no way. Countries like India and China are going to be able to when they get less than one

acre of land available per person in agriculture. You just can't grow enough of anything that's legal and that amount of land and feed a family lifted out of poverty so the most important things for those governments to be doing is to so that they don't end up with everybody moving into the big cities that are already overflowing is to make create make create an enabling environment so that the jobs get created in the small cities and market towns widely dispersed through the country. You know we've got great cities like Wichita and St. Louis and Minneapolis and Denver and Kansas City wide spread through the countryside and as a result they each of them is a pole of development. They're all well linked with one another through good interstate highways rail links and so on and that's the kind of thing that has to happen in developing countries. Otherwise you end up with places that are just impossible to live in like Calcutta Lagos Mexico City. I'm sure there are people around the world who cast their eyes in countries like the United States but and not just the United States and do I'm going back to this issue of subsidies and report

action ist kind of policy who would say that you all if it's well and good for countries like you to talk about free trade but the fact of the matter is that you do have you do subsidize some of your growers and you do have you know restrictions on what can come into the United States in order to benefit your own producers. So I guess that gets at this question of well just how committed are we to this idea of liberalizing trade in. And given the fact that there are within within American politics some groups who have a lot of clout whether it's possible that we're really going to going to see any change. And I suppose one would have to start out admitting Well this is the kind of thing that you're not going to change overnight this is this is going to take some time. I wonder wonders whether you're going to see substantial change at all. Well I think we'll see change after 2005. I think the federal budget deficit is going to reach such crisis proportions by the time we do the budget

reconciliation package in 2005 after the next presidential election. Neither party's going to admit to the problem before the presidential election. But I really believe that things like the 2002 farm bill are going to have to be revisited especially in an environment where you have a lot of urban residents who see the editorials in papers about fact farmers getting big subsidies sugar growers and so on. And therefore there's going to be I think there's going to be a backlash against the 2002 farm bill. Also the passing the 2002 farm bill reversed the U.S. United States move towards freer and more open. I recall child policy 180 degrees. We together with countries like Australia New Zealand Canada were leading the charge towards opening up agricultural markets through the last round of trade negotiations. But we we really reversed course in the 2002 farm bill and then went backwards in the manner in which we raised our

subsidies. And in fact it really concerns me when I talk to soybean growers for example the extent to which they've lost confidence in the ability of the United States to compete. We sell a third of everything we grow overseas. If we can't maintain that volume of exports or increase it there's no growth out there in the market for this for our agricultural productive capacity. I believe there's going to be plenty of market there for both Brazil Argentina and the United States in say in the corn and the market as we go into the first decades of this century. But. That's a long way of saying early on way of saying that agriculture policy as told by the US in the last couple of years has really reduced our credibility as an advocate for freer and freer trade. But I do believe that after 2005 when we have to fix the budget deficit that this will be the propitious time for the United States to really engage in the trade negotiations. Well it's interesting. I certainly think back to the discussions in Washington the

last time around there was talk about farm legislation and going into that we had a lot of people and the Congress saying things like it is it is now time for there to be a fundamental rethinking of agricultural policy in this country for for a variety of reasons economic reasons environmental reasons and so forth and there were people who were talking pretty big about changing things and and when and at the end of the day when the dust settled things didn't change at all which I suppose again as a as it an indicator of the kind of political power that agriculture and agribusiness has in the United States. But it's so you think maybe we might actually next time around we come to do this that that political both political and environmental pressures will be enough to get past the point of saying yes we're going to do something revolutionary and actually doing it.

I think we'll have to the budget deficit is not going to be sustainable by 2005 this war in Iraq if nothing else is costing us such a fortune that TAR other things are going to have to give. Americans want are older Americans who want drug benefits or prescription drug benefits in their Medicare programs. And that's going to be such a high priority and it's going to be expensive that some other things are going to have to give it you can't just keep piling on and piling on federal expenditures. So that I believe will will bring about some change. What worries me is that virtually all of these big government checks are being capitalised into the value of farmland during the first half of the 1980s the price of land fell 60 percent in the corn and wheat growing areas of U.S. agriculture. We had record number of farm and World Bank bankruptcies in the post-Depression period and we got land prices down the middle of the 80s to where you can make a buck in agriculture that you could get a return on your investment in farmland. But

it's it's very worrisome the extent to which we've we've build land prices right back up to probably double what you can possibly cashflow and any reasonable expected world market prices. And so we've set ourselves up as a result of these big government checks for for another drop in let prices come. Sometime after we reform agriculture policy because the basis for sustaining these high prices will be knocked knocked out from under them. You know we we had five billion dollars a year for five years leading up to the 2002 farm bill and emergency appropriations because because of the supposed financial crisis in agriculture BLM prices were being bid up 4 percent per year during that time. Something doesn't calculate I mean you in fact are culture so unprofitable that that nobody's making any money. You're certainly not bidding up the price of the most value or the most important input or asset in farm production. But that's but the basic reason for that was the five billion dollar checks were all being bid into the

price of land. And so we've I really believe we set ourselves up for another fall like the early 1980s. People who don't have any debt on the land will feel poorer. Their assets or their net worth won't look as nice but they they won't be knocked out of production the people will really be hurt. Are the recent entrants the really bright young aggressive people who've gotten out of college gotten into farming and borrowed themselves up to the hilt. And if the same thing happens as happened in the early 1980s with land prices dropping now to the point that the the size of the loan outstanding exceeds the value of the collateral then the banks will get in the picture and call a loans. But that's that's probably my biggest worry about about the present foreign policies. They're undercutting our international competitiveness by raising the total cost of production because of the more expensive land and they're setting us up for

another fall. And anybody that remembers the first half of the 1980s doesn't want to relive that. We talked earlier about the fact that here that we've seen certainly we have seen this demographic trend in the United States over the last century or something maybe a bit more than that of a sort of reversal major reversal of where people live a shift from rural to urban and fewer and fewer and fewer people being involved in farming so we've got fewer people producing food and fewer people juicing more food and that that's a trend that we're likely to see elsewhere around the world too. And what we've seen over that time also because the because of what's happening with the prices are getting to the point where to make a living you've got to be you've got to have the biggest operation you possibly can begin to be as efficient as you can and you've got to have as much land as as it's possible to have. And I know a lot of people

are are kind of not happy about that development and when one might make the argument that says well that's just the way things are that's that's inevitable. And other people would say well it's not exactly inevitable because we've we've adopted policies that have actually pushed and in that direction and I guess maybe this is kind of a philosophical question about whether in fact we it was a mistake that we could have done something to it. Slow down that trend a little bit in agriculture and then maybe and maybe it wasn't such a good thing. I doubt it and then of course there's the companion question as well even if you think that that's right is there anything that can be done about that now. Or is that just. At this point we just have to say Well that is the way that it is and that's the way that it's going to be. Well I'm the product of a small family dairy farm so I have personal experience in this in this question. But I

think a very strong case can be made that the way we've practiced foreign policy in the United States has contributed to faster consolidation because the way we practice foreign policies we've distributed the benefits in proportion to sales. This means that the largest farmers get the most benefits and this gives them the additional liquidity to buy up their neighbor's farms. And so if anything. Practicing policies of the nature we have in the matter we have has reinforced the tendency towards consolidation foreigners ations defend foreign policies every time they go to Congress for a new farm bill. On a on the basis of low farm family income. But the reality is what they lobby for are policies that are to provide most of the benefits to the already largest and wealthiest farmers and then they get even wealthier and buy up their neighbors and accelerate the consolidation. So I think if we hadn't run our foreign policies in the manner

we had we wouldn't have had as rapid consolidation. But I still think we have had consolidation. I think the key thing is to make sure that we have the infrastructure in place to make small cities and market towns attractive places for investors to create jobs off the farm so we keep those communities viable. If the community is soley based on agriculture and you have consolidation of agribusiness as well as of the farms a lot of those communities dry up and blow away so we need them. I think the one thing we can do to keep them viable is an active role development policy. This stimulates creation of greater nonfarm employment throughout rural America and foreign policy is traditionally practiced in this country is not good rural development policy. Well certainly there are. There are different farm organizations I want to name any names but that there are different form organizations and they have different kind of

priorities. And there have been some. And you know politically we started to see a lot of people making these arguments back in the 80s when things were really bad saying look we've got a problem here and that if we if we allow smaller. Farmers and smaller operations to go out of business and continue to see this call that and this sort of consolidation and consented to see this trend that says you've got to be as big as you possibly can be to survive so that you know all there is we're not going to have small farms anymore maybe we're not going to median farmers any more than we talk about production of production of animals livestock. You might as well forget it unless you're some kind of mega operation you know there were people in some some farm organization saying look this is a problem it's going on. And if we allow this to continue one day we're going to wake up and say we've lost something. You know they those some of those folks were quite vocal. I guess in the long run maybe they weren't. You know they didn't

have the clout that some others dead. But there were people making that you know making that argument that they just not not have have the strength to to move policy in the direction that they want it. I think a lot of those people in the who are making those arguments were probably less than or were often less good managers than of the of the larger units or some of the larger better managed farm operations in approach every farm has a different level of productivity in different cost to production and and frequently there are economies of size in in farm production to officially use one complement of the state of the art machinery we have today in corn to be in production takes about twenty five hundred acres.

If you if you have that equipment and you don't run it over that much land you're you're not spreading the capital cost of that equipment over enough units of product to it. To be competitive. So it's it's in part that our arm that our technologies are are not scale neutral that they tend to favor larger than average farms. We also have to remember that that there are different stages of adoption of the available technologies and that as you increase productivity it really reduces the unit cost of production. But the early adopters of the technology tend to benefit from that lower cost to production market. When a significant fraction of the farmers adopt the technology market prices fall closer to the cost of production. And then the laggards either are forced out or forced to adopt the technology. And so as a result as in effect the of the profit margin gets skinnier and skinnier for the

ligers in adopting the higher productivity technologies. You know you find people driven to larger size just to provide a comparable level of income to the to the labor management skills of the farmer involved. So you not all farmers have the same cost to production. And we there's a fallacy when we talk about the cost of production because really no two farmers have the same cost of production. So if you feel. I think the I think the the desire for parity of income with people in the rest of the economy when potential profit margins are so skinny really has been one of the principal sources driving people towards larger size. So I think in many ways that some of those organizations in the late 80s were. Leaning against the wind that they it was inevitably going to keep increasing the

average size of the farm. We got about 10 minutes left in this part of focus 580 I should introduce Again our guest We're talking with Robert Thompson he's chairman of the International Food and Agricultural trade policy council. He is just recently fairly recently retired from the World Bank he served there is director and senior adviser for rural development and also senior adviser for agricultural trade policy. He's been involved in agricultural economic issues one way or another for a long time. He served as dean of Agriculture a professor of agricultural economics at Purdue and also going back a bit further than that was a state senior staff economist for food and agriculture at the president's Council of Economic Advisers. He was also assistant secretary for economics at the U.S. Department of Agriculture and he's here to talk about agricultural trade and reform of agricultural trade. It's part of a series of public lectures on global food security sponsored by the aces Global Connect that's the international arm of the College of agricultural

consumer and environmental sciences and we'll be talking to you by campus this afternoon. Questions here welcome 3 3 3 9 4 5 5 toll free 800 2 2 2 9 4 5 5. I have a couple people here lined up ready to go starting with champagne County and line 1. Hello good morning. I wanted the last subject you're talking about I've pinions on but that's got to do with higher productivity agriculture sometimes require so much higher input and in lesser developed countries that it's just not feasible to do and I know a lot of the Green Revolution too have been disasters from that point of view and from others but really promoted me that my call was really are you saying that. And GEOS have you know had some points to make but one of the problems you saw was that they couldn't argue that trade liberalization. It has bad effects because it's never been

tried well it's never been done through a multilateral unit so we still have our high subsidies but the IMF and the World Bank mainly the IMF through loan structure imposing structural adjustment policies. You know because of the bet you have imposed lots of forms of trade liberalization you know laterally and they're only want mostly one way and there is a track record on that and it is enhancing property as opposed to poverty alleviation. And so it's not true that there's not a track record on so-called liberalization. You can say well you would you agree that it should be done multilaterally and we have you know it's unfair the way it's been done so it can't really be the because old economic liberalization but this is what is being called economic liberalization and this is what is being imposed and this is what is. You know

making the plight of people in lesser developed countries even worse than I do. Think farmers here should see the commonality they have actually as opposed to. And I kind of nativist response but that's another subject perhaps. What do you say about a structural adjustment on that facet in that kind of track record on probably economic liberalization. The first reaction is that I think both the World Bank and the IMF have acknowledged that they made some significant mistakes in structural adjustment that whereas they argued that when you liberalize an economy the gains of the gainers exceed the losses of the losers and therefore society as a whole ends up better off. They didn't pay much attention to who the losers were they didn't have adjustment assistance retraining programs. The majority of the poverty is in rural areas yet the but yet the bulk of the World Bank lending is

targeted at Urban it urban problems and so I think the the bad. I would certainly argue in the banquet in MIT today that they made mistakes but they're trying to do a lot better with a lot more pro-poor. Policies or development policies. I was brought into the bank from outside to lead a review and revision of the world development strategy because the bank accepts poverty reduction is job one. We know that 70 percent of the people live on less than a dollar a day and that's a billion and a quarter people live in rural areas and most are farmers. But yet the bank had a pronounced urban bias in its in its lending so it's trying to move in the direction of more focus on rural poverty row infrastructure and so on by like to also go back to one point assertion you made and that is that the green revolution has been a disaster. I just cannot let that go by and unchallenged.

I was early in my career involved with the introduction of the first high yielding rice varieties in Laos and doing Farmer Field demonstrations under lock conditions and showing farmers who had never grown. More than one ton of rice perfecter hectares two and a half acres that they could get for five six even seven tons. And this same area of land is they've never seen one ton grow before this productivity growth had an incredibly positive impact on farmers. Net income yes it took more inputs but the profitability of getting that higher productivity. As a result a lower unit cost of production not the input cost but the lower unit cost of production was such that the farmers would find any way to get the money to buy the fertilizer to put put on those seeds. In fact they would they would raid the seed multiplication plots under the dark of night and steal the seed as it was maturing. They were so desirous of getting access to higher productivity and higher

and more profitable varieties. That's just one facet I lot of a lot of things. The vitamin A rice and all that are touted as being some kind of salvation whereas we know that there is already enough food in the world to feed the poor and feed the starving but it's just a matter of distribution an unfair economic system so just attaching a technological fix I think is entirely inappropriate and you know a lot of other factors going on at the time that might have. It might have dictated that they needed to you know have the say. I didn't answer it. Their production. Well it may not have been a stable a stable situation to step in and here we have overproduction on. And consequently subsidies and consequently were no now called trade liberalization but it obviously isn't really because we still have our subsidies and it's devastating the Mexican countryside

one week after increased border patrols and immigration controls and all the unintended consequences of these phenomena like I can one needs more holistic point of view and I think your analysis. The domestic situation I've been hearing at is predicting a pending you know action crisis from prices again and this is probably right on so on. I don't disagree with you entirely but thanks a lot. You say you've got over production today relative to current demand and there certainly is a great deal of unmet need in the world with 800 million people going hungry but that's mainly a problem of poverty. The rich in no country go hungry and it's the poor who don't have the purchasing power and this is to access the available food supply so with that I agree but don't forget that with the population growth and if we have any reasonable sixth success in a broad based economic growth in the world

we're likely to see a doubling of food demand in the first half of this century and that's going to create tremendous market opportunities for efficient producers wherever they are in the world as long as their own policies don't get in the way of their ability to compete and I couldn't agree more with you the in your statement about the the adverse impact of high income countries agricultural policies on the poor and low income countries. We really do mess up the market by depressing world market prices and undercutting the income earning potential of small holders in it. In Mexico and all over the world or try to get one more caller in here real quick. Bloomington Indiana. Line number two fellow quick Many people have to be part of the population know 9.1 billion. So you say it's about 6.1 now we're going to 9.1 by the middle of the century 6.1 and growing.

Yes. Whining population in Europe. Does that make them more farmland in Europe and we have a problem in Africa that is telling them that also make more farmland available. This projected increase from 6.1 to 1.1 billion people has already build in a factor take into account the scourge of AIDS cutting population growth potential. The fact that Europe isn't reproducing itself. Yes it does increase the available food production capacity but on the other hand their extremely high price supports induced environmentally unsustainable levels of input use. So the European farmers have been the highest chemical plyers per acre in the world and as a result of reducing the price supports together with their tougher environmental regulations is bringing a reduction in input use and therefore lower productivity. And this is more than offsetting decline in demand in Europe

and as a result I don't see your being as large an exporter in the future as they are today. All right well I think that we will have to leave it at that with our thanks to our guest Robert Thompson he's chairman of the International Food and Agricultural trade policy council and these former official at the World Bank he served as director and senior adviser for roll development and also senior adviser for agricultural trade policy here is here visiting the campus as part of a lecture series sponsored by the Global Connect that's the international arm of the College of agricultural consumer environmental sciences here University of Illinois Urbana-Champaign. Well thanks very much Dr. Thompson. It's been my pleasure.