you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything is are you you don't know i'm tom are welcome to the big picture. please. and if you. start.

below in the welcome to cross talk i'm peter lavelle managing an avoidable disaster is the world facing another in more sustained food prices higher prices population growth bad weather and a vested financial interest collectively do not bode well for the poorest of the poor in global political stability while the fat and complacent act in time. and if you. start. to cross the rising food prices i'm joined by timothy wiser in boston he is the research director of the global development and environment institute at tufts university in chicago we have david moberg he is a senior editor at in these times and in washington we cross ronald bailey he is an award winning science correspondent for reason magazine and reason dot com all right gentlemen crosstalk rolls in effect that means you can jump in anytime you

want a david if i go to you first in chicago we had a food crisis price crisis in two thousand and seven two thousand and eight is it deja vu all over again did we learn anything from the last crisis. well some people may have learned something i think the crisis has not really ever completely ended from that time is building up once again. but they're basically lessons still need to be learned and one of them is that climate change is rapidly much more rapidly than anyone thought changing the whole circumstances for global food production ok tim if you want to jump in there what one lesson ok what lessons were learned more learned came. well we did a report earlier this year that looked exactly at that question and i think our conclusion was that an alarming number of things haven't been learned or if they've been learned they haven't been acted on the main precipitating causes of the food

crisis and the food crisis that we're talking about now isn't just. what another price spike after two thousand and seven and eight there was another in two thousand and ten eleven so this is the third price spike that we're facing in five years what have we learned we haven't learned that failing to keep adequate international stocks of basic grains is a huge mistake it makes the markets very vulnerable that's the situation we're in now facing the drought in in the midwest we haven't learned that climate change as david points out is likely to increase the severity and frequency of extreme weather events that cause agricultural interruptions we haven't learned that financial speculation on a national commodity markets increases the volatility of those markets and so we're still largely unregulated in those markets. and perhaps most importantly we haven't learned that biofuels expansion that the feeding food to our cars is in a time of scarcity is actually

a really bad idea and one that dramatically contributes to price increases ok ronald it would to him if he came and went across a lot of issues there which one would you focus in on and we'll discuss the other issues that timothy mentioned go ahead. right i would first of all like to agree with him about the biofuels we have certainly not learned that we should not be turning food into fuel just take take for example the fact of the matter is that the amount of ethanol that you can produce using corn to feed to fill the tank of one s.u.v. one time would be enough calories to feed a person for an entire year that's a great tragedy in fact basically the amount of corn that we're turning into biofuels in this country could provide calories for as many as three hundred million people it's just a complete shame we should not be doing that government should not be subsidizing the development of biofuels in this way turning food into fuel the other thing that i hope that we've learned though i doubt it unfortunately and this is where i think tim and i would disagree is that what we need to do is keep the markets open that

is when there's a drought in the united states we shouldn't therefore or in russia another country that produces a great deal of grain and supplies it to the international market what we need to do is to be able to move food across the globe food security is increased and enhanced by free market that is countries that are who dev's that are able to buy it on markets and supply to their people from around the world last time what happened is several countries closed their grain markets and that dramatically increased the price of food around the world and did not in fact increase food security except in those countries it's a very bad idea to do that well david i mean everyone on this program is mentioned that all of them they're all right go ahead timothy but i'd like to just point out that all of you pointed out the same problems that we face but i guess there's no political will to address these issues go ahead timothy well there was a lot of intel is already in there with him in the first go ahead. well i was just going to say that i think the the issue of keeping markets open is is entirely

right but but i think there's a real fantasy about how you do that there is no international economic police force to force governments to. to carry out policies that keep markets open even the world trade organization isn't going to do that and when a government is facing a major food crisis for its own people it is going to act to protect its own people not international markets that only makes sense that one heater temora very well respected. food policy analyst an economist has pointed out that international reserves are actually the best away keeping food reserves is actually the best way to make markets work because it gives countries the confidence to know that there's enough food out there so they don't have to close off their borders ok ronald you want to respond to that before we move on to one of the and again you're right there is no international police force to keep those markets open largely because

the world trade organization. food was excluded from free trade rules of the world trade organization the doha round which is unfortunately collapsed was aiming at exactly that problem of trying to open up free trade in food and to guarantee it through the world trade organization and i would hope that we would move in that direction and that the people on the panel here would be in favor of pushing forward those negotiations in the future because then you would have rules that would apply and would certainly help stabilize markets well i mean that's a good point david if i go to you i think many of the problems and yeah i think many of the problems that actually been exacerbated by increased move towards free market reliance in recent decades and i would second what tim was saying about the need for government held food reserves. if you go back in history to that even the earliest states that were formed in the su mer their governments from that

point on until just recently made a point of having large grain reserves as a way of dealing with the natural fluctuations in food production and that's something that we see only a consumer could only say that with india or china is the problem i mean when you live in a primitive world where trade is forbidden across the globe that is a process that you probably want to do if you're a government but with but currently you can buy off and i would anywhere a limited or a world and that that stabilizes the market if you allow those markets to go forward ok timothy winter is a very bad it hasn't stabilize the market in recent years but who wants to market to be stable exactly like for agribusiness timothy this is the problem there's a lot of money here involved. yeah i actually i actually would agree with david though i mean i think the point is you know the alternatives aren't no trade and free trade and unregulated trade the alternatives

the question is how to manage trade what should the rules be for trade and should they be exactly the same for every country i think what where the doha negotiations were going and actually they broke down because the united states government and others refused to accept some of the proposals of developing countries is that developing countries actually need more flexibility in the management particularly of their food resources and their food growing resources so free trade for a poor developing country is is not the same thing when it comes to to keep food resources so there were special provisions that were being negotiated something called special products that would allow developed developing countries to have added protection for key food crops key crops for. rural development and for livelihoods and incomes that's an anti-poverty whether you have a long border development program it's exactly how the united states developed its

own agriculture is with massive protection and government in me mention all right let me on that question you know that we're in a different rules for different stages of developing ronald is it are certain countries liable to make sure other countries don't go hungry is that what we are all saying here. what that they're not liable in the sense what we thing that will make sure eventually that these kinds of things will go away of course is economic development of poor countries so that the people living in those countries will be in fact able to purchase the food that they need for their families from wherever it is in the market in the world the other problem that we haven't addressed here is also that we have massive subsidies in the first world in the united states for example and certainly in europe which is creating a lot of cheap food and in off years we'll call it which is then dumped into markets in poor countries undercutting the agricultural development of poor

countries and that is a huge problem we need to get rid of and it's basically as last time i looked at it the world subsidizes production of food the rich countries to to about the tune of one hundred billion dollars if we got rid of that they would go a long way again to stabilizing the markets and helping developing countries develop their own agricultural production ok david i mean is there an interest in the rich countries to see poor countries develop their own agriculture i mean it's business after all isn't it well there's an interest of the rich countries themselves as a society and seeing poor countries develop their own agriculture it may not be in the interests of cargo or other big grain traders and certainly the foreign policy in recent years has mainly been oriented in this country around service to. agribusiness and food processors and trying to keep inputs as cheap as possible so there's a difference between the interests of big agribusiness and the interests of the

country and i think that there is an interest. on our part of seeing development take place one of the ways in which development can best take place is like what happened with korea where farm prices were stabilized and. kept sufficiently high so that. peasants could. get richer as the country developed and not simply be pushed off the land by cheap or cultural imports so i would agree that there's a problem with the dumping of us grain but i don't think that the answer to that is simply opening up markets indiscriminately ok we're going to in a moment i just don't want to go can i get out let me jump in here gentlemen we're going to short break and after that short break we'll continue our discussion on the global food crisis. and. what.

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to mind you we're talking about soaring food prices. and. say. ok tim and i to go back to you in boston i mean no one wants to see famine in the world no one wants to see people go hungry but the whole economic model global model really supports western business interests ok no one wants to see peasants starve but the entire business model doesn't allow them to grow their own food to feed themselves i mean it's the whole model was flawed. well i think there are a lot of flaws of the model and and i think unfortunately that the debate gets bracketed as pro market or anti market and it's not anti market or per market at all it's it's how are you going to manage international markets and national markets which are very different and are different from depending on where you are

in the development process they look completely different any theo bia than they do in mexico than they do in the united states and there are different stages of development they have different levels of agricultural development different numbers of people making their living from agriculture and they are going through development processes that are not linear they don't look exactly alike from one country to the other i do a lot of work on mexico and we've seen. the utter failures of what's called the free market model in under nafta in mexico and it's for farmers what they've seen is withdrawal by their own government in mexico from programs that helped keep them improving their productivity and and marketing their products in favor of. imports of key products that mexico produces in abundance like corn coming in from the united states mexico now imports something

like thirty four percent of its corn as a major corn producing country they still have some three million people making their living off of corn farming that's a large number of people in a country like mexico and in a country like mexico that has failed to deliver adequate job

is where we have. actually green revolution in fact it was incubated in mexico back in when i came forty's and fifty's would norman borlaug and what you found is in one thousand nine hundred. days and that helped support the green revolution mexico was importing fifty percent of its wheat it was already a poor country after the green revolution it was exporting wheat and that and what you need to do are those kinds of technologies need to be applied in poor countries so that they can also jumpstart their economic development again the distortions in the market our government and that's a problem ok david how much of it is just the entire now massively seemingly go

ahead but i mean how much is a speculation involved here well ronald can i just can i just say something about the i mean the wheat example is an excellent example mexico is now importing them as the vast majority of its wheat and i am and that's because of the opening of its market and it's succeeded in becoming a wheat producer and so it's becoming more self-sustaining and we precisely because it did not open its market up it did invest in technology and and in yield in hansing seeds and and other improvements but it didn't open it and the mining did to you as if they had and were not in a surprisingly grain production well but my suggestion to you is that if the u.s. were not massively subsidizing its grain production then the mexican farmers would be able to compete better. the reason that the market's not it is because we have provided so much money to farmers here that they can't over produce ok that's not a market mechanism that is not with a number of different government policy ok a lol ok david you want to jump in here

. yeah just on the bed about volatility exact one of the reasons for the increased volatility is the withdrawal of governments from price stabilization programs and increased reliance on markets like futures markets and many investors have gotten into the market not in the traditional hedging functions like green millers buying grain in the future or farmers contracting to deliver grain in the future but instead getting him to speculate that food prices are up prices or other commodity prices will simply go up and they continue to drive the prices up so the marketplace particularly this financial market aspect of it has exacerbated the volatility in prices ok this is exactly you want to go ronald you want to reach people didn't see well the problem

with saying speculation is part of the problem you're pretending that prices always go up in fact in areas they go down so speculators lose money as well when you have a contract there's a person on either side of that contract someone is going to lose money in some way to make money that has nothing to do with the ultimate price of the grains ultimately ok can i do either just speculation and that's that but it's not it really doesn't have a long term effect on food prices that's a big debated question timothy what do you think about that. well i think the debate is is ongoing i think. you know the u.n. contract at a high land high level panel of experts to study it for the g eight and it's been studied by the g twenty i think the debate is over how much it contributes to volatility not whether i think that it clearly contributes or volatility of futures markets and some of the biggest complainer about the. functioning of the futures markets with all of the financial capital flowing into them particularly when

prices go up is that they big they lose their price discovery function so they lose their their ability to help legitimate hedgers people who are you know the northeast petroleum association trying to ensure that it has supplies of petroleum for the northeast heating oil market at a price that that it can be somewhat predictable the price discovery function of that is is significantly damaged you can read statements by all of them complaining about the entry of. the financial capitalists into those into those markets and what it what it has the effect of is to make hedging legitimate hedging like that much more expensive so it's actually adding to costs for consumers in the end by making the hedging more expensive making the oil heating oil more expensive and adding in theory the idea is that it adds liquidity to the market but these are

markets that have a lot of liquidity they do not lack for liquidity at this point well frankly are we entering an age where the there's no longer cheap food in the world as you said prices go up and down. no i actually think the long term trend i don't think can you as it has over the last century where the price that will eventually continue to go down the international food policy research institute has looked out to the future to twenty fifty and they basically think that food prices will stabilize about where they are now and remain more or less that way for the next forty years as productivity continues to rise around the world so ultimately food if you think about it in the last twenty years if you look at the average price of food it's never been cheaper or more abundant than any time else in history and i fully expect that trend to continue ok but david and in light of what well just said there's still a billion people that are hungry out there so the system is not working. that's

because they're poor yeah and we need to do economic development so that they can buy food and markets we have plenty of food they just can't buy it and that's really the problem ok david you want jump in there go ahead well they have put plenty of food and. as a i think one thing that a lot of people are beginning to rethink is the impact of global warming and climate change on the prospects for a good culture. not until just now many years ago many scientists expected global warming to actually help agricultural productivity and now there's increasing evidence that it's likely to be neutral or a undermine. cultural productivity and so these revised forecasts suggest that prices are likely do rise much more dramatically than a lot of people thought so the date is still in what i would add to that is what is

their own prospects are determined to jump in go ahead yeah i mean what i would add to that is is that. is that i mean i think the study the ronald cites unfamiliar with and they modeled a lot of scenarios actually i mean they looked at what the what they admitted there was that there was increasing on certainty. and that's what what david stalking about climate change which is you know however you want to view the debate over how much is is cause caused by human activity what the results will be it's it's now more an accepted fact that the climate is changing and we're seeing more severe weather events and it's having an impact on agriculture and they're very exciting going to mean here gentlemen fascinating discussion on the food crisis many thanks today to my guests in boston chicago and in washington thanks to our viewers for watching us iraqis see you next time and remember profitable.

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