April 27, 2010

Market-phobia and China-phobia to feed the world?

Nature recently published an interview (What it will take to feed the world) with Marion Guillou, the chief executive of France's National Institute for Agricultural Research, "Europe's largest agricultural-research agency." She says:
One really big research area is studying the volatility of prices. It is the main problem. Remember the food riots in several countries in 2008? We are still trying to understand what happened, but much of it was because of financial speculation. We already have enough food to feed everyone on the planet at 3,000 kilocalories per day, but it is a question of price. We need research to find out which economic tools are available to stabilize prices at the international level, and to ensure, for example, adequate available reserves of cereal. We need to propose economic solutions, and regulation of markets of agricultural foodstuffs to avoid the yo-yo whereby prices can go so high that people do not have access to food. We also have to guarantee minimum prices if farming is to remain viable.
A free market would guarantee that farming is viable and people have access to food. The main problem is not the "volatility" of prices. The problem is that important people believe that financial speculation causes price volatility, when it actually has the opposite effect, and that prices must be set by centralized research and regulation and not by supply and demand.

Market-phobics typically hate China. Guillou is no exception:
China is heavily involved in training and technology transfer to Africa, and in Europe we should be trying to offer Africans an alternative; we have the scientific capacity. It would be a pity if we were to leave all collaborations in the hands of the Chinese.

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