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xiv SUMMARY


albeit as an untested hypothesis. However, surging demand from China and India turns out not to present any compelling linkages to the crisis. At the national level both countries are largely food secure, so they rarely rely on substantial food imports, except some oilseeds. It is true that both countries, especially China, have experienced greatly increased demand for energy and other minerals, but their demand is by no means the only cause of rising oil prices and is perhaps not even the main cause. Chinese demand for soybeans has also grown dramatically, but since 1995 rather than very recently. More- over, this longer term increase in demand was accommodated mostly by area expansion in Brazil and Argentina, so the effects on other commodities would appear to be quite limited. China and India might also have influenced international food prices by depleting their stocks of major cereals, but there is no direct evidence that declines in their stock influenced expecta- tions elsewhere. In China’s case, estimated stock levels in the 1990s were excessively high, and still are, so China shows little or no sign of being unable to feed itself in the foreseeable future. India’s stocks also declined from excessive levels and were briefly too low during the crisis, which may have led to the hasty decision by India to ban rice exports in November 2007—an action that undoubtedly had a large adverse effect on international rice prices. But these are all quite indirect linkages to the crisis, and in fact we find that growth in cereal imports was much stronger among other sets of countries, including Mexico, the European Union (E.U.), and a range of Middle Eastern and North African (MENA) countries.


Another perennial research literature that was prominent before the food crisis was declining yield growth in cereal production and related trends, such as low levels of agricultural research and development (R&D) and land degra- dation. These problems are certainly significant in some parts of the world, but the real linkage to international prices must come from global supply and demand, which is best examined by looking at global cereal production per capita and trade statistics. It turns out that production per capita has indeed declined, but about three-quarters of that decline is explained by fall- ing production in the former USSR and Eastern Europe. However, that trend did not affect international trade, because the former Soviet bloc countries actually increased cereal exports to the rest of the world over this period. Hence much of the decline in global grain production simply relates to struc- tural change in transition countries, which does not appear to have adversely affected international prices. The remainder of the decline comes from Sub- Saharan Africa, where cereal production has struggled to keep up with rapid population growth. Here the factors cited above probably are pertinent—low R&D, soil degradation, climate change—but Africa is a very small player in international cereal trade, so the linkage is tenuous at best.


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