[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                 CONTRIBUTING FACTORS AND INTERNATIONAL 
                  RESPONSES TO THE GLOBAL FOOD CRISIS 

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 14, 2008

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 110-111
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            DEBORAH PRYCE, Ohio
CAROLYN B. MALONEY, New York         MICHAEL N. CASTLE, Delaware
LUIS V. GUTIERREZ, Illinois          PETER T. KING, New York
NYDIA M. VELAZQUEZ, New York         EDWARD R. ROYCE, California
MELVIN L. WATT, North Carolina       FRANK D. LUCAS, Oklahoma
GARY L. ACKERMAN, New York           RON PAUL, Texas
BRAD SHERMAN, California             STEVEN C. LaTOURETTE, Ohio
GREGORY W. MEEKS, New York           DONALD A. MANZULLO, Illinois
DENNIS MOORE, Kansas                 WALTER B. JONES, Jr., North 
MICHAEL E. CAPUANO, Massachusetts        Carolina
RUBEN HINOJOSA, Texas                JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri              CHRISTOPHER SHAYS, Connecticut
CAROLYN McCARTHY, New York           GARY G. MILLER, California
JOE BACA, California                 SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
BRAD MILLER, North Carolina          TOM FEENEY, Florida
DAVID SCOTT, Georgia                 JEB HENSARLING, Texas
AL GREEN, Texas                      SCOTT GARRETT, New Jersey
EMANUEL CLEAVER, Missouri            GINNY BROWN-WAITE, Florida
MELISSA L. BEAN, Illinois            J. GRESHAM BARRETT, South Carolina
GWEN MOORE, Wisconsin,               JIM GERLACH, Pennsylvania
LINCOLN DAVIS, Tennessee             STEVAN PEARCE, New Mexico
PAUL W. HODES, New Hampshire         RANDY NEUGEBAUER, Texas
KEITH ELLISON, Minnesota             TOM PRICE, Georgia
RON KLEIN, Florida                   GEOFF DAVIS, Kentucky
TIM MAHONEY, Florida                 PATRICK T. McHENRY, North Carolina
CHARLES WILSON, Ohio                 JOHN CAMPBELL, California
ED PERLMUTTER, Colorado              ADAM PUTNAM, Florida
CHRISTOPHER S. MURPHY, Connecticut   MICHELE BACHMANN, Minnesota
JOE DONNELLY, Indiana                PETER J. ROSKAM, Illinois
ROBERT WEXLER, Florida               KENNY MARCHANT, Texas
JIM MARSHALL, Georgia                THADDEUS G. McCOTTER, Michigan
DAN BOREN, Oklahoma                  KEVIN McCARTHY, California
BILL FOSTER, Illinois                DEAN HELLER, Nevada
ANDRE CARSON, Indiana

        Jeanne M. Roslanowick, Staff Director and Chief Counsel






































                            C O N T E N T S

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                                                                   Page
Hearing held on:
    May 14, 2008.................................................     1
Appendix:
    May 14, 2008.................................................    29

                               WITNESSES
                        Wednesday, May 14, 2008

Clayton, Hon. Eva M., Former Special Adviser to the Director-
  General, Food and Agriculture Organization at the United 
  Nations........................................................     6
Natsios, Andrew S., Former Administrator, U.S. Agency for 
  International Development, and Professor in the Practice of 
  Diplomacy, Walsh School of Foreign Service, Georgetown 
  University.....................................................    13
Patel, Raj, Political Economist and Visiting Scholar, Center for 
  African Studies, University of California at Berkeley..........     9
Subramanian, Arvind, Senior Fellow, Peterson Institute for 
  International Economics; Senior Fellow, Center for Global 
  Development; and Senior Research Professor, Johns Hopkins 
  University.....................................................    11
Watson, Dr. Robert T., Director, International Assessment of 
  Agricultural Knowledge, Science and Technology for Development 
  (IAASTD), and Professor of Environmental Sciences, University 
  of East Anglia, United Kingdom.................................     4

                                APPENDIX

Prepared statements:
    Carson, Hon. Andre...........................................    30
    Waters, Hon. Maxine..........................................    32
    Clayton, Hon. Eva M..........................................    34
    Natsios, Andrew S............................................    38
    Patel, Raj...................................................    42
    Subramanian, Arvind..........................................    54
    Watson, Dr. Robert T.........................................    63

              Additional Material Submitted for the Record

Frank, Hon. Barney:
    New York Times article entitled, ``Ending Famine, Simply by 
      Ignoring the Experts''.....................................    88
    Wall Street Journal article entitled, ``Africa Does Not Have 
      to Starve''................................................    90
Carson, Hon. Andre:
    Answers to questions submitted to Robert Watson..............    92


                        CONTRIBUTING FACTORS AND
                        INTERNATIONAL RESPONSES
                       TO THE GLOBAL FOOD CRISIS

                              ----------                              


                        Wednesday, May 14, 2008

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:02 a.m., in 
room 2128, Rayburn House Office Building, Hon. Barney Frank 
[chairman of the committee] presiding.
    Members present: Representatives Frank, Waters, Velazquez, 
Watt, Sherman, Moore of Kansas, Baca, Miller of North Carolina, 
Scott, Green, Cleaver, Moore of Wisconsin, Klein; and Manzullo.
    The Chairman. The hearing will come to order. The members 
of the minority have graciously made it clear that we're free 
to go forward. I will tell the witnesses, to many of whom this 
will come as no surprise, including, of course, our very 
distinguished and much missed former colleague. In fact, I have 
two former colleagues on this panel. I served in the House here 
with our friend from North Carolina, Ms. Clayton.
    But I have an earlier colleagueship. After I was elected to 
the Massachusetts house in 1972 along with Congressman Ed 
Markey and Congressman Bill Delahunt, 2 years later, we were 
joined by one of our witnesses, Mr. Natsios, who then 
represented the town of Holliston, I believe, where the 
marathon begins, and later took over the town of Sherman, which 
is now in my district. So we have had one of the greatest bonds 
you can have--common constituents. There are probably some 
annoying people we can both remember, and some very nice ones.
    But I want to assure people that obviously this is--because 
it is a Wednesday--it is a busy day. There are a lot of other 
things going on, but this is a hearing we take very seriously. 
This committee has jurisdiction over American relations with 
all of the international financial organizations, and we plan 
to follow-up on this, including there will soon be a letter 
coming from members of this committee to the Treasury 
Department urging more money for IFAD, which Ms. Clayton had 
brought to our attention. And when this committee sent a 
delegation to Africa during the spring break--several members 
of the committee, Ms. Waters, Mr. Meeks, Mr. Watt, Mr. Clay, 
and Ms. Moore--we included meetings with the IFAD people in 
Cape Verde and the whole question of how you deal with 
agriculture, and how you deal with the food crisis, was very 
much on our mind.
    So I am very appreciative. My praise goes to the staff of 
this committee. They did a very good job of assembling an 
excellent panel, and I just want to assure everybody that this 
is a subject we take very seriously, and your words will have 
an impact as we go forward trying to shape policy.
    I am also glad to note that we're not by any means the only 
committee dealing with this. I guess the Senate is having a 
hearing on it today. I have talked to my colleagues on various 
other committees, including the Agriculture Committee and the 
Appropriations Committee. I do believe there is a recognition 
of the extreme gravity of the food crisis. And what we hope to 
remind people is that, yes, it's important to respond in the 
short run, but it's equally important to take a set of policies 
that won't confront us with this in the future.
    So this is the current crisis in which we have people 
literally starving and the economic harm that is being wreaked. 
The current crisis is an important reminder to us not just to 
respond to the crisis, but to try to use the attention that we 
get now that we're in a crisis to refocus polices in a broader 
sense, and I know that is what we expect to hear from you.
    Are there any other members who wish to make statements? 
The gentleman from North Carolina.
    Mr. Watt. Thank you, Mr. Chairman. I won't take much time, 
but I want to thank the chairman for scheduling this hearing 
and to reemphasize the importance of the subject matter.
    I also wanted to just pay special tribute to my State 
colleague who came to Congress at the same time that I did, Eva 
Clayton. She was in many ways my mentor and she rounded out and 
smoothed out some of the rough edges until she finally gave up 
and left, and left me an unfinished product.
    But I want to welcome her in particular and acknowledge all 
the wonderful work that she has been doing since she left the 
Congress around these issues. We met with her on another CODEL 
with the Speaker on the way to Darfur, and when she was in Rome 
with the World Food Program, that was an important transition 
into that area to understand what humanitarian assistance was 
being provided, and it was just--I was just really proud to see 
the work that she in particular has been doing around these 
issues since she has left Congress.
    With that, I will yield back, because we are marking up 10 
bills in the Judiciary Committee, and as important as this 
subject is, markups take precedence over hearings.
    The Chairman. Well, as a chairman, I certainly concur in 
that even more than I used to. I thank the gentleman. The 
gentleman from Texas had asked to say a word.
    Mr. Green. Thank you, Mr. Chairman. I, too, thank you very 
much for this most important hearing, and I will be very brief 
with my comments. Yesterday, I attended a briefing on Haiti--I 
will be taking a trip to Haiti shortly--and a term was used 
that sort of shocked my conscience, to be quite candid with 
you. The term was ``hunger season.'' A hunger season. In Haiti, 
and I'm told in other countries as well, we have what are 
called ``hunger seasons'' where people plan their lives around 
a time when there will be hunger, more I suppose to a greater 
extent than they have ordinarily, because in these countries, 
food is a problem.
    So I'm grateful that this hearing is taking place, because 
seasons of hunger are seasons that we should be able to 
eliminate. I thank you, Mr. Chairman.
    The Chairman. Are there further--the gentleman from 
Georgia.
    Mr. Scott. Thank you, Mr. Chairman. I just want to make a 
few brief remarks. As you know, I am a member of the 
Agriculture Committee and we now have a farm bill. And one of 
the most important parts of that farm bill is that we have 
strengthened our international food aid program.
    We have put in $60 million to purchase food overseas to 
feed people in need on top of the existing Food for Peace 
international program, and also you're familiar with McGovern-
Dole. We have reauthorized that international food and 
education and child nutrition program to infant child school 
nutrition programs in underdeveloped countries and provides an 
infusion of $84 million in additional funding. So we are moving 
very forthrightly on this issue.
    It is very interesting. This is a very timely hearing as we 
look across the globe and we see food riots. We see what is 
happening in places like China and India and we need to 
evaluate what contributions they are making in a large extent 
to the food crisis. There are other people who are blaming 
developed countries for the brunt of the concerns. The question 
is, who is to blame? And do we need to put the blame on any one 
entity?
    But it appears to me that it is counterproductive to simply 
place blame on a few countries for a situation that looks to 
get much worse before it becomes any better. And when some 
experts are calling this crisis more of a threat than 
terrorism, we must definitely have and understand that this is 
a very dire situation before us.
    Food security is very important. This is a very, very 
timely effort. This is a plentiful earth; there is enough to go 
around for everybody. We just have to manage it better. We have 
to make sure that the United States is truly fulfilling its 
role as the leader. We understand that this farm bill speaks to 
that, and we hope we get enough votes to be veto-proof so the 
President won't veto it.
    Thank you, Mr. Chairman.
    The Chairman. Are there any further requests for an opening 
statement? If not, I will note that we have been joined by 
another North Carolinian, our colleague from North Carolina, 
Mr. Miller. And with that, we will hear from our witnesses.
    The first witness is Dr. Robert Watson, who is the director 
of the international assessment of agricultural knowledge, 
science and technology for development, and he is also a 
professor of environmental sciences at the University of East 
Anglia in the United Kingdom. He was previously chief scientist 
at NASA, Associate Director for Environment at the White House, 
and was the chief scientist at the World Bank.
    He was also the first chair of the Intergovernmental Panel 
on Climate Change, and now he is the director of the recently 
released UN Study on Global Agriculture, which is the 
international assessment to which I just referred.
    So, Dr. Watson, we are very grateful. Please go ahead.

    STATEMENT OF ROBERT T. WATSON, DIRECTOR, INTERNATIONAL 
 ASSESSMENT OF AGRICULTURAL KNOWLEDGE, SCIENCE AND TECHNOLOGY 
   FOR DEVELOPMENT (IAASTD), AND PROFESSOR OF ENVIRONMENTAL 
      SCIENCES, UNIVERSITY OF EAST ANGLIA, UNITED KINGDOM

    Mr. Watson. Mr. Chairman, members of the committee, it's a 
pleasure to have the opportunity to testify today. There is no 
doubt that the recent food price increases are a major cause 
for concern around the world. In developing countries where 
most of the household income is spent on food, increased food 
prices are undermining attempts to reduce hunger and pushing 
some of the world's poorest people into abject poverty.
    The underlying causes of most of the recent increases are 
complex. They include factors such as increased demand from 
rapidly growing economies, especially China; poor harvests due 
to an increasingly variable climate, such as the Australian 
drought; the use of food crops for bio-fuels, such as the use 
of maize for bio-ethanol in the United States; higher energy 
and fertilizer prices; low food stocks; speculation on 
commodity markets; and then, in response to these high food 
prices, export restrictions on agricultural products from a 
number of a significant exporters to protect their domestic 
consumers.
    A key question is whether these price increases are a 
momentary blip, the result of an unfortunate series of events, 
or are they something for the future? There is already evidence 
that the current high prices are stimulating increased 
production, but it may take a number of years to rebuild stocks 
to levels that markets are comfortable with. But if the high 
prices are more than a blip, what else do we need to know if we 
are to provide sustainable, nutritious and affordable food for 
the world in an environmentally and socially sustainable 
manner?
    Meeting the goal of affordable, nutritious food for all in 
an environmentally and socially sustainable manner is 
achievable, but it cannot be achieved through current 
agricultural business as usual. We must recognize that business 
as usual is not an option. We need nothing short of a new 
agricultural revolution. We need more rational use of scarce 
land and water resources. We need an equitable trade regime, as 
well as widespread recognition and action on climate change.
    We also need to recognize in this changing world that we 
need new tools, which means increased investments in 
agricultural knowledge, science, and technology, and we also 
need to care about rural livelihoods. It is undeniable that 
over the past century agricultural science and new technologies 
have boosted production, with enormous gains in yield and 
reductions in food price, but these benefits have been unevenly 
distributed.
    Over 850 million people go to bed hungry every night. 
Primarily, this is a problem of distribution and local 
production. In coming decades, we need to double food 
production. We need to meet food safety standards. We need to 
enhance rural livelihoods and stimulate economic growth, all of 
this at a time when there will be less labor in many developing 
countries as a result of HIV/AIDS and other endemic diseases 
such as malaria in Africa, when there will be more competition 
from other sectors for scarce water, when there will be less 
arable land due to soil degradation and competition for bio-
fuels. There will be increasing levels of regional air 
pollution in many developing countries, loss of bio-diversity, 
and when climate is changing due to human activities.
    Agriculture can no longer be thought of as production 
alone, but we need to recognize the inescapable connectedness 
of agriculture's different economic, social, and environmental 
roles and functions.
    Thankfully, many of the technologies and practices we need 
to manage the challenge of sustainable agriculture already 
exist. But climate change and new and emerging animal diseases 
are throwing up new problems that we haven't considered before, 
and which will need advances in agricultural science and 
technology.
    Climate change has the potential to irreversibly damage the 
natural resource base on which agriculture depends and in 
general adversely affects agricultural productivity. And while 
bio-fuels can offer potential benefits over the rising cost of 
fossil fuels, energy security issues, reducing greenhouse gas 
emissions, and improving rural economies, we concluded in the 
international assessment that the production of first 
generation bio-fuels, which are predominately produced from 
agricultural crops, can raise food prices and reduce our 
ability to alleviate hunger. There is also considerable debate 
over the environmental impact of bio-fuels.
    Opening national agricultural markets to international 
competition can offer economic benefits but can also lead to 
long-term negative effects on poverty alleviation, food 
security, and the environment without basic national 
institutions and infrastructure being in place. Therefore, 
policy reform, trade policy reform that provides a more 
equitable global trading system, can help small-scale farmers 
become more profitable and enhance the ability of developing 
countries to achieve food security while ensuring environmental 
sustainability.
    So what are the short-term challenges? International 
financial institutions and development agencies can assist 
developing countries with the impact of these high prices by 
recognizing that we need to increase productivity and 
profitability of the small-scale farm sector. We need to 
support emergency interventions to boost domestic agricultural 
production of food crops that are locally important for food 
security.
    These interventions need to focus on supporting the small-
scale farm sector, for example, post-harvest facilities, market 
feeder roads, improving access and tenure to land and other 
productive resources, and to provide access to credit.
    We need to promote an increase in national public 
investment and regional cooperation in agricultural knowledge, 
science, and technology. We need to establish safety nets and 
public food distribution systems to provide the poorest and the 
most vulnerable members of the population with the resources 
they need to meet their basic needs and to protect them against 
food price shocks.
    So what do we also need in the medium- to longer-term? The 
IFIs and other developmental institutions should target 
agricultural knowledge, science, and technology toward 
strategies that combine productivity with protecting natural 
resources, such as soils, water, forests, and bio-diversity. We 
need to help crop and livestock production systems adjust to 
human-induced climate change. We need to help countries find 
the appropriate balance between the production of export crops, 
which can help a country's balance of payments, but does not 
ensure food security domestically, and we need to support 
production of subsistence crops that are needed to meet the 
needs of the domestic populations.
    We need to support programs internalizing environmental 
externalities and provide payment and reward farmers for 
environmental services. And we need to help countries to 
develop the basic national institutions and infrastructure to 
take advantage of international trade and macro policy level 
changes that will enable AKST linkages with developing goals.
    We need to help countries to build and reform the AKST 
skill base, and we need to build and rebuild national and 
regional foodstocks.
    Lastly, Mr. Chairman, meeting the goal of affordable, 
nutritious food for all, to make the small-scale farmer 
profitable in an environmentally sustainable manner is 
achievable.
    The future is not preordained, but it is in our collective 
hands. While we can build upon our successes, we must also 
recognize an extrapolation of business as usual will not 
suffice. Instead, we need to be bold enough to rethink 
agriculture.
    Most importantly, if we are to help to improve the welfare 
of poor and disadvantaged people, we need to acknowledge that 
the time to act is now.
    Thank you.
    [The prepared statement of Dr. Watson can be found on page 
63 of the appendix.]
    The Chairman. Next, our former colleague, as I have noted, 
Eva Clayton, who while in the House was obviously very active 
in agriculture affairs, including helping draw attention to the 
need to remedy the past discrimination against African-American 
farmers, where she really was the leader in that effort that 
remains uncompleted. In 2006, after leaving the House, she 
completed a 3-year assignment with the Food and Agriculture 
Organization of the UN. She was assistant director general and 
special adviser to the director general, and we have since 
worked with her in her concern for the IFAD.
    Ms. Clayton?

   STATEMENT OF THE HONORABLE EVA M. CLAYTON, FORMER SPECIAL 
     ADVISER TO THE DIRECTOR-GENERAL, FOOD AND AGRICULTURE 
               ORGANIZATION AT THE UNITED NATIONS

    Ms. Clayton. Thank you, Mr. Chairman, and members of the 
Financial Services Committee, for having this hearing. I 
certainly appreciate the opportunity to appear before you, and 
I will summarize my remarks.
    We in the United States are not immune to these 
circumstances either. We are understanding that we are 
beginning to feel the drops of what has been called a tsunami 
in terms of a global food crisis. We are beginning to 
understand at the marketplace that we are paying more for food. 
But globally, the disaster is very dire.
    The global food crisis is having a much more dramatic 
effect around the world, especially in developing countries. It 
was recently reported that food riots have erupted in more than 
20 countries. Tragically, death has often resulted from these 
disturbances. In the country of Haiti, which was mentioned 
earlier, food shortage has become the order of the day.
    Likewise, the global food crisis continues on the worldwide 
journey of misery and despair without regard to region or race. 
The global disaster is in addition to the existing global 
tragedy. Let me repeat that. This global crisis is in addition 
to the existing global tragedy of 800 million people going to 
bed hungry every night. Both the FAO and the WFP have reported 
14 to 16 million people die--children die every day. So you can 
understand that the global devastation is indeed in addition to 
a current one that is going on.
    What are the contributing factors to the current global 
food crisis? On many of them, I agree with Dr. Watson. The 
Rome-based agencies, both the FAO and WFP as well as IFAD, have 
agreed in a recent document that adverse weather conditions 
such as the Australian drought, which has caused a complete 
eradication of their rice crop, and many of the other producing 
cereal companies have experienced likewise.
    The rise in transportation cost, making it far more 
expensive to produce and distribute food.
    The diversion of crops for bio-fuel, resulting in fewer 
crops for food and feed.
    The rising demand because of the increase in population but 
also in the increase in the emerging economies both in China 
and India require more grain and food.
    The lack of access of important input such as seed, credit, 
fertilizer, technology and markets among smallholder farmers in 
low-income deficit countries, particularly sub-Saharan Africa, 
resulting in these low grain production.
    And finally, but not exclusively, the commodity speculation 
and over-reactive trade policies put in place by some countries 
in an attempt to respond to domestic food shortages.
    How we address these issues going forward will speak 
volumes about us as a nation and also our role in this global 
community. We need a three-pronged approach, that is, 
emergency, immediate, and long term. For the emergency 
response, the case has already been made by WFP and other UN 
agencies indeed that this situation is urgent and unrelenting. 
The recent Burmese cyclone, which killed tens of thousands of 
people, has decimated almost 65 percent of their rice crop. And 
by the way, their rice crop was a significant amount of the 
rice crop for the entire Asian market. So in addition to their 
situation, they have taken this away as well.
    The immediate and long-term approach should include those 
activities that support the building of national food economies 
through fair and open trade. And we need to examine our policy 
here in the United States to the extent that we are not 
contributing to the unfairness of this trade.
    The 2008 Rural Development Report on Agriculture and 
Development concluded that the ability to serve as the engine 
of economic growth and poverty reduction, especially in sub-
Saharan Africa, requires a sharp productivity increase in the 
smallholder farming combined with more effective support to the 
millions coping as subsistence farmers. This can only be 
effectuated if significant resources are made in agriculture 
and development to assist these farmers to be more productive.
    The smallhold farmer must play a key role in the global 
response to the current food security crisis. IFAD has had an 
important role to play in helping to channel the increased 
investment to these family farmers to enable them to contribute 
to increasing the global food supply. Consultations are 
underway this year that will determine the level of the 8th 
replenishment of IFAD's resources, covering the period of 2010 
to 2012.
    IFAD is projecting a growth rate of greater than 10 percent 
for this period, which would require an overall replenishment 
budget globally of $1.2 billion. To maintain the U.S. 
commitment at their current level in the seventh replenishment 
in the eighth replenishment, if they maintain their level, that 
would mean an increase from the current $54 million to $90 
million.
    An additional opportunity to respond long term is also to 
make sure that we have the opportunity to transfer not only 
technology but new ways of assisting each other. And one of 
those ways certainly would be to consider the collaboration of 
the United States universities, the land grant universities, 
who have a special interest in helping small farmers, to work 
with national agriculture universities in increasing their 
ability to understand nutritional agriculture development, and 
to identify and design and implement the best practices to 
increase food security, good nutrition, and agriculture 
development. Such an initiative could be supported for a 5-year 
period for $10 million.
    I need to make, Mr. Chairman, also a request of you. In my 
printed testimony, I think three zeroes were left off, so I 
want to make sure in the record that it has the correct--it 
should have been 10 million.
    The Chairman. Without objection, the--
    Ms. Clayton. I appreciate that. This would afford an 
opportunity of sharing low technology between countries and 
encouraging cooperation and collaboration between a number of 
the international market level organizations, which would 
enhance the opportunity of farmers being more productive with 
very limited resources.
    The situation is dire. Our response must be decisive and 
forward thinking. The failure to strengthen our global food 
system would ultimately lead to political and economic upheaval 
all over the world. If we fail to act now, future generations 
will be condemned to a life of misery and headaches. Today must 
be the day that marks the beginning of reclamation of the world 
food supply, and our future, I think, Mr. Chairman, and members 
of the committee, hangs in that future.
    Thank you.
    [The prepared statement of Ms. Clayton can be found on page 
34 of the appendix.]
    The Chairman. Thank you. Now I am going to recognize 
another member of the committee. The Judiciary Committee, as 
our colleague from North Carolina noted, is marking up some 
bills. And we have one other member on our side who is a member 
of both Judiciary and this committee, and she has come in, so I 
am going to recognize Ms. Waters.
    Ms. Waters. Thank you very much, Mr. Chairman. I appreciate 
your allowing me to have a few words before I go back to 
Judiciary. I really came here to see Eva Clayton. I heard that 
she was going to be here today testifying, and of course there 
is no better advocate on the issue of hunger than Eva Clayton. 
I am very pleased and proud that I had the opportunity, as you 
did and some of the others on the committee, such as Mel Watt, 
had an opportunity to serve with her.
    We were all a little bit disappointed when she decided to 
leave us, but we were very, very pleased and honored when we 
recognized what she was doing and where she was going. The 
assignment that she had with the UN Food Agriculture 
Organization was an extremely important assignment, and we all 
had the opportunity to visit her and to see where she worked 
and what she was doing. We could not have a better person with 
us on this issue than Congresswoman Eva Clayton.
    And, of course, I believe that if many in the world had 
been paying attention to the work that they were doing and the 
advice that they were given about hunger and food, perhaps we 
would not find ourselves in a situation today where there are 
food riots that are going on in some places in the country, 
right here in our own hemisphere, right next door to us where 
Haiti is in desperate straits.
    So I'm hopeful now that the world is beginning to pay 
attention that they will be able to apply some of the advice 
that you have been involved with for so long. I know that one 
thing that I am hopeful that those of you who have been 
involved with the issue of hunger are able to do is to help 
talk about distribution in ways that make good sense. Because 
many of the efforts to assist those who need help will not be 
done--those efforts will not be done very well, because they 
don't understand the complications of distribution. So I thank 
you for being here today, and it's always good to have you 
back, Eva. Thank you.
    The Chairman. Our next witness is Dr. Raj Patel, who is a 
political economist and visiting scholar at the Center for 
African Studies at the University of California at Berkeley. 
And he is also a Fellow at the Institution for Food and 
Development Policy, which is located in Oakland. Dr. Patel.

   STATEMENT OF RAJ PATEL, POLITICAL ECONOMIST AND VISITING 
 SCHOLAR, CENTER FOR AFRICAN STUDIES, UNIVERSITY OF CALIFORNIA 
                          AT BERKELEY

    Mr. Patel. Thank you very much.
    The Chairman. I should note that he has a new book out 
called, ``Stuffed and Starved: Markets, Power and the Hidden 
Battle for the World Food System,'' which is a study of how the 
corporate model and international trade markets affect both 
farmers and consumers.
    Please, go ahead.
    Mr. Patel. Thank you. I'd like to thank the chairman and 
the committee for their concern and their willingness to 
address this urgent issue. I will summarize my written 
testimony.
    The World Food Program has called the current crisis a 
silent tsunami. Yet country after country has experienced not 
silence, but riot. We have seen them in Indonesia and Mexico 
and Haiti and Morocco. These protests, like food riots 
throughout history, are both demands for food but also demands 
for democratic accountability. The citizens on the streets are 
all too aware that the current crisis is one of high food 
prices and a longer term failure of governments to respond to 
the food needs of their people. Both of these are concerns for 
today's committee hearing.
    Now today's food prices and the reason behind the food 
price rises have been well-summarized by Dr. Watson and Ms. 
Clayton, and I endorse their analysis and their policy 
suggestions. But there are some deeper and longer-term reasons 
why governments have been so very vulnerable to the current 
price spikes. As the United Nations special reporter on the 
Right to Food has recently stated, this crisis is the result of 
20 years of mistakes, mistakes for which the World Bank and the 
International Monetary Fund are particularly culpable in, and 
over which this committee has jurisdiction.
    In the 1970's, the Bank invested in a range of agricultural 
institutions, supporting things like grain marketing boards, 
extension, food storage and distribution services, particularly 
in Africa, in an effort to support local agricultural 
development. In the 1980's, however, the Bank shifted 
strategies and the mistakes began in earnest. Last year the 
Bank's own independent evaluation group summed up its 
agricultural policy in Africa since 1980 as a story of 
systematic neglect and underinvestment.
    The Bank had a further impact on agriculture through its 
agricultural trade conditionalities, which demanded cuts in 
government support for agriculture and which continues today 
with the privatization of crop boards in Tanzania and Mali, and 
which has the effect of shoving developing countries straight 
onto the playing field of international competition. But that 
playing field is far from level. Under World Trade Organization 
rules, supported by the World Bank and the International 
Monetary Fund, the European Union and the United States are 
allowed to support their agriculture to the tune of billions of 
dollars a year, a policy that will be reinforced by the passage 
of the 2008 Farm Bill. But developing countries under Bank 
rules continue to be denied similar protections and supports.
    One of the most striking impacts of this distorted playing 
field has been the phenomenon of import surges, which happens 
when imports displace domestic production. In Ghana in 1998, 
local rice production accounted for over 80 percent of domestic 
consumption. By 2003, after liberalization, that figure was 
less than 20 percent. In 1992, 95 percent of Ghanaian poultry 
was local, and by 2003, that was only 11 percent. Yet the Bank 
remains unaccountable in the imposition of its mistakes.
    Through lending conditionality the Bank and Fund are able 
to exercise direct and anti-democratic control over government 
policy. Agricultural trade conditionality in Haiti, for 
example, forced Haitian farmers to compete with U.S. rice 
farmers, who receive nearly a billion dollars a year in 
subsidy. Haiti produced the majority of its rice domestically 
in the 1980's, and today, most of the bags of rice in Haiti are 
imprinted with the U.S. flag and the words ``gift of the people 
of the United States.''
    The situation facing the world is grave, but there are 
solutions. In the short term, there is a role for regionally 
purchased food aid, and for income transfers to increase the 
purchasing power of the poorest people. Further, a freeze on 
continuing investment in the bio-fuels industry has also been 
internationally recommended. In the longer term, though, 
governments need, in the words of the IAASTD that Dr. Watson 
has chaired, to ``preserve national policy flexibility.''
    Investment in agriculture offers a fast track to lifting 
the poorest out of poverty. Developing country governments 
should have the liberty to do precisely that, and to develop 
and maintain domestic agricultural polices that ensure against 
price fluctuations and promote agricultural development.
    For this liberty to be made real, these countries need to 
be unchained from the shackles of World Bank conditionality. 
One way to do this first is to drop Bank loan conditionalities 
except for those around transparency and democratic 
decisionmaking.
    Second, World Bank loans need to be smaller. If they were 
smaller, it would make more credible the threat to withhold 
them if transparency and democracy conditions were violated. To 
this end, debt forgiveness, a priority for this committee, is 
also a necessity.
    In conclusion, with smaller loans and a targeted set of 
conditions, the Bank would be able to draw on lessons that it 
learned in the 1970's. Just as the Bank is responsible for the 
destruction of domestic agricultural supports that have made 
much of the world vulnerable to international price spikes, it 
was in the 1970's responsible for building such buffers and 
assisting democracies rather than dictating to them. So while 
the World Bank's recent past is ignominious and callous, the 
Bank can still call on distant glories to light the path for 
its future.
    I thank you for inviting me here today to offer testimony.
    [The prepared statement of Dr. Patel can be found on page 
42 of the appendix.]
    The Chairman. Our next witness is Arvind Subramanian, who 
is the senior fellow of the Peterson Institution for 
International Economics and the Center for Global Development. 
He is also a senior research professor at Johns Hopkins 
University, and was an assistant director of the research 
department at the International Monetary Fund as well as having 
worked at the GATT, the predecessor of the WTO during the 
Uruguay round. Mr. Subramanian.

   STATEMENT OF ARVIND SUBRAMANIAN, SENIOR FELLOW, PETERSON 
 INSTITUTE FOR INTERNATIONAL ECONOMICS; SENIOR FELLOW, CENTER 
 FOR GLOBAL DEVELOPMENT; AND SENIOR RESEARCH PROFESSOR, JOHNS 
                       HOPKINS UNIVERSITY

    Mr. Subramanian. Thank you, Chairman Frank, and 
distinguished committee members for inviting me today. There is 
a saying that there are only seven meals between civilization 
and anarchy. The riots and social unrest around the world bear 
witness to this saying. The world, and especially the United 
States, needs to respond.
    I want to outline the essentials of a comprehensive 
international policy response to this crisis, highlighting how 
U.S. leadership can make a difference. I will present five 
concrete suggestions by way of response, two for the short run, 
two for the medium run, and one for the long run.
    Short run: The immediate humanitarian imperative is to get 
food quickly and cheaply to the hardest hit parts of the world. 
Recent Administration and congressional actions on food aid are 
excellent initiatives, but they could be complemented in two 
ways.
    First: The rice market. My colleague, Peter Timmer, has 
made the following suggestion. Japan today has 1.5 million 
stocks of rice. These stocks are not sold domestically. 
Instead, they are allowed to decay and then used as livestock 
feed. Last year about 400,000 tons of rice was disposed of in 
this manner. WTO obligations prevent Japan from re-exporting 
this rice, but the United States can relive Japan of these 
obligations which would allow Japan to export this rice 
commercially or as food aid, and that would make a big 
difference to the current crisis in the rice market.
    Second: On food aid, the United States can easily increase 
its assistance by up to 50 percent without providing any 
additional money. How can this be achieved? Simply to eliminate 
the requirement that food be sourced from the United States. On 
my rough calculations, that would mean feeding an extra one 
million children annually without any extra financial 
contributions.
    As the table in my written testimony shows, the United 
States is almost unique in the practice and magnitude of tying 
food aid. Moreover, this is an excellent time to eliminate the 
tying requirement because we are in a supplier's market, so 
that farming interests need not be sacrificed if we eliminate 
the tying requirement.
    Medium run: To boost agricultural supply in the medium run, 
we need to fix the incentives facing agriculture globally. My 
two suggestions here are the following: First, to eliminate, 
gradually if necessary, the current set of policies surrounding 
ethanol in the United States; and second, to negotiate to 
eliminate all global barriers, import and export, to trade.
    Bio-fuels: We can be confident that eliminating or reducing 
the distortions generated by the ethanol program will help 
dampen food prices. By how much is unclear, but help it will. 
This is one of the few policies we can control. We cannot 
control climate change very much in the short run. We cannot 
control rising prosperity and India and China. But this we can 
control.
    More important, the problem with the bio-fuels policy is 
not objectives, which are laudable, but means. Current policies 
favor one specific alternative to fossil fuels; namely, 
ethanol, which is not even the best environmental option. Why 
not level the playing field so that all new avenues, all 
potentially new ideas have a good shot at being explored and 
discovered?
    In short, Mr. Chairman, policies here should aim not to 
pick winners, which we are not very good at doing, but to find 
winners. On agricultural trade, we need a new global compact. 
Unfortunately, the ongoing Doha round of trade negotiations 
won't on its own address these problems. We need to enlarge the 
trade agenda so that bio-fuels policy, including in the 
European Union, and all trade barriers, import as well as 
export, are put on the trade agenda. As you know, currently the 
Doha round is dealing with import barriers but not really with 
export barriers, which have been a big part of the problem in 
the rice market in the last few months.
    The United States has a key role to play in bringing all 
countries, industrial and developing countries together, so 
that comprehensive policies that are good for trade, good for 
food, and good for the environment can be negotiated.
    Long run: If there is one positive fallout from this 
current crisis, it is to bring agriculture, which has long 
suffered from inattention, back into focus. For example, World 
Bank lending to agriculture went down from 30 percent of its 
portfolio in 1980 to 12 percent in 2007. That is a huge 
decline.
    The United States and the international community need to 
go on a war footing to engineer a new Green Revolution, 
particularly in and for Africa. Investment in agricultural R&D 
offers probably the biggest bang for the outsider's buck. For 
example, the World Development Report on Agriculture by the 
World Bank says returns on investment in R&D and agriculture 
have been about 43 percent per year. And you will recall that 
the original Green Revolution was made possible by assistance 
from the Food and Rockefeller Foundations.
    We need international public assistance here to complement 
private initiatives. Private sector initiatives alone will not 
be enough to generate research for African agriculture because 
of the limited purchasing power in Africa.
    In conclusion, Mr. Chairman, the United States can make an 
invaluable contribution to the current food crisis. In the 
short run, the United States should allow Japan to re-export 
its rice and eliminate the tying of food aid. In the medium 
run, it should get all countries together in the WTO to 
eliminate all the distortions in agriculture and agricultural 
trade, including our own bio-fuels program. And in the long 
run, we should revitalize the financial and organizational 
effort to boost agricultural research and productivity in 
developing countries, especially in Africa.
    Thank you.
    [The prepared statement of Mr. Subramanian can be found on 
page 54 of the appendix.]
    The Chairman. Our next witness is Andrew Natsios, whom I 
referred to in part before. He was the administrator of the 
U.S. Agency for International Development. He is a professor in 
the practice of diplomacy at the Walsh School at Georgetown, 
and he is, as many of us know, in one of the most morally 
compelling and difficult jobs now as the President's Special 
Envoy for the Sudan. Mr. Natsios.

  STATEMENT OF ANDREW S. NATSIOS, FORMER ADMINISTRATOR, U.S. 
  AGENCY FOR INTERNATIONAL DEVELOPMENT, AND PROFESSOR IN THE 
    PRACTICE OF DIPLOMACY, WALSH SCHOOL OF FOREIGN SERVICE, 
                     GEORGETOWN UNIVERSITY

    Mr. Natsios. I resigned from that, Congressman, at the end 
of December.
    The Chairman. Okay. Thank you.
    Mr. Natsios. Rich Williamson, Ambassador Williamson, the 
new envoy, is a good friend of mine.
    The Chairman. Thank you.
    Mr. Natsios. I talk with him every week, and--anyway. I 
would like to thank the committee for the opportunity to 
testify today on an important issue, the rapidly rising price 
of food. While this crisis presents grave risks to human life 
and the potential for terrible suffering, it can also be the 
catalyst for a new worldwide campaign to spread the Green 
Revolution of the 1960's to areas of the world which are yet 
untouched by it, particularly in sub-Sahara Africa.
    We should set as an international objective the end of the 
specter of famine and of severe food insecurity in our time. We 
can do this through a two-pronged approach: A much greater 
investment in agricultural development and reforms to our food 
aid programs. This is a very complex subject, so I want to 
limit myself basically to five points.
    The first is just some comments on where the locus of the 
problem is; the principal areas of greatest food insecurity in 
the last decade, and particularly right now, is South and 
Central Asia, North Korea, and sub-Sahara Africa. In fact, an 
incipient famine is developing in North Korea as we speak right 
now. The risk of the current price rise evolving into a famine 
in some areas is very high, particularly in North Korea.
    The North Korean famine--and I wrote a book about this 
about 8 years ago--of the mid-1990's, which killed at least 
2\1/2\ million people, was principally an urban famine, which 
is very unusual, and the incipient famine now developing is 
also likely to be urban as well.
    It is also the case that generally speaking, urban famines 
are politically much more destabilizing than those in rural 
areas where people die in silence. In urban areas, they 
demonstrate and they riot, which often leads to political 
explosions. During the Sahelian famine of the early 1970's, 11 
of 13 governments in the affected African countries fell to 
coups d'etats driven by inadequate governmental response to the 
famine.
    While we should respond to the current food crisis for 
purely humanitarian and ethical reasons in my view, we ignore 
the strategic and political consequences of this crisis at our 
peril. People in most poor countries can adjust or cope with 
slowly rising food prices. What they cannot do easily is to 
deal with rapidly rising prices, which is what we are 
witnessing now.
    My good friend, Amartya Sen--who won the Nobel Prize for 
Economics, I think a decade ago--in his research on the whole 
question of famine economics--in fact, I use his text as the 
principal text for my course on Great Famines and Humanitarian 
Assistance at Georgetown--usually rapidly rising prices in a 
very poor, traditionally food-insecure country with large, 
destitute populations frequently leads to starvation and death. 
I can go through all the famines I have worked in the last 19 
years; almost all of them follow this pattern.
    Second point: Investing in agricultural development. There 
are two things, Mr. Chairman, that I failed at while I was at 
USAID--it is not in my testimony--one was increasing the number 
of people working at AID and the other was increasing the 
budget for agriculture. We are grossly understaffed in the 
agency. That's being remedied now. We put money every year in 
the budget for agriculture and it was diverted to other 
purposes. I will describe that in a minute.
    The cause of food insecurity and acute malnutrition in sub-
Sahara Africa, apart from civil war, is threefold: Regressive 
trade and agriculture policies which discourage food production 
and trade between countries; declining donor investment in 
agricultural development; and poor and nonexistent rural 
infrastructure, particularly roads. By the way, if we increase 
agricultural resources for development in Africa, and we do not 
do something about rural roads, this is not going to work. You 
can't move seed around and fertilizer and other inputs and 
surpluses around if there are no roads. In large parts of rural 
Africa, there aren't any roads, and that's a big problem.
    The real answer to food insecurity, particularly in Africa, 
is economic growth, particularly through agricultural 
development. More donor funding for agricultural development 
and rural roads in Africa should be the first and principal 
response. The President's Millennium Challenge Corporation is 
the only U.S. Government foreign aid program which is now 
spending substantial money to build roads and invest in 
agriculture in Africa. This is because the MCC is not 
earmarked. However, well-governed countries are the only ones 
that benefit from the MCC, so there is no funding for fragile 
and failed states.
    The focus of a new U.S. agricultural initiative should be 
to connect farmers to markets, to use science to improve 
agricultural productivity, to lower northern and southern trade 
barriers to food, and to support and encourage both large-scale 
commercial farming and small-scale subsistence farming. There's 
been a way between policy advocates in this city on that issue 
for too long. We need to end the war. This country would never 
have been food secure if we stopped commercial farming and if 
we didn't help small farmers as well. We need to do both and 
stop this fight in the city that goes on between different NGOs 
and advocacy groups. It is not helpful.
    I want to commend in particular the excellent work of the 
Gates Foundation in agricultural development as well as Bob 
Zoellick's recent announcement of the World Bank's new 
agricultural initiative to address food insecurity.
    Let me mention how serious this problem is on the lack of 
investment for the U.S. Government on agriculture. In Ethiopia, 
one of my favorite countries in the world, and also one of the 
most food-insecure countries, the USAID budget in Fiscal Year 
2007 totaled $462 million. That is a lot of money: 50 percent 
of it is for HIV/AIDS; 38 percent of it is for food aid; 7 
percent is for maternal health and child health; 1.5 percent is 
for education; 1.5 percent is for economic growth; and 1.5 
percent is for agricultural development.
    The Ethiopians keep saying, why are you sending us all this 
money for things that are not the first priority? The HIV/AIDS 
infection rate in Ethiopia is not the highest in Africa. It is 
relatively low, in the single digits. There is so much AIDS 
money right now that is being pushed all over Africa, while 
there is no money for agriculture.
    I have to say, I was in the AID mission in Ethiopia, and I 
had an officer get up and ask when Washington was going to send 
more money here for governance and for agricultural 
development? And I said are you the economist, the agricultural 
economist on the staff? She said, ``no.'' I said, ``Are you the 
governance officer?'' ``No, no, no. I'm the health officer.'' I 
said, ``Why is the health officer asking for things that she 
has nothing to do with?'' She said, ``Because the country is 
going to starve to death if you don't send us more money in 
these other areas.''
    And that is the problem. In the areas where we need money, 
there is no earmark. And so whenever earmarks increase in the 
AID budget, the hydraulics of the system are--and there's no 
increase in the actual level of spending--all the money is 
sucked out of the non-earmarked accounts. This is a little 
secret of the budget process. All of the budgets in AID that 
have no protection from earmarks get reduced whenever we 
increase very popular programs. I support education. I support 
HIV/AIDS spending. I support malaria initiative. All of these 
initiatives are good. But when you have an earmark, and 
agriculture is not earmarked, all those programs get cut, which 
is what has been happening for 20 years--20 years, through both 
Democratic and Republican administrations. And unless this 
structural problem in the AID budget is fixed, this is going to 
continue.
    Food aid: We also need food aid reform which will phase out 
the monetization of food aid as an NGO mechanism to fund their 
programs. And I come from the NGO community. This is not a good 
practice, because monetization frequently has a depressive 
effect on agricultural markets, particularly in Africa. We 
should move toward a mixed system of locally and U.S.-purchased 
food aid. I suggested to the President that at least 25 percent 
of the food aid budget for AID should be locally purchased in 
the developing countries. I would actually like it to be 
higher, but we can't even get 1 percent. We ought to do at 
least 25 percent of Title II.
    Some people say this is too dangerous, too risky. We should 
have a pilot program. We do not need, Mr. Chairman, a pilot 
program. The World Food Program has been doing this for 10 
years, local purchase of food aid. We don't need any pilots. 
Sixty million dollars is in the current farm bill over 5 years. 
That is $12 million a year out of a $1.2 billion budget. Why 
are we only spending $12 million out of $1.2 billion for the 
Title II program, which is our major food account, for local 
purchase at a time of international crisis in food?
    Under the current system, about 60 percent of the cost of 
food aid is ocean freight, land transportation, and 
distribution costs. Only 40 percent actually goes to purchase 
food. We can save a lot on these handling charges by moving to 
local procurement.
    The Food for Peace budget is only one-third of 1 percent of 
our total food exports. And the farm community in this country 
is not the problem. They are not the ones who are insisting 
that we leave the system in its place, because they know this 
is not going to affect prices, it's not going to affect exports 
or anything else. It's so small. The President's initiative 
will not have any appreciable effect on commercial farming in 
the United States.
    Without President Bush's reform, USAID will not be able to 
respond to the price increases that we are facing right now. We 
conservatively estimate in AID, and we did this estimate when I 
was there before the rise in food prices--this is a 
conservative estimate--that we could save 50,000 children's 
lives a year just by making the reform of 25 percent of Title 
II being locally purchased.
    It is not only a matter of money saved. It takes 4 months 
to ship food, and we have a crisis. We can't wait 4 months.
    But let me mention finally, and I'll leave the rest to the 
testimony for the record, and that is this: There is a 
provision in the farm bill putting down a mandatory hard 
earmark for non-emergency food aid, which means all the 
emergency accounts are going to have to be cut. That is a 
disaster right now.
    Two, that money is going to be used for more monetization. 
The last thing on earth we need to do right now is more 
monetization to damage agricultural markets in Africa. This is 
a terrible provision in the farm bill and it was in there 
before, and it's in there now. It should be taken out.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Natsios can be found on page 
38 of the appendix.]
    The Chairman. Well, let me just clarify to Mr. Natsios. I 
am strongly inclined to agree with the substantive point; but 
earmark, we need to be precise about language.
    I infer you don't mean earmark in the sense that it is for 
this bridge and this county, but earmark in terms of the 
program category?
    Mr. Natsios. Yes.
    The Chairman. Okay. That doesn't make it right, but I just 
want to be clear that these are not earmarked for this 
particular sector. It is a separate debate from that.
    Mr. Natsios. Yes.
    The Chairman. But it does restrict program flexibility?
    Mr. Natsios. Yes.
    The Chairman. Thank you.
    Let me ask you just a couple of questions here, Mr. 
Subramanian. Give me this Japanese re-export issue again. 
Summarize that briefly.
    Mr. Subramanian. Thank you, Mr. Chairman, yes.
    Under the WTO, under the Uruguay round, Japan was required 
to import rice because it had a protected rice market.
    The Chairman. Okay, so it imports rice and destroys it or 
makes it into feed, and they are not allowed to re-export it?
    Mr. Subramanian. Exactly.
    The Chairman. And we have a role in this because we are a 
big exporter?
    Mr. Subramanian. That rice that they import, 900,000 tons, 
is from the United States.
    The Chairman. Okay, so the issue is, if the United States 
were in effect to acquiesce in that, would that take care of 
it? There wouldn't be other countries that would have these 
standards?
    Mr. Subramanian. There are two other countries, but that 
is, I think, more of a technical issue. If the United States 
would do it, I think these other countries would be more likely 
to.
    The Chairman. All right. Now, would you know whether the 
United States could do that? Would that take statutory 
authority, or could the U.S.T.R., on behalf of the Federal 
Government, be able to do it?
    Mr. Subramanian. I'm not entirely sure.
    The Chairman. We are going to check on that, but I am 
inclined to be supportive of that, and I have talked to our 
staff members. We will. I just want to make sure. So they have 
imported, and they should be allowed to export what they have 
imported, Mr. Natsios?
    Mr. Natsios. First, you do not need statutory authority; 
U.S.T.R. already has the authority to do this. Second, in all 
famines, there is hoarding. It can be small farmers who do it 
or it can be big merchants. It can be the government that 
hoards.
    Hoarding is going on now in rice more than anything else. 
The way to break hoarding is not through more government 
regulation--that is the worst thing to do--but to move rice 
onto the market and once the price starts to drop, the people 
hoarding the food will dump their rice.
    The Chairman. All right, but this is a de-regulatory 
measure. Let me ask two more questions. One, in the bill that 
passed the House uncontested, in fact, it was a bipartisan 
agreement, to go back again to the point that was made about 
conditionality on the part of the World Bank and to some extent 
the IMF, or to a considerable extent earlier, we said that debt 
relief should come from us and from the multi-lateral 
organizations with no conditionality except the procedural 
conditionality, openness, democracy, add to corruption. And I 
am pleased to be able to report that was included in a 
discussion by both parties here. It was in our manager's 
amendment. It went to the Floor. It was unchallenged.
    In fact, it was inadvertently wiped out by somebody else, 
and there was an agreement, and we had to put it back in. So, 
we are on track to do that. But let me say that this has been a 
subject we have felt strongly about; and it does seem to me 
that there has been some inconsistency on the part of the U.S. 
Government, on a bipartisan basis, because I do think 
agricultural policy has often been one in which both parties 
have vied with each other to be wrong more enthusiastically for 
political reasons.
    And although I sometimes think, when I look at some of my 
more conservative colleagues, that in all of the great free-
market texts, Friedrich Hayek and Ludwig von Mises and Milton 
Friedman, there was a footnote that I cannot find that says, 
``except agriculture.'' Because many of the most ardent 
proponents of those doctrines seem to think agriculture is 
exempted. It may be that the footnote is in high German and 
that is why it is so hard to translate, but there does seem to 
me to be an inconsistency between the policies we have followed 
domestically, which include a great deal of government 
intervention in agriculture, and the policies we have supported 
in the international financial institutions mandating very 
rigid privatization in opposition to government efforts.
    For example, with regard to fertilizer, I am wondering, Dr. 
Patel, is that an accurate perception?
    Mr. Patel. Thank you, Mr. Chairman.
    Yes, it is. There is a vast gulf between the kinds of 
policies that are supported domestically and those that are 
foisted on developing countries.
    The Chairman. Pull the microphone closer, Dr. Patel, 
please?
    Mr. Patel. Is that working?
    The Chairman. Just pull it closer.
    Mr. Patel. So there is a vast gulf between the policies 
supported within the United States and those foisted on 
developing countries. One of the recent success stories has 
been Malawi, which was forced under old circumstances to 
auction off its grain store in 2002 by the IMF when it was on 
the brink of famine, and since then has learned the lesson that 
IMF and bank conditionality is not necessarily the best way to 
go. And so recently they have started a program of subsidizing 
fertilizers for farmers in Malawi and that has had tremendously 
good results in terms of increasing productivity.
    Now, I mean, sadly the use of inorganic fertilizer, 
particularly is fossil-fuel intensive, is not necessarily a 
sustainable way forward. And I would defer to Dr. Watson on the 
appropriate technologies that would be required there. But, 
certainly, the lesson to learn from Malawi is that it is 
important to break with a condition.
    The Chairman. I appreciate that. There was an article from 
the New York Times that I am going to ask unanimous consent to 
put in the record, which in fact says, ``Improving food 
production by defying the experts,'' and it was about Malawi.
    I also would ask unanimous consent to put into the record 
the Wall Street Journal article from last week co-authored by 
Mr. Natsios and Dr. Norman Borlaug, the Nobel winner, entitled: 
``Africa does not have to starve.'' Without objection, both of 
those will be a part of the record. The New York Times article 
has just been efficiently edited from December 2, 2007, by 
Celia Lugger.
    Let me ask one last question; I know we have a little more 
time.
    Have we seen an improvement, or has there been a decrease 
in the conditionality we have been told by the World Bank and 
the IMF that they regret for instance the hyper prescription 
that accompanied the Asian economic crisis, not just the food 
crisis in the 1990's?
    Any comments on what the current state is? Has there been 
more recognition or more relaxation by the IFI? Anyone?
    You know, the recent examples, I am told, there are still 
excessive conditionality forcing a kind of privatization to an 
ideological model without looking at the reality. Dr. Patel?
    Mr. Patel. Yes, the conditionality still persists and the 
micromanagement of domestic economies, particularly in 
agriculture, still persists. There were four grain marketing 
boards that are about to be privatized in Tanzania. In Mali, 
the irrigation of the system is about to be modernized there, 
and these are just sort of small examples of many.
    The Chairman. I appreciate it. On our congressional 
delegation we did encounter--Ms. Moore is doing this--some 
concerns about forced privatization of water. So we will 
follow-up with that.
    Let me ask one last question, and I show a reference in one 
of the reports, and I know this is somewhat controversial. I 
have been very supportive of a lot of my liberal friends in 
many of these, but I think I may differ with them here. On the 
TMOs, on the genetically modified foods, are restrictions on 
those contributing to our inability to feed people adequately?
    Let's start with Mr. Natsios.
    Mr. Natsios. During the severe drought that affected, I 
think, seven or eight African countries, some of the lobbies 
told heads of state that it would poison their population if 
they allowed USAID food aid in, and 60 percent of all food aid 
comes from AID and the Agriculture Department. There is GMO in 
it; I mean, we have been eating it for 15 years.
    You eat corn flakes. You eat GMO grain. Eighty percent of 
our soybean crop is GMO now, and so our food aid has it in it 
and it was prohibited in a number of countries. Some of those 
countries, Zambia, for example, President Mwanawasa, I went to 
see him to try to get him to reverse this and he would not 
reverse it.
    Some of this is the trade war with Europe. It's not just 
the environmental groups, because the Europeans actually 
privately told Southern African countries if you allow USAID 
food aid in, we will not trade with you, because the DNA will 
mingle with other crops. I mean, these arguments are ridiculous 
and completely unscientific; and, there wasn't enough 
scientific knowledge in the ministries to contradict these 
rumors that were being fueled.
    One minister in Mozambique said that one western advocacy 
group told him that we put a pig gene into our corn GMO corn 
seed. And I said, well, there are no animal genes in any of our 
grain crops. It is possible to do it, but we haven't done it, 
because 25 percent of the population of Mozambique is Muslim, 
so a lot of this is rumor, and it is not helpful.
    The Chairman. Any other comments? Yes, Dr. Watson?
    Mr. Watson. We do not need GM crops at the moment to help 
the African farmer. If they had appropriate use of inputs and 
the best possible seeds, they could triple or quadruple their 
production overnight. We could help them to reduce post-harvest 
loss. So, the food problem in Africa today is not because they 
do not have access to GM crops.
    Now, it is conceivable in the future that when we look at 
the risks and benefits of GM crops, they may have a role to 
address drought tolerance, temperature tolerance, pest 
tolerance, and salinity tolerance when we look at climate 
change. But that is not the problem today.
    The Chairman. What about the point that Mr. Natsios made 
about food aid being rejected because of GMO fears?
    Mr. Watson. Yes, it was, and that obviously had to be the 
decision of those individual governments. As has already been 
said, we eat GM crops here today. I think that was a problem 
when the GM crops were rejected as food aid, but the bigger 
question is--
    The Chairman. One question at a time. I know we have bigger 
questions. We have medium-size questions. We have small 
questions. I would like to get my answers one at a time. That 
is the way my mind works. So you would agree that contributed, 
or the American food aid was rejected because of the GMO fears?
    Mr. Watson. Correct.
    The Chairman. Yes, Mr. Subramanian?
    Mr. Subramanian. On GMOs, Mr. Chairman, while I agree that 
this might not be the current problem, there is a huge 
potential for GMOs in Africa, which Paul Kalia, the author of 
the Bottom Berlin, has said it is going to be.
    The Chairman. Well, I appreciate it, as we are being told, 
don't just look at the immediate term, look at the long term. 
And we always did have it probably on a short-term effect.
    Mr. Subramanian. And if you just look at the adoption of 
GMOs by Latin America, Asia, and Africa, Africa lags far 
behind. So there is huge scope here and clarifying the trade 
rules, I think, will have an important long-run impact.
    The Chairman. Mr. Green?
    Mr. Green. Thank you, Mr. Chairman.
    I think it merits saying thank you again for hosting the 
hearing. This is exceedingly important.
    Let's talk for just a moment about Haiti and go back to 
this terminology that I introduced earlier, ``the hunger 
season.'' If we are aware, and I assume that we are painfully 
aware that there is a hunger season, why do we not have the 
sense of a squirrel? Why is it that we have not appropriately 
dealt with a hunger season in a country like Haiti?
    Mr. Natsios. We do deal with it, Congressman.
    The hunger season is simply the 3 or 4 months at the end of 
the agricultural cycle, before the next harvest comes in. There 
is a hunger season in Chad, in Mali, in Mauritania, and in 
Sudan. It's all over the world in countries where they don't 
produce enough food, because their plots are too small, or 
there is a drought or there is an insect infestation.
    For a variety of reasons, or they don't have enough land, 
and they don't produce enough food told to feed them the whole 
year, so they have coping mechanisms. In food aid programs in 
Haiti, for example, the USAID food is used to supplement in 
what is called traditionally the hunger season. Ultimately, the 
answer is not more food aid during the hunger season, it is to 
increase the productivity of small farmers and large farmers so 
that they can grow enough food so they won't have a hunger 
season.
    We don't have a hunger season in the United States. No 
western country does.
    Mr. Green. Would anyone else care to respond?
    Yes, Representative Clayton.
    Mr. Clayton. I agree that there is indeed a hunger season. 
There are many developing countries where they don't have the 
post-production ability to store and reap the harvest of their 
production season. But, also, there is an opportunity, I think, 
during this crisis that we can begin to encourage countries to 
put safety nets in places. Safety nets within their communities 
and here in the United States, we have become familiar with the 
whole idea of food banks store and we need to find ways where 
their version of some way of reclaiming their overabundance 
production when there is a production and storing that.
    We would also need to find ways, and I agree that the 
purchase of our aid program needs to be where we give part of 
that money so we can buy from the local area that would allow 
for them to have a response when there is a famine or a hunger 
season in that area, if they don't have a sufficient supply, 
they can get from their neighbors.
    But I think this gives us an opportunity to start 
structurally saying, what can we do anticipating those seasons? 
What could outside areas do? What can multilateral groups do? 
How can we increase the productivity of farmers and find ways 
of storing their food so they will have the opportunity to 
respond to those areas?
    Mr. Green. Yes, Dr. Watson?
    Mr. Watson. There is another question. We must find a way 
to stimulate the profitability and productivity of the small-
scale farmer in Haiti. Basically, one of the problems was back 
in 1994 one of the IMF loan packages to Haiti was conditioned 
upon agricultural market liberalization.
    What resulted was that cheap rice from the United States 
flooded the country and significantly undercut and damaged 
national rice production. So one of the challenges we have as a 
medium or long-term goal is how could we have the right trade 
system? How do we stimulate local productivity that is 
profitable to the small-scale farmer?
    Mr. Green. Thank you.
    One final question: In Burma, we have a military junta that 
is not responsive, in my opinion, to the world's hand of 
friendship in terms of trying to provide aid at a time when it 
is desperately needed.
    How much of this world, 854 million persons being food 
insecure, is associated with governments; countries wherein 
they just don't handle the circumstances, as I would see it, 
appropriately.
    Who would care to respond, please?
    Thank you.
    Mr. Natsios. In my experience as USAID administrator, a 
very substantial portion of our problem is not just a function 
of inadequate investment. But, there is a huge problem with 
predatory, corrupt, and tyrannical regimes that do not 
represent their own people. They never have elections and they 
don't care what happens to their own population.
    Amartya Sen has said--and the evidence is overwhelming--
that there has never been a famine in a true democracy 
anywhere, even in very poor countries. And the reason for that 
is people go to the polls and vote politicians out of office if 
there is a famine and if Parliament or the Congress doesn't 
deal with it.
    There is a direct relationship between democracy and famine 
prevention. Sen has shown that in his research over the years, 
and I completely agree with him. Most of the worst famines are 
in the worst dictatorships that are the most abusive. There are 
countries like Rwanda that is not a democracy, but President 
Kagami has done a lot to boost agriculture productivity and 
there is an 8 or 9 percent growth rate. They have very good 
economic policies; and, it's a good place to invest.
    So I am not saying all autocratic forms of government are 
bad. They are not in terms of caring about their own people. 
You know, there is a big difference between Burma and countries 
that are also autocracies that have good policies, care about 
their people, provide social services, and treat their people 
decently. But the best way to guarantee food security over the 
longer term, particularly on the issue of famine, is moving 
toward representative and accountable government of some kind.
    Mr. Green. And I would endorse that, but it is also the 
case that hunger is invariably a political phenomenon. And of 
the number of 854 million people going hungry, 35.5 million of 
those are U.S. citizens. Now that is a measure. I mean, 
obviously, the degree of food insecurity here is not comparable 
to Rwanda for example, or Haiti, but it does signify that 
hunger is to some extent a political choice, a choice by 
government to support or not to support its poor citizens in 
accessing food.
    Or, while we cannot control the climate, and we cannot 
guarantee harvest from one year to the next, all of human 
history has been about managing the transition from 7 lean 
years to 7 fat years. I mean, we have as progressive 
civilizations figured out ways to manage that. And, 
unfortunately, over the past 20 to 30 years, the kinds of trade 
and economic architecture we have put in place has gotten rid 
of the government's capacities to be able to make those kinds 
of regulations; to be able to have grain stores; to be able to 
set aside grain for lean years; and those politics, 
unfortunately, have often not been chosen by those governments 
but have been enforced by organizations like the World Bank.
    Mr. Green. My time has expired.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. I appreciate it. I will only just take one 
minute to get this straight. It was in 1994 that the IMF told 
Haiti to liberalize its economy?
    Mr. Watson. Yes.
    The Chairman. That is very odd. I mean, for anybody to have 
been looking at Haiti in 1994, and decided that the time had 
come to act as if it were a functional place, is a sign, I 
think, of ideology run rampant.
    Mr. Cleaver?
    Mr. Cleaver. Thank you, Mr. Chairman.
    I am concerned and perplexed over the whole issue of bio-
fuels. And I am interested in any or all of your responses. 
There are those who are calling on us to put a freeze on bio-
fuels for 5 years. But of course, Congress has already said 
that we were going to increase the bio-fuels from 9 billion to 
about 36 billion by 2022, I think, maybe 2020.
    And if we place a moratorium on bio-fuels, then obviously 
we won't be able to continue to manufacture ethanol which has 
some other challenges. One is that ethanol was not flowing 
through the pipes like gas. Or the only way you get it to a 
service station or get it anyplace is to carry it by large 
truck, which is using a lot of fuel to deliver.
    But without going too far, I want to first of all get your 
response to whether you believe that it is absolutely critical 
that we put a moratorium on the bio-fuels for 5 years or 
whatever period of time.
    Ms. Clayton?
    Ms. Clayton. I'm not necessarily asking that there ought to 
be a moratorium, but I do think we need a reassessment of the 
utilization of ethanol, and understanding both is the pro's and 
con's in that. I think, as we are beginning to look at this 
crisis, we are now seeing the interplay between the value of 
food and the value of utility, of fuel.
    And to the extent that utility prices go up, the market is 
going to drive that we grow more food for fuel. But in addition 
to that--the demand where farmers making decisions--it is to 
what extent, as you indicated, this is a more convenient, or 
more efficient or more environmental alternative.
    And the other issues of bio-fuel that are growing and going 
to, I think all of those need to be, I think as indicated, as 
Doc Watson said, the objective for which we made that 
commitment is a laudable one. We need to find alternatives for 
the fuel, but we need not go in a situation that gives us 
greater food insecurity as we seek to find ourselves rid of a 
dependence on foreign oil.
    So I think at least we need to pause, and the government 
needs to have an assessment as to the impact of bio-fuel, in 
particular ethanol, both on the food security as on an 
environmental issue that is efficiency.
    Mr. Cleaver. Dr. Watson, as you are responding, though, I 
want you to keep in mind, all of you, that currently we are 
subsidizing ethanol to a tune of about $9 billion a year.
    Mr. Watson. Yes, I would like to endorse exactly what Ms. 
Clayton just said. I would suggest you ask for the National 
Academy of Sciences to do a 3-month, in-depth study about the 
direct and indirect of bio-ethanol on the social and 
environmental issues.
    It is not at all clear that there is a significant 
reduction in greenhouse gas emissions. There are potentially 
indirect effects internationally on bio-diversity, water, and 
soil degradation. There is clearly an impact on food price. And 
there may even be in some other countries, social dislocation 
of displacing small-scale farmers for large-scale plantations.
    And as you just said, it is normally not economic. The only 
time that it has been economic is bio-ethanol from sugar in 
Brazil after 20 years of intense research into 500 cultivars of 
sugarcane. And effectively, when oil went above $50 a barrel 
and they could produce sugar at less than $200 per ton.
    So I would strongly urge an in-depth analysis to see 
whether the current U.S. policy should or should not be 
modified.
    Mr. Subramanian. Thank you, Congressman. I also completely 
endorse what my two colleagues have said. But I just add two 
perspectives on this--first is that if you think about it, the 
market is providing huge incentives now for bio-fuel 
production. Why, because oil prices are at $125 a barrel. So 
the market itself is creating the incentives. Why add to that 
by giving more taxpayer money. That is point number one.
    Point number is, you have to look at this from the point of 
saying what is better environmental policy? Sure, we have 
chosen for some not very good reason to favor ethanol. Whereas, 
there might be much better alternatives out there which can 
accomplish the objective.
    And I will draw your attention to the fact that in the 
energy bill, the support for solar power and wind power was 
actually eliminated. So not only have we not favored you know, 
possibly better environmental alternatives, but actually 
favoring demonstrably less good alternatives to fossil fuels.
    Mr. Cleaver. But we all know that rather than using grain-
based fuel from the grain, that cellulosic ethanol is the dream 
of the future. But that may be 10 or 15 years away. I mean, I 
hear people talk about it like next week we are going to have 
it, but the science is just not there yet.
    So either we're--I have an E-85 car, and so I am depressed. 
And the reason for the depression primarily is just the five of 
you up here, and, and, and all that I have been reading over 
the last couple of months. And so I'm frustrated--the food now 
travels in the United States--well, around the world, but in 
the United States for sure--we have a transportation-based 
economy.
    Food travels about 1,500 miles before it gets to our table. 
So whether we use ethanol or not, whether we reduce or put some 
kind of moratorium or not--the truth of the matter is if 
gasoline prices continue to rise, food prices are also going to 
continue to rise, because we have done nothing to deal with the 
gasoline, even if we deal with ethanol. So what then?
    The Chairman. We will finish up with these, because we may 
get to a vote soon. Please, anyone who wants to respond? Mr. 
Natsios?
    Mr. Natsios. It is not just that the bio-fuels are pushing 
prices up for corn. People cope by always shifting to the 
cheapest grain when they are hungry. And the North Koreans 
survived--everybody in North Korea wants to eat rice, but if 
they have a choice between starvation and corn, they eat the 
corn.
    Corn used to be the cheapest crop. USAID would ship corn as 
the preferred grain because we could ship the greatest volume 
because the price was so low. But what is happening now is 
because it has gone up so much, it is putting pressure on the 
prices for all the other grains, because people are shifting 
out of corn consumption, maize consumption, to other things.
    And it's not just corn that is being affected; the 
substitutionary effect in the markets is to drive other crops--
    The Chairman. We will take one more response to that. And I 
am going to get the other two so we can do that before we--yes, 
Dr. Patel?
    Mr. Patel. The point is well-taken--that the price of oil 
is increasing the price of food transport. But that's not the 
only place the oil price matters in agricultural production. 
Oil, and natural gas in particular, is vitally important for 
the production of fertilizers. And that's why the USDA is for--
well its index--in 2000 was 118, but they expect that to reach 
204 by 2006.
    So they are seeing that the price of fertilizer, the price 
of the way we grow food is so heavily linked to oil--that is 
also going to be a long-term contributory factor. And I take 
great courage from Dr. Watson's committee and the results that 
they have come up with, the IAASTD, about the need to shift 
towards more local and agro-ecological fertilizer free kinds of 
inorganic fertilizer free kinds of agriculture. I think that 
absolutely is the way that we are going by force, one way or 
another, going to be feeding ourselves.
    Mr. Cleaver. Thank you, Mr. Chairman.
    The Chairman. The gentleman from California; the gentleman 
from Wisconsin will be able to finish.
    Mr. Sherman. Mr. Watson, we are told that we are 10 to 15 
years away from cellulosic ethanol. Do you generally agree with 
that, and are we spending enough money on the science to move 
that forward as quickly as we can?
    Mr. Watson. I am told by people that it is 5 to 15 years. I 
would argue that we should aggressively increase both public 
and private sector funding for second and third generation bio-
fuels. And I think it's crucial that we do reduce our 
dependency on foreign oil, that we can improve oil 
infrastructure and reduce greenhouse emissions
    Mr. Sherman. Sir, if I could move on to the next question?
    Mr. Watson. Yes.
    Mr. Sherman. Is the way to go cellulosic ethanol, or is the 
way to go methanol?
    Mr. Watson. I think we shouldn't choose a winner; we should 
keep as many options open as possible.
    Mr. Sherman. Okay. I think the panel has already briefed 
the ways in which higher fuel costs have contributed to this 
crisis. Bio-fuels, transportation, and fertilizer have all been 
affected by the price of petroleum.
    Have the petroleum-exporting countries massively increased 
their contributions to food aid, or are they part of the 
solution or just part of the problem? Is anybody aware of any 
massive increases in food aid from petroleum-exporting 
countries or the absence thereof?
    Mr. Natsios. Food aid is provided basically by the European 
Union, Canada, and the United States, 95 percent of it, and 60 
percent comes from the United States.
    Mr. Sherman. So the OPEC countries squeeze the U.S. economy 
so as to make it more difficult for us to provide food aid, 
dramatically drive up the cost of food, and simultaneously get 
a bunch of money, none of which they use for food aid.
    I think this deserves a little bit more attention than it 
gets in the press.
    Mr. Natsios. Congressman, there is a proposal by Bob 
Zoellick, the president of The World Bank, to ask for I think--
I don't remember the percent--I think it's 1 percent of the 
sovereign wealth funds of these oil producing countries be 
invested in development. I think it's a very good idea, and Bob 
made it in a big speech for sort of a vision for the future, 
for the bank, and he proposed this idea. It's a good idea. We 
ought to push it.
    Mr. Sherman. I think pushing that gives them just too easy 
an out. That's zero contribution, just an investment only from 
the sovereign wealth funds, so not of all oil revenues. And of 
course many of these companies, instead of having sovereign 
wealth funds, give their money to various non-sovereign hedge 
funds.
    So you would be penalizing--if this is even a penalty, if 
this is even a contribution--you would be penalizing those who 
choose to manage their own money, as opposed to letting Wall 
Street manage their money. And I know there are many on Wall 
Street who will agree with that. I yield back.
    The Chairman. The gentlewoman from Wisconsin.
    Ms. Moore of Wisconsin. Thank you Mr. Chairman. Just very 
briefly, all of you have given the very complex reasons for 
food insecurity. So in the scheme of things: adverse weather; 
transportation costs; diversion of bio-fuels; the emerging 
economies of China and India; the costs of fertilizers--what 
role would eliminating the subsidies in the EU and the US, 
averting the conditionality of The World Bank, WTO, and INF, 
IMF--to what extent would doing those things help immediately, 
given the complex nature of the problem?
    And also Public Law 480 Title II, which some of you have 
talked about as being a really critical factor in food 
insecurity?
    Ms. Clayton. Let me begin a little bit with the farm bill, 
since it is on the Floor.
    Ms. Moore of Wisconsin. Right.
    Ms. Clayton. And it has many good parts of it, and many 
that I have have advocated in nutritionists, as I have talked 
with about it as well. But it does have persistently high 
subsidies in there, and those subsidies affect small farmers in 
developing countries.
    And I have had--you know I voted for subsidies when I was 
here. I voted to reduce subsidies when I was here. I have been 
defeated by trying to, in the agriculture committee, when I try 
to have amendments on that. But I'm--so I'm guilty of knowing 
what it means to subsidize our farmers, because I represent an 
agricultural area.
    But I also met, I would say, hundreds of farmers in 
developing countries, who said to me that the United States 
dumps their cotton cheaper than we can grow our cotton. And so 
what you do is you frustrate their market. So indeed, that does 
have a--
    Ms. Moore of Wisconsin. Representative Clayton, I was 
actually reading from your testimony. So in the interest of 
time, let me ask this--what do we say, you have been in my 
spot, to U.S. citizens who say, ``Oh, if you don't give us 
these subsidies, you are going to create some food insecurity 
and some poverty among our farmers?'' What is our argument 
against voting for these subsidies?
    Mr. Subramanian. I would say that the biggest one is that 
in the current crisis, prices of farm products are so high, 
farm incomes are really very high now. So this is as good a 
time as any for that argument not to be as compelling.
    Ms. Moore of Wisconsin. Thank you.
    Ms. Clayton. And some farmers will tell you that if they 
had other kinds of assistance in meeting your mandates for 
environmental areas, they wouldn't need the subsidies; they 
would like to have the freedom to grow. And if the market is 
hard now as indicated, then it's evident.
    I mean, so--and the subsidy is based on the market being so 
low that farmers can't make a living. Well, the markets are 
very high now.
    The Chairman. If the gentlewoman would yield, let me just 
add that one of the most heavily subsidized crops that has a 
negative impact on Africa is cotton.
    Ms. Clayton. Yes.
    The Chairman. And as the song goes, ``They don't eat very 
much cotton, whether the cotton balls get rotten or not.'' So I 
think the food security argument is that we do the same thing 
for cotton as we do for wheat. I think it cancels out the food 
security argument, because if that were the case, there 
wouldn't be all this cotton. I am--
    Ms. Moore of Wisconsin. That's right. Well, thank you all. 
I would like to ask more questions, but I need to go vote.
    The Chairman. I thank the panel. We are going to be 
following up on some of these specifics. I did want to know one 
thing, and I have had problems with the farm bill over time. 
But the Speaker does take some credit for, in this bill, 
reducing the ethanol subsidy--not by a huge amount. It goes 
from 51 cents to 45 cents, I think, per gallon.
    She is very conscious of this, and this is a movement you 
know, it's a 10 percent reduction in the level of subsidy. It 
is not in and of itself huge, but it is recognition, I think, 
of the concerns that were voiced here. I thank the panel, and 
the hearing is adjourned.
    [Whereupon, at 11:33 a.m., the hearing was adjourned.]
































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                              May 14, 2008

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