A concept note about setting up an international program for studying the effects of the emergence of biofuels on global poverty and food security. 

The recent global expansion of biofuels production is an intense topic of discussion in both the popular and academic press. Much of the debate surrounding biofuels has focused on narrow issues of energy efficiency and fossil fuel substitution, to the exclusion of broader questions concerning the effects of large-scale biofuels development on commodity markets, land use patterns, and the global poor. There is reason to think these effects will be very large. The majority of poor people living in chronic hunger are net consumers of staple food crops; poor households spend a large share of their budget on starchy staples; and as a result, price hikes for staple agricultural commodities have the largest impact on poor consumers. For example, the rapidly growing use of corn for ethanol in the U.S. has recently sent corn prices soaring, boosting farmer incomes domestically but causing riots in the streets of Mexico City over tortilla prices. Preliminary analysis suggests that such price movements, which directly threaten hundreds of millions of households around the world, could be more than a passing phenomenon. Rapid biofuels development is occurring throughout the developed and developing world, transforming commodity markets and increasingly linking food prices to a volatile energy sector. Yet there remains little understanding of how these changes will affect global poverty and food security, and an apprehension on the part of many governments as to whether and how to participate in the biofuels revolution.

We propose an international collaborative effort to:

• Understand and quantify the effects of expanding biofuels production on agricultural commodity markets, food security, and poverty;
• Develop training programs and policy tools to harness the benefits and mitigate the damages from such expansion on both local and global scales; and
• Build an international network of scholars and government officials devoted to studying and managing biofuels development and its social consequences

China's economy has experienced remarkable growth since its economic reform and is expected to maintain high growth in the coming decades. This paper looks at the implications of China's rapid growth and emergence in the global economy for its own economy and for the rest of world, with specific focus on Australia. The conclusion is that China will emerge as the second largest importer and exporter in the world by 2020. Although imports of many land-intensive agricultural products are projected to rise, exports of most labor-intensive products (eg horticulture, fishery and processed foods) are also going to grow in the future, which implies that China needs to continue restructuring its agricultural sector as the economy moves towards globalisation. The results also show that the opportunities from China's economic growth for the rest of world are projected to far surpass the adverse effects. With the exception of Russia, it is predicted that Australia will be the single biggest winner from China's rise in world markets.

In a book assessing the development of China during the People's Republic era, it is of interest to know how well agriculture has performed and the role that it has played in the development process. Has China produced food and other commodities that have contributed to China's growth? Has it been successful supplying labor to the off farm sector? How has agriculture contributed to the rise in rural incomes and growth, in general? In short, one of the overall goals of this chapter is to document the performance of the agricultural sector and use the criteria of Johnston and Mellor to assess how well the agricultural sector has done.

This chapter, however, seeks to go further than describing the achievements and shortfalls of China's agricultural economy; we also aim to identify the factors, both domestic policies and economic events as well as foreign initiatives, that have induced the performance that we observe. To create an agricultural economy that can feed the population, supply industry with labor and raw materials, earn foreign exchange and produce income for those the live and work in the sector and allow them to be a part of the nation's structural transformation requires a combination of massive investments and well-managed policy effort. The process can only proceed smoothly if an environment is created within which producers can generate output efficiently and earn a profit that can contribute to household income. Policies are required to facilitate the development of markets or other effective institutions of exchange. Although the sector is expected to contribute to the nation's development and allow for substantial extractions of labor and other resources, large volumes of investment also are needed. Investment in education, training, health and social services are needed to increase the productivity of the labor force when they arrive in the factories. Investment is needed in agriculture to improve productivity to keep food prices low, allow farmers to adopt new technologies and farming practice as markets change, and to raise incomes of those that are still in farming. Investment is needed in technology, land, water and other key inputs that are in short supply. In this chapter we seek to point out both policies that have facilitated the performance of the agricultural sector and those that have constrained it.

Although the initial reforms in China and other successful transition nations centered on improvements to property rights and transforming incentives (McMillan, Whalley and Zhu, 1989; Fan, 1991; Lin, 1992), the othe , equally important task of reformers was to create more efficient institutions of exchange (McMillan, 1997).

Markets, whether classic competitive ones or some workable substitute, increase efficiency by facilitating transactions among agents to allow specialization and trade and by providing information through a pricing mechanism to producers and consumers about the relative scarcity of resources . But markets, in order to function efficiently, require supporting institutions to ensure competition, define and enforce contracts, ensure access to credit and finance and provide information. These institutions were either absent in the Communist countries or, if they existed, were inappropriate for a market system. In assessing the determinants of success and failure of 24 transitions during their first decade of reform , Rozelle and Swinnen demonstrate that improved institutions of exchange were absolutely essential for nations to make progress. deBrauw et al. (2004) have shown the positive effect that market development had on the efficiency of China's agricultural producers and their welfare during the 1980s and early 1990s. Continued success of transition nations during the second decade of reform and beyond almost certainly also will depend on continued market development. Somewhat surprisingly, despite the importance of market performance in the reform process there is little empirical work on the success that China (or any other transition nation) has had in building markets.

The purpose of this executive summary is to provide a concise statement about what we have learned about investment into China's rural environment. The overall purpose is to help the Bank understand what is happening in rural China, what farmer's are thinking about the current trends and what they are hoping will happen in the future (if they had a say). One of the most important questions is answer what should the role of the state be.