Japan's massive earthquake and tsunami three weeks ago and the challenging recovery process continue to make news headlines around the world. It is difficult to separate fact and reasonable speculation about the future from the terror-filled coverage about radiation leaking from the Fukushima nuclear complex. In an effort to make sense of recent events, the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC) convened a panel of experts for a discussion about the possible future implications arising from this complex and emotionally charged situation for Japan's energy policy, economy, and politics.

Addressing an audience of one hundred students, faculty, and members of the general public on March 30, Shorenstein APARC associate director for research Daniel C. Sneider expressed the center's deep sympathy for those affected by the natural disasters and its profound admiration for the way in which the people of Japan are dealing with the aftermath. Members of the panel echoed these sentiments throughout the event.

Michio Harada, Deputy Counsel General at the Consulate General of Japan in San Francisco, cited official government figures indicating that, as of March 28, twenty-eight thousand people were dead or missing and one-hundred-and-eighty thousand people were still in evacuation shelters. Faced with such staggering figures, Japan remains in a rescue and recovery phase, he said, but is receiving a tremendous amount of global support. More than one hundred and thirty countries have provided financial assistance, and eighteen countries and regions have sent rescue teams. Collective public spirit is currently very strong, Deputy Counsel Harada emphasized. Japan's challenge moving forward, he suggested, will be to adopt pragmatic measures to fund reconstruction projects in the areas destroyed or damaged by the natural disasters.

Understanding the situation at the Fukushima nuclear power facility and the information circulating about the potential health risks of radiation exposure is complicated, stressed Siegfried S. Hecker, co-director of the Center for International Security and Cooperation. He described the intricate design and structure of the reactors and outlined the sequence of events up to the present, explaining the immediate, crucial challenge of continuing to cool the reactors and deal with the leakage of radiation from them. While there are definite and potentially very serious health threats from radiation exposure and contamination, Hecker said, fear and stress about the situation could also negatively affect mental and physical wellbeing. It is too soon to know the long-term implications for energy policy in Japan and other countries, he suggested, emphasizing the significance of learning from this experience in order to improve any future use of nuclear power.

Robert Eberhart, a researcher with the Stanford Program on Regions of Innovation and Entrepreneurship, proposed that the global supply chain is flexible enough to absorb any manufacturing disruptions in Japan. He noted that in the past twenty years most of Japan's heavy manufacturing has moved overseas, and that the components made there are a comparatively less significant part of the supply chain. In terms of the overall impact on Japan's economy, Eberhart suggested that the net effect on the GDP would be neutral over the next two years, explaining that the imminent loss of business and investment in some areas would be offset by the growth of firms involved in the reconstruction process.

Phillip Lipscy, a center fellow at the Freeman Spogli Institute for International Studies and an assistant professor with the Department of Political Science, stated that events and immediate needs during the early stages of reconstruction may have long-term affects on policymaking and the government structure in Japan. For example, the continued use of nuclear energy—a relatively clean and efficient source of power accounting for 30 percent of Japan's total energy consumption—will face public opposition due to rising concerns about safety and pressing energy needs. In addition, while Prime Minister Naoto Kan's prompt response after the natural disasters helped boost popular sentiment for him and the Democratic Party of Japan (DPJ), how they fare in the long term—especially with regard to the DPJ's relationship with the opposition Liberal Democratic Party and reconstruction-related modifications to its key economic policies—remains to be seen, Lipscy said.

Sneider closed the event with a comparison between the events in Japan and the April 2010 Gulf of Mexico oil spill, pointing to criticism that the Obama and Kan administrations have received for not regulating large corporations closely enough. A prompt resolution to the dangerous—and contentious—situation at the Fukushima nuclear complex is the most immediate concern, and one that will help foretell the long-term political implications for Japan's government, he concluded.

Although there is still a long road ahead in Japan—especially until the accident at Fukushima's nuclear reactor is contained and the actual after-effects of radiation are better understood—the underlying message during the panel discussion was that Japan will indeed recover and that the terrible events of the past weeks have brought people—and even the competing political parties—closer together.

February 10th marked the launch of the Program on Food Security and the Environment's Global Food Policy and Food Security Symposium Series. Setting the stage for the two-year series were Jeff Raikes, CEO of the Bill & Melinda Gates Foundation, and Greg Page, CEO and Chairman of Cargill Inc. As CEOs from the largest foundation and the largest agricultural firm in the world they provided important perspectives on global food security in these particularly volatile times. Full video and clips of the event are now available - Improving Food Security in the 21st Century: What are the Roles for Firms and Foundations.

Jeff Raikes: A Perspective from the Bill & Melinda Gates Foundation

Catalytic philanthropy

The Gates Foundation, through its Agricultural Development Initiative, has been a leader in addressing global food security issues. The Foundation allocates 25% of its resources to global development and to addressing the needs of the 1 billion people who live in extreme poverty ($1/day). 70-75% of those people live in rural areas and are dependent on subsistence agriculture for their livelihoods.

The Gates Foundation is driven by the principle: how can it invest its resources in ways that can leverage performance and address market failures? Its approach embodies a novel concept driven by both private sector motives and public responsibilities. Raikes describes this as catalytic philanthropy.

"The Foundation identifies where its investments can create an innovation, a new intervention that can really raise the quality of lives for people," said Raikes. "If successful, it can be scaled up and sustained by the private sector if we can show that there is a profit opportunity or the public sector if we can show that this is a better way to improve the overall quality of society through investment in public dollars."

Image Photo credit: Michael Prince

In the realm of agriculture, allocating resources across the agricultural value chain has proven to be the most effective approach. As an example of this strategy, Raikes talked about a farmer-owned, Gates-supported dairy chilling plant in Kenya. The cooling facility provided the storage necessary to provide a predictable price at which to sell farmers' milk. This price knowledge and market access gave farmers the confidence to invest in better technology and better dairy cattle. The plant also provided artificial insemination services and extension services to teach farmers how to get greater amounts of milk from the cattle.

"I love the concept. I also love the numbers," said Raikes. "In just two or three years there were now 3,000 farmers in a 25 kilometer radius that were able to access this dairy chilling plant and able to sell their milk."

In addition to improving incomes, Raikes remarked that very consistently what he hears is when farmers are able to improve their incomes the first thing they do with the money is invest in the education of their children.

Upcoming challenges to food security

During the next 40 years or so, global food production must double to accommodate a growing and richer population. Climate change and water scarcity contribute to this challenge. The places that will suffer the most severe weather are also the places where the poorest farmers live. 95% of sub-Saharan agriculture is rain fed with very little irrigation.

"If we are going to be able to feed the world we are going to have to figure out how to achieve more crop per drop," cautioned Raikes. "This includes trying to breed crop varieties that will better withstand water shortages. Early results show that you can get as much as a 20% increase in yield or more under stressed conditions when you have varieties that are bred for that need."

These challenges are compounded by the current economic crisis that is putting pressure on budgets in both donor and developing countries. In 2009, the G20 committed 22 billion dollars to agricultural development in recognition of the importance of agricultural development to food security. However, of the 22 billion promised, 224 million dollars went to five countries in the first round of grants in June. By November, when 21 additional countries submitted their proposals, just 97 million dollars were available to be dispersed and 17 countries were turned away empty handed.

High- and low-tech solutions

In an effort to alleviate some of this deficit, the Gates Foundation has committed 300 million dollars in six grants that span the value chain. These include investments in science and technology, farm management practices, farmer productivity, and market access as well as the data and policy environment to support the Foundation's work. The grants are intended to support about 5 ½ million farm families in sub-Saharan Africa and South Asia.

"We believe innovative solutions can come from both high-tech and low-tech," said Raikes. "On the high-tech end, submergent genes are allowing rice crops to survive periods of flooding up to 15 days. In areas of rice farming prone to flooding, this can save entire crops traditionally wiped out by such weather disasters."

Image Photo credit IRRI/Ariel Javellana

The sub1gene seeds are now being used by 400,000 farmers and are on track to be used by 20 million rice farmers by 2017. On the low-tech end, the Gates Foundation is providing $2 triple layer bags to farmers to reduce crop loss from pests; an affordable solution that has increased average income per farmer by $150/year.

"We primarily support conventional breeding, but we also support biotechnology breeding. In some cases we think that breeders in Africa and South Asia will want to take advantage of the modern tools we use here in our country to provide better choices for their farmers," explained Raikes.

Reasons for optimism

After years of diminished support, US Agricultural Development assistance to sub-Saharan Africa has gone from about 650 million in 2005 to about 1.5 billion in 2009. In developing countries, the Comprehensive Agricultural Development Program (CADP) in Africa has challenged countries to dedicate 10% of their national budgets to agriculture with the goal of improving annual agricultural growth by 6%. 20 countries have signed on to the CADP compacts, and 10 countries are exceeding the 6% growth target. Finally, since 1990, 1.3 billion people worldwide have lifted themselves out of poverty primarily through improvements in agricultural productivity.

Raikes pointed to Ghana as a success story. Since 1990, casaba production, an important staple food for poor smallholder farmers, has increased fivefold. Tomato production increased six fold. The cocoa sector has been revived and hunger has been cut by 75%.

"The key to success in Ghana was a combination of getting the right developing country policy with the right macroeconomic reform, the right institutional reform, smart public investment, and an overall good policy environment," said Raikes.

Supporting good policy is an important part of the Foundation's food security strategy, and was a strong motivation behind its funding of FSE's Global Food Policy and Food Security Symposium series.

"We see this symposium series as an opportunity to gather policy leaders who will bring new ideas of what will be effective policy approaches and effective economic environments in the countries we care a lot about, in particular sub-Saharan Africa and South Asia," said Raikes.

Raikes concluded his remarks by reminding everyone that the key to improving food security globally is making sure women, who make up at least 70% of the farm labor population, are included in the equation.

Greg Page: Balancing the race to caloric sufficiency with rural sociology

As the largest global agricultural firm, Cargill has an influential role to play in the world of food and agriculture. Cargill is a major supplier of food and crops and a provider of farmer services, inputs, and market access.

Image Photo credit: Olaf Hammelburg

Together with the Gates Foundation, Cargill has reached out and trained 200,000 cocoa farmers in the Ivory Coast, Ghana, and Cameroon. One tribe and one small village at a time the company has helped improve food safety, quality maintenance, and storage; benefiting the farmers, Cargill, and customers further down the supply chain. Cargill has also assisted, through financing and product purchasing, 265,000 farmers in Benin, Burkina Faso, the Ivory Coast, Malawi, Uganda, Zambia, and Zimbabwe.

Can the world feed itself?

A billion people lack sufficient caloric intake on a daily basis. In sub-Saharan Africa, 38% of all children are chronically malnourished, largely the result of inadequate agricultural productivity. While nine of the ten countries that have the highest prevalence of malnourishment are in sub-Saharan Africa, the two countries with the largest absolute number of malnourished people are India and China.

"This points to the difficulty of this problem," said Page. "India exports corn and soybean protein and China has 2.5 trillion dollars of hard currency reserves. These issues aren't necessarily of ability to feed people, but a willingness and commitment to do so."

Can the world feed itself? Yes, said Page.

When you break down the number of calories needed per malnourished person per day and convert that to tons of whole grains required to extinguish that hunger you get 30 million tons; 1/6 the amount of grain we converted to fuel globally last year. In the U.S. alone, 40% of our corn goes to ethanol.

"It isn't an issue of caloric famine-it is an issue of economic famine," stated Page. "In other words, this is not a food supply problem, but rather the lack of purchasing power to pay for a diet. An adequate price must be assured to reward the farmer for his efforts and to provide enough money that she can do it again the following year."

Rural sociology premium

What we face is the need to keep smallholders on the farm-despite the fact that they may not be the low-cost producer of foodstuffs-in order to avoid a rural population migration that would be unsustainable. As a result, the challenge the world faces is who is going to pay that rural sociology premium? If it costs more to raise crops on small farms is that burden going to be borne by the urban poor or is there going to be an alternative funding mechanism that allows smallholders to succeed?

Image Photo credit: Cargill

What is the survival price for a smallholder farmer? Page explained that if you wanted a family of four on a farm in sub-Saharan Africa to receive an income commensurate with the average per capita income of the urban population, you would come up with a price near $400 a ton.

"To put this in context, the highest price for maize that has ever been reached here in the United States is about $275 a ton," said Page. "This rural sociology premium to sustain smallholders is not an insignificant amount of money. How do we achieve fairness between the revenue received by the rural smallholder and the price borne by the urban consumer?"

State of disequilibrium - complacency to crisis

Today we are experiencing incredible price volatility where commodity prices are in a continuous state of disequilibrium. Very small changes in production have outsized impacts on price. This is in contrast to the last two and a half decades when the world operated with fairly robust stocks due to crop subsidies in the United States and Western Europe.

"This period of subsidization was when the western world probably did more harm to sub-Saharan Africa and South Asia than any other period in history," said Page. "We refused to allow price to signal to western farmers to produce less. As a result, the world price of grains fell far below the ability of any smallholder to compete. We then shipped those surpluses to developing countries, which then failed to invest in their agriculture for decades."

Today we are lurching from complacency to crisis. The ability of information and market speculation to be transmitted rapidly is affecting purchasing decisions of thousands to millions of consumers. Rising fuel prices, export restrictions, increasing demand for crops for biofuels, and unpredictable weather have all contributed to higher prices. Some of the drivers of price, however, are good things, such as the increase in per capita income and the capacity of more people to have a more dense and nutritious diet.

"Interestingly, the upside of the ethanol and biofuels program is that it brought prices back to a sufficiency that reinvigorated investment in agriculture," noted Page. "On one level I think a very good argument could be made that the biofuels program brought the world further from famine than it ever had been because of the price."

Critical food security factors

Page concluded by summarizing the elements that Cargill believes are critically important to increase food security. The first is the ability to understand the tradeoffs between a fast path to caloric sufficiency and the needs of rural sociology. Second, that crops be grown in the right soil, with the right technology, and relying on free trade so we can harvest competitive advantage to its fullest.

Another critical factor is rural property rights. Smallholders must have the ability to own the land, have access to it, and transfer it to future generations if you want a farmer to reinvest in his farm, said Page.

"Smallholders in developing countries need some degree of revenue certainty and access to a reliable market if we expect them to do what their countries really need them to do, which is raise productivity," explained Page. "Today they are often forced to sell at harvest, often below the cost of production, and lack the storage capabilities and capital to provide crops sufficiently and continuously."

Open, trust-based markets also play a key role in ensuring food security. Governments need to support trade. When Russia, Ukraine, and Argentina turned to embargos as a way to protect domestic food prices open markets were jeopardized and price volatility increased. Finally, there are very important roles for the world's governments in the creation of infrastructure that is vital to provide access to markets.

"I believe fully and completely in the world's capacity to harvest photosynthesis to feed every single person and to do it at prices that can be borne by all," concluded Page.

From how failure drives innovation to the role of government in supporting entrepreneurship, two expert professors at Stanford led a training session for executives from Chinese state-owned enterprises (SOE) as part of the 2011 Cisco China 21st Century Enterprise Leader Program (ELP) hosted by Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) on March 22, 2011.

Professor William F. Miller, Co-Director of SPRIE, kicked off the session with a stimulating presentation on Silicon Valley's habitat for innovation. He pointed out that turning technology into business was the essence of Silicon Valley, and a favorable business, social and political environment in the region had facilitated the process. Despite the emergence of other venture capital locations, Silicon Valley scooped up almost 40% of venture deals and dollars across the U.S. in the last quarter of 2010, according to the MoneyTree Report.

The "restless pioneer spirit" of Stanford had always played a crucial role in the effective interaction between research institutes and industry, Miller argued.

Following Miller's discussion of features of Silicon Valley's entrepreneurial habitat, William Barnett, Thomas M. Siebel Professor of Business Leadership, Strategy, and Organizations at the Stanford Graduate School of Business, shared his thoughts on how to discover successful business models.

"Having great technologies is not enough," said Barnett. "Entrepreneurs are like scientists. Successful business models are learned from failures." Barnett encouraged the leaders present to create a working environment within which failure would be tolerated. He further urged them to accelerate the learning process by asking what might go wrong.

The purpose of the SPRIE session, which is part of a 12-day US-based program organized by Cisco Systems and China's State-owned Assets Supervision and Administration Commission (SASAC), is to help the SOE executives understand how to foster innovation and to drive operational excellence. The delegation is composed of SASAC officials, Peking University professors and leaders from 17 SOEs in China, including Southern Power Grid, Three Gorges Corporation, China Telecom, China Unicom, China Mobile, China FAW Group, Harbin Electric Corp., Anshan Iron and Steel Group, Baosteel Group, China Ocean Shipping Company, China Eastern Airlines, China Oil and Foodstuffs Corporation, State Development and Investment Corporation, China Merchants, China Railway Group and China Railway Construction.

A group of leading American and Japanese venture capitalists, entrepreneurs, academic experts, government officials, and leaders in business and related fields joined the "U.S. - Japan Dialogue to Promote Innovation, Entrepreneurship and Job Creation" symposium, organized by the Stanford Project on Japanese Entrepreneurship (STAJE), the largest U.S.-Japan event held at Stanford in many years, on February 23, 2011.

Representatives from both governments opened the event by underscoring the economic and strategic reasons for closer U.S.-Japan cooperation in promoting innovation and entrepreneurship. U.S. Ambassador to Japan John V. Roos emphasized how an economically vibrant Japan is critical to the security of the United States, and how it creates opportunities for U.S. trade, investment, and job creation. Moreover, innovation and collaboration are vital to addressing critical global issues, such as climate change. Under Secretary of State Robert D. Hormats noted how innovation and entrepreneurship, often involving young firms bringing new technology to market, are fundamental to ensuring sustainable growth and inclusive prosperity, both at home and across the globe. For Japan, Teruhiko Mashiko, a Ranking Member of the Diet's Committee on Economy and Industry and a former Senior Vice Minister of Economy, Trade, and Industry, highlighted the potential for greater employment, development of green technology, and the circulation of human and other resources through innovation and entrepreneurship.

Several speakers pointed to ways government and the private sector can foster the creation of entrepreneurial ventures with a global outlook. Professor William F. Miller, co-director of the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE), focused attention on the need to support the full entrepreneurial habitat—including an active angel investor and venture community, entrepreneurial education, passionate entrepreneurs, and business services (legal, consulting, financial) that understand the needs of start-up companies. Additionally, several speakers suggested that mid-career hiring by large Japanese firms and greater willingness on their part to grow by acquisition would increase labor mobility and expand opportunities for entrepreneurial ventures. They expressed concern that, at present, a public offering of shares is practically the only option for startup firms to exit the venture stage in Japan. Others highlighted how greater English-language proficiency and changes in immigration law could expand the linkages between Japan and the global community of entrepreneurs and venture capitalists.

Larry W. Sonsini, Chairman of Wilson Sonsini Goodrich & Rosati, reflected on the waves of innovation that Silicon Valley has generated, both in terms of new technologies coming to market as well as the maturing of technology already out. Defining Silicon Valley as a culture rather than a place, he outlined the ingredients in the recipe for its success: an entrepreneurial culture, with such features as mobility of talent, diversity, and acceptance of failure as a type of learning; ready access to capital; sources of technology and technologists, particularly from universities and large forward-looking corporations; government support; developed laws and accounting systems; availability of exit options for ventures; and an infrastructure of lawyers, accountants, bankers, and consultants. He also offered his thoughts on key trends that will influence the position and direction of emerging technology companies, including: globalization, regulatory changes, development of capital markets, education, and the rule of law.

In the closing remarks of the day-long symposium, Robert Eberhart, a SPRIE researcher and the leader of the SPRIE-STAJE project, summarized the three potential roles for governments to play in promoting innovation and entrepreneurship: to establish rules to ensure fair dealing and access to the market; to rewrite (i.e., reform) the rules of a market thereby ensuring firms will address it in new ways; and to stimulate demand for advanced technology by purchasing it for its own reasons, thereby creating new opportunities for entrepreneurial technology ventures.