Tom Abate covers the technology sector for GlobalPost, where this article first appeared. Any views expressed are his own.

It seems like a science fiction novel: Near-starvation of much of the world’s population results in the development of patented seeds and widespread livestock cloning.

But that scenario is not pure speculation. Rather it is a possible future envisioned by analysts for the Organization for Economic Co-operation and Development, in a new report titled “The Bioeconomy of 2030.”

The report, which extrapolates current trends into the year 2030, deals with every aspect of biotechnology from medicines to plant-based chemicals, and projects their impacts on the world economy. It raises the fictional starvation scenario to prod the public and policymakers into considering biotech agriculture in a new light.

“Two consecutive years of extreme drought and high temperatures in the major grain growing regions of the world between 2016 and 2017 … caused an explosion in food prices,” says the report published last month. “The ‘Malthusian years’, as they were quickly called by journalists, fueled further investment in agricultural biotechnology.”

Thomas Malthus, a British economist and demographer, famously predicted that population growth would outpace food production, resulting in famine. But over the past two centuries, a series of technological advances — the Industrial Revolution, for example — have greatly expanded the world’s ability to produce food and his theory has been largely discredited.

The report’s sections on agriculture stand out because they evoke provocative concepts to revive the policy debate over what opponents have sometimes call “Frankenfoods.”

There has been public opposition to the genetic modification of foods, particularly in Europe, since herbicide-resistant soybeans were introduced in the mid-1990s. Consumers have questioned the health and environmental risks of the products.

The genetically modified crops currently on the market have been designed to resist insect damage and viral infections and to tolerate certain herbicides, according to the World Health Organization. They are widely grown in North America, South America and China, but only a handful have been approved in the European Union.

The report says that overcoming this unease will require some policy response — possibly driven by an unwanted disaster.

“The goal is to get people thinking about the way the world is changing (population, consumption patterns, climate change, etc.) and encourage them to take a hard look at how society is going to cope,” OECD analyst and report co-author David Sawaya said in an e-mail exchange from Brussels.

In the sections focusing on agricultural issues, the report anticipates that growing middle classes in China and India will increase demand for meats and grains. It predicts a global trade pattern in which manufactured goods flow from the East to the West, while edibles flow back from bread-basket regions such as North and South America.

The report envisions that population growth, coupled with trends like water scarcity, will increase the pressure to obtain greater yields from arable lands. The OECD planners also think that an increasing demand for biofuels and biochemicals will lead to the development of non-edible plants designed to be grown on arid or other marginal lands.

All of these trends, they say, will increase the need for genetic modifications to design drought-tolerant crops, optimize non-edible plants for fuel and chemical production, and improve livestock through advanced breeding and cloning techniques. “The use of biotechnology in primary production is therefore likely to be pervasive by 2030 for the production of plant and animal food sources and for plant sources of feed and fiber,” the report suggests.

Biotech-skeptic Michael Sligh, director of the sustainable agriculture program for the U.S.-based Rural Advancement Foundation, said such a technology-centered view of the future ignores the social, economic and environmental issues that should be considered when planning how to feed the world.

“There’s always been a great deal of rhetoric and promise around agricultural biotechnology but issues of hunger are far more complex than any technological fix,” Sligh said. “Do farmers have access to fair credit, good roads, open markets? All of these are factors that have to be taken into account.”

Among other objections, Sligh said biotech agriculture will increase the number of patented seeds and other inputs that farmers will have to purchase year after year, making them more dependent on global trade and credit flows and decreasing self-reliance.

“When you shift from a very long tradition of 12,000 years of farmers saving seeds to a technology that is patented that is a fundamentally different paradigm,” Sligh said.

Biotech advocate C.S. Prakash, a plant geneticist at the University of Tuskagee in Alabama, thinks the OECD report correctly predicts that global warming will increase the need for genetic modifications.

“The whole geography of farming is going to change,” he said. “You will have more water in some places and less elsewhere, and we will need to redesign crops quickly to meet these new stress factors.”

Prakash said he hopes the report’s fictional scenario spurs debate, especially in Europe, where opposition to genetically modified foods is strongest.

“Unless Europe changes in a big way I don’t think the rest of the world will follow,” he said.

In addition to the public opposition that could impede biotech agriculture, the authors of the OECD report noted another issue that could diminish its usefulness in avoiding the Malthusian possibilities.

In a follow-up email to GlobalPost, they noted that mass-market crops like corn, soy, cotton and canola have been the focus of biotech development because they are most profitable. There has been far less development of the niche crops and local adaptations that are sorely needed.

“This will often be in areas without huge (in a monetary sense) markets,” the OECD authors wrote, suggesting that research subsidies and public support would have to be part of the scenario for “fulfilling the promise of biotechnology.”

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(Pictured above: Alberta farmer Dwayne Marshman measures the height of his wheat crop, which should be at his waist, on his farm in the Canadian prairies near Rockyford, Alberta June 30, 2009. REUTERS/Todd Korol)

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

Thursday’s G20 summit may not mark the end or even the beginning of the end of the global recession. It did mark the end of the ascendancy of the unfettered, Anglo-Saxon model of capitalism.

What comes next is far from sure, but it will be different from the headlong dash for individual enrichment, short-term profit and financial acrobatics that began with the dominance of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher in the 1980s. The widespread acceptance of increased regulation would have been anathema for U.S. President Barack Obama’s predecessors.

“The old Washington consensus is over,” British Prime Minister Gordon Brown declared after chairing the London summit. It was a clear acknowledgement that the deregulation that allowed casino capitalism to flourish on Wall Street and in the City of London, the world’s two biggest financial centers, had failed and will be fundamentally overhauled.

Brown’s role in brokering a bigger-than-expected G20 deal on refinancing and reforming the International Monetary Fund and World Bank, extending the scope of regulation and providing new finance for trade and the poorest countries was a personal success. But it may not help him much at home, where many recall his 1997-2007 decade as a “light-touch” finance minister who claimed to have ended the cycle of “boom and bust.”

The $1.1 trillion in funds for the IMF, the World Bank, trade finance and development which he announced, even if it is not all new money, may begin to restore market confidence that countries will not default, and to revive trade flows.

But Brown and Obama did not achieve their initial declared objective of persuading countries with balance of payments surpluses such as Germany and China to give a bigger fiscal stimulus to the world economy.

Nor did they come up with a solution for disposing of banks’ toxic assets, which continue to impede a recovery.

Indeed, they were upstaged by French President Nicolas Sarkozy and German Chancellor Angela Merkel, who appeared in lockstep on the summit’s eve to hammer home demands for tougher regulation of all markets and financial institutions, and for the naming of shaming of tax havens.

“We have taken an important step toward creating order in an area of the world where there was previously no order,” Merkel told a news conference. Sarkozy said the world had turned the page on “the Anglo-Saxon model.”

The Franco-German couple, so strained since the hyperactive Sarkozy’s election in 2007, achieved almost all its objectives. The French leader’s pre-summit theatrics of threatening to leave an empty chair may have been an empty threat, but it played well back home and may have put his host on the defensive.

Obama, who was more of a listener than a leader at his first global summit, made clear that while he believed in the free market, executive pay and rewards would have to be changed to encourage long-term performance instead of quick profits.

Other winners at the table included Chinese President Hu Jintao, who was courted by Obama and Sarkozy and magnanimously contributed $40 billion toward the IMF war chest to help countries in financial trouble. In return, Hu was promised a reform of IMF seats and votes in 2011 that will give his emerging economic colossus, which now has no more say than Belgium or Switzerland, far greater power.

That redistribution will also benefit India, Brazil, Mexico and Indonesia, and should reduce the traditional U.S. and European dominance over international financial institutions, symbolized by their carve-up of the top jobs.

Agreement to publish a list of tax havens that use banking secrecy to deny cooperation with other countries about suspected tax cheats and money launderers came only after countries such as China and Brazil had been assuaged about the fact that it was compiled by the Organization for Economic Cooperation and Development, a largely Western, rich countries’ body.

Russian President Dimitry Medvedev was also among the winners, enjoying a fresh start in relations with the United States despite his country’s continued military presence in breakaway regions of Georgia following last year’s war.

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

The United States is fighting a fire in the world economy, but Germany and some other European countries fear a flood of inflation as a result.

That clash of cultures is at the heart of transatlantic debate over whether Europe should spend more and ease monetary policy to revive growth, with a deep economic contraction certain this year and an end to the recession not yet in sight.

The perception gap could cause lingering resentment among Americans and Germans on the way out of the crisis.

World Bank President Robert Zoellick sees concern on both sides of the Atlantic, not just in Europe, at the risk of inflation down the road from the massive additional liquidity created by the U.S. Federal Reserve and soaring public debt.

The current gush of liquidity made the glut after the bursting of the Internet bubble in 2001 look like a desert, he told the weekend Brussels Forum, a conference of North American and European policymakers, business and opinion leaders.

The dollar’s sharp fall and the jump in the price of gold after the Fed’s announcement of a giant purchase of long Treasury bonds reflected fears that the United States will try to inflate its way out of the crisis.

“What some political leaders say when you bring this up is: “Well gee, when we’re putting out the fire, can you really worry about the water damage?” In a way, you really do have to worry about both,” Zoellick said, advocating a timely pathway back to fiscal and monetary discipline.

The European Central Bank has provided unlimited liquidity for banks to unfreeze credit markets and is weighing following the Fed into unconventional measures such as buying bonds to provide an extra monetary stimulus. But Germans are especially wary due to their traumatic history of hyperinflation in the 1920s, something that contributed to the rise of Hitler.

“I can promise you the European response to this crisis will not be inflationary. That’s why guys like me exist,” German Bundesbank President Axel Weber, a member of the ECB’s Governing Council, told the Brussels Forum. “I can promise you once it starts looking inflationary we will tidy up the mess.”

European Union leaders agreed at a summit last week they had taken enough fiscal stimulus measures for now and rejected pressure from the Obama administration to do more.

German leaders were particularly dismissive of calls to throw more money at the crisis when two stimulus packages adopted in the last five months are still being implemented.

European Commission President Jose Manuel Barroso made clear EU countries would review their stimulus efforts if the economy continues to deteriorate. European Economic and Monetary Affairs Commissioner Joaquin Almunia said the high debt levels of many states before the crisis were a constraint on further deficit spending.

“We are concerned by countries whose public debt is increasing very, very fast,” Almunia told the forum. “We cannot afford to spend the next two decades absorbing the debt we have created to tackle this very deep recession.”

The dispute about how to fight the crisis may have longer term negative consequences on both sides of the Atlantic — fuelling pressure in the United States for trade protectionism and stoking opposition in Germany to helping European partners.

Germans feel they made tough choices in the good times to balance their budget and cut unit labor costs to improve their competitiveness. Now many feel they are being expected to pay for the fiscal recklessness of other European countries.

Americans are raging at the greed and irresponsibility of bankers and corporate moguls. But if Main Street resents bailing out Wall Street, it will be even more resistant to paying to revive European or emerging economies through imports.

Lord Mark Malloch-Brown, the British minister in charge of preparing next week’s London crisis summit of G20 nations, said there was a big risk if Americans felt other countries were not pulling their weight in reviving the global economy.

“The most dangerous idea out there is that the world is somehow going to expect the American consumer to ride to he rescue,” the former senior U.N. official said. “If that idea is left out there, it’s going to lead to protectionism in America.”

Robert Zoellick, President of the World Bank, and a man who believes that 2009 will be a “dangerous year”, will be speaking on March 31st and has agreed to take questions from Reuters readers.

Zoellick has been outspoken during the current economic crisis predicting the first shrinking of the economy since the ’30s, warning that increased government spending will simply create a ‘sugar high‘ until banks’ toxic assets are dealt with properly, and urging a tougher stand against protectionism.

But the World Bank’s primary focus is on helping developing nations and alleviating  poverty. Earlier this month it published research showing that the spreading crisis will push 46 million more people into poverty in 2009 on top of 130-155 million pushed into poverty in 2008.

With the London summit of the Group of 20 nations on April 2nd fast approaching what do you want to know about the World Bank’s role in shoring up the world economy and helping poorer nations? Use the comments section below, or use the #askwb tag on Twitter, and I’ll get as many of your questions to Robert Zoeliick as possible.

UPDATE: This event has now taken place and you can view the questions we put to Robert Zoellick in the player below. We have no means to pass on any further questions to the World Bank but you are welcome to add your comments on the discussion thread below.

– Wei Gu is a Reuters columnist. The opinions expressed are her own. –

Beijing risks inflicting even more damage to the world economy by reflexively slowing market reforms in response to the financial crisis. But China’s leaders should quicken, not slow, the pace of reform to help it ride through the storm.

This December marks the 30th anniversary of China’s decision to embrace market liberalization but with growth becoming the No.1 concern in China, reforms have taken a back seat.

To stimulate the economy, Beijing has resorted to non-market measures that have worked in the past, such as building big infrastructure projects to boost public spending.

Further, the yuan’s recent slide has prompted some market-watchers to speculate that policymakers are deliberately encouraging the depreciation of the currency to support exports.

But those policies will not pull China out of this turmoil. The multiplier effect of government infrastructure investment is much weaker than during the Asian financial crisis because China’s roads and bridges are much improved. And with demand slumping almost everywhere abroad, a small yuan devaluation will not save exports, especially when the currencies of other Asian nations are seeing much bigger falls.

China has to switch from its export-oriented growth model to a new one driven by domestic demand.

To that end, Beijing should introduce further reforms, such as improvements to the social security net, reforms on healthcare, education, land tenure and taxation systems, as well as proper energy and resource pricing mechanisms, said Jiming Ha, chief economist of China International Capital Corp.

Political reforms are needed to facilitate the economic transition, according to Zhiwu Chen, a Yale professor. The state still controls three quarters of the economy, and Chen suggests Beijing should pool state-owned assets into funds and give its people shares to make them feel richer, enticing them to buy.

It is particularly important to enrich China’s villagers because there are 800 million of them, said Chen. Beijing needs to loosen controls on village land and allow farmers more freedom to transfer their land rights to offer them more wealth.

“China needs to act as aggressively as possible to boost consumption to replace exports,” said Paul Cavey, an economist with Macquarie Bank. “Structural reforms will help China to grow out of this crisis.”

TIME TO FREE THE YUAN

China should draw the right lessons from the credit crunch. If it had moved more decisively on the currency front when the international community was clamouring for reforms, its economy may not have been at so much risk now. But some in Beijing seem to be gloating on the other hand that China may have avoided a bullet by not fully integrating itself with market forces.

Fan Gang, an adviser to the central bank, said recently that if China had bowed to overseas pressure three years ago and sharply re-valued the yuan, the result today would have been a steep drop in the currency and possible balance of payments crisis.

Peking University Professor Michael Pettis, however, asserts that China might have been in much better shape today had it revalued the yuan by 10 percent to 15 percent in 2005, instead of the small one-off 2 percent revaluation it carried out. He argues that China would not have racked up such huge trade surpluses and its growth would have been more balanced.

By focusing on selling the yuan to buy dollars to suppress its currency, China has become hostage to its own monetary policy and created massive liquidity at home which contributed to high inflation earlier this year.

After the revaluation and de-pegging of the yuan, the currency hit a peak in September. As China’s export sector has reeled, Beijing has since allowed the currency to weaken a bit.

But it would be unwise to use currency depreciation to increase China’s ability to export overcapacity because that will almost certainly lead to more trade friction — not a good long-term solution.

Instead, Beijing should view the current storm as a chance to regain its monetary freedom.

No one really knows how the yuan will move if the central bank let it trade freely. Just half a year ago, dealers were saying that the yuan would almost certainly rise in the absence of government interference, but now that the Chinese economy is slowing abruptly and exports have fallen in November for the first time in seven years, traders are less certain.

Still, the Chinese economy remains one of the healthiest in the world, so the yuan would be unlikely to depreciate much. That is why Yu Yongding, a former adviser to the central bank, says it’s time for the government to let go and test the real value of the yuan.

To its credit, China has seized the opportunity to launch at least one major reform. After oil prices tumbled, Beijing agreed to allow limited liberalization of domestic gasoline prices and shifted to a much bigger consumer tax, sending a clear signal that consumers would be required to bear more of the future cost of fuel.

But Pettis said that is merely the unwinding of a bad policy and China needs to work on its core problems.

“There is a difference between moving ahead and not moving backwards,” Pettis said. “Now conditions are difficult but the right reforms are almost always done when things are tough.”

– At the time of publication Wei Gu did not own any direct investments in securities mentioned in this article. She may be an owner indirectly as an investor in a fund. –