We agree with much of their analysis but would point out that they ignore two important areas of investment in grain and oilseed markets.

First, though governments may have reduced the relative size of their investment in agricultural research, private investment in farm chemicals and genomics has been booming. As a result, yield levels in major exporting countries have continued to trend upward at relatively the same average annual rates for periods that cover recent decades as the yield growth rates in the 1960s and 1970s.

While it is true that agricultural yields and output faltered in many developing countries because the World Bank and International Monetary Fund ill-advisedly shut down public extension, credit and marketing services, the anticipated yield plateau in major grain producing countries never flattened out. It is hard to know how long yields will continue their upward paths, but for now the movement is unabated.

Despite Headey and Fan engaging in an analysis of investment on the supply side, they ignored the impact of investment on the demand side.

Even though crop farmers experienced extended periods of “low” prices prior to the price run-up in latter half of the 2000s, farmers’ supply response to those prices did not result in market self-correction. Given the “sunk investment” in land and machinery that saddles farmers with high fixed costs, crop farmers have little choice but to continue raising grains and oilseeds in order to cover at least part of the costs that remain whether they grew something or not.

Contrary to the expectations of the proponents of the 1996 Farm Bill, farmers did not—and could not—respond to lower prices by materially reducing total crop production in a timely fashion.

With production locked in at an increasing rate—the result of the investment in technology by the increasingly integrated farm chemical and genomics industry—farmers had only one direction in which they could turn, demand enhancement. Though there were hungry people in the world, effective demand for their product was primarily limited by the rate of population increase.