Rising global food prices could presage social unrest
Global food prices have been rising for months, putting additional pressure on the world's poorest people.
Why it matters: Past spikes in the price of food staples have been connected to periods of social unrest, including the Arab Spring. If prices continue to rise — on top of the pain of the pandemic — the world could be in for a bumpy future.
By the numbers: Global food prices rose by 2.4% in February, according to the Food and Agriculture Organization's Food Price Index.
- That marks the ninth straight month of price rises, causing the index — which is adjusted for inflation — to reach its highest level since July 2014.
Details: In the U.S., prices rose by nearly 3% in 2020, roughly double the rate of inflation, putting pressure on the poorest Americans, who spend more than one-third of their income on food. But the real threat comes in countries where large portions of the population live close to the edge of hunger.
- Brazil, which is already dealing with the world's worst active COVID-19 outbreak, experienced the fastest increase in food prices last year relative to inflation.
- In Russia, food costs have been kept in check only because of tariffs and export controls, but those measures have fueled inflation and are unlikely to keep prices from jumping when the policies are lifted at the end of March.
- In Nigeria — where the average household already spends more than half of its income on food — supply bottlenecks and attacks on farmers have contributed to rising prices.
- India has helped keep prices affordable by spending the most in the world to subsidize food, but it's been racked by farmer protests over plans to unwind that support, which is likely to translate to higher prices and more unrest.
Flashback: Governments are right to worry about the effects of rising food prices. Past spikes in 2011 helped fuel protests in the Arab world, and record-high prices in 2008 contributed to instability throughout the global South.
- A growing food crisis in Sudan — where inflation is in the triple digits and the price of bread has more than doubled — has helped lead to rising protests against the joint military-civilian government.
- In Lebanon, food prices quadrupled in December, leading angry protesters to set up roadblocks over the government's failure to act.
What they're saying: "These price spikes are destabilizing, not just because they induce a lot of hardship on communities and households, but also because there is this expectation that the government will do something about it," Cullen Hendrix, a nonresident senior fellow at the Peterson Institute for International Economics, told Bloomberg.
- "The implications are going to last longer and beyond the pandemic."
How it works: The food price spike has multiple interlocking causes: COVID-19 lockdowns "are a wrecking ball for food systems," notes Lawrence Haddad, the executive director for the Global Alliance for Improved Nutrition, while broader inflation and extreme weather events like February's winter storms in Texas play a role as well.
- But the crisis is also a reminder of how interconnected — and vulnerable — the global food system is, with the world's poorest dependent on food flowing from the biggest producers.
- In a study published in Nature Food this month, researchers found that restrictions by as few as three key exporters would be enough to increase the price of wheat by 70%, while maize and rice would rise by 40% and 60%, respectively.
- Even consumers in well-off countries aren't exempt, with food producers reducing the number of items on sale and shrinking the size of processed food to keep prices seemingly stable.
- But COVID-19 has still pushed 13.2 million Americans into food insecurity, an increase of 35% from 2018.
Yes, but: Prices are well below their 2011 peak, and there are signs that grain price increases are slowing even as wheat output is forecast to reach a record high of 780 million tonnes next season.
- Still, increased production won't help if the pandemic prevents food from reaching the needy, and over the long term, climate change is likely to increasingly disrupt farming.
"Those who have done well have an obligation to help those who have suffered and will continue to suffer through no fault of their own."— Lawrence Haddad, GAIN
The bottom line: More than politics or the pandemic, it is food scarcity that will bring people out into the streets, which is likely to make the next few months unstable ones.