Affordable food or riots and unrest?
By Jim Surber 
August 25, 2011 

The images and accounts of recent riots in the United Kingdom have been disturbing and confounding. Disturbing by the fear and destruction they have caused and confounding as to their root cause. It has always appeared that the causes of such events were as random as the specific nature and the participants in the events themselves. We must accept the fact that technologies such as social networking now play a large part in their organization, but still we wonder about what causes them. In other words we would not expect the question, “What causes riots?” to have a simple answer. 

Oddly enough, some researchers in Cambridge, Massachusetts claim to have found a single factor that seems to influence riots around the world—the price of food. They have determined that when food prices rise above a certain threshold, social unrest sweeps the planet. 

Their evidence comes from two sources: data gathered by the United Nations, known as the food price index that plots the price of food against time, and the dates of riots around the world. When both sources are plotted on a graph it clearly seems to show that when the food price index exceeds the determined threshold, trouble occurs. 

Of course this in itself is no revelation, because it stands to reason that people become desperate when food is unobtainable. It has been said that any society is only three square meals away from anarchy. The researchers don’t claim that high food prices trigger the riots, only that they create the conditions where social unrest can flourish. In other words, they believe their observations are consistent with a hypothesis that high world food prices encourage social unrest, not unlike the presence of a lighted match in a dry forest. 

This leads to an obvious thought. If high food prices prepare the world for chaos, then reducing the price should help to stabilize the world and its people. Of course, like many things this is easier said than done. The researchers have identified two main factors that have driven an increase in the food price index. The first is traders speculating on the price of food, which has been encouraged by the deregulation of commodities markets and the removal of trading limits. The second is the conversion of corn into ethanol, a practice directly related to subsidies. 

Both main factors could easily be changed in the western world. While the food price index today is above the determined threshold, the researchers say the long term trend is still below. In spite of this, the trend is rising and, if it continues at the current rate, they project it will cross in about August of 2013. If their model has the predictive power they suggest, when that happens, the world will become a tinderbox waiting for a match. 

Looking at the data, it appears that many of the identified countries are places where the cost of food had been subsidized by their governments -- and the riots occurred when those governments either could not or would not continue to hold prices down. They also seem to have a large number of young people with time and energy to riot, with no jobs to occupy them. In the USA, and perhaps other developed nations, many retired seniors spend a disproportionate part of their pensions on food, but simply aren’t up to rioting.       

It can be argued that our government has understood the relationship between food prices and social unrest ever since the Great Depression. Also arguably, the main reason we have enjoyed low food prices is due to the government farm programs with subsidies to agriculture which have given US consumers an abundant and relatively cheap supply without large price swings or supply interruptions. American farmers have been furnished support nets to keep them producing food even when commodity prices are low. Without them, production would decrease when commodities are low, increase when prices are higher, and cause wide price swings and supply interruptions. 

Most, if not all, people in the world pay a much higher percentage of their income for food than Americans. The Chinese have been used to getting their protein from vegetables rather than animals, which keeps their total food costs down. The average American spends $2300 per person annually for food while the average Chinese spends $400. While this is still a much smaller percentage of annual income for Americans, we pay additionally for it through taxes which provide the farm subsidies. There is now an ongoing political debate about government subsidies in general. Do programs such as food stamps and school lunches accomplish more than providing assistance or handouts? Meeting the increasing costs of food, though difficult, is still easier than getting enough food when there is an inadequate supply. 

Ironically, we are now entering a twenty-year low for the ending stocks of food in the world. This results from a number of factors. Droughts and crop failures in various locations over the past three years have eaten away at food reserves. There is also a higher demand for animal protein (which consumes larger amounts of grain) and the use of more grain to produce energy (ethanol), with the result being increased demand when supply is low. Today, over one half of the corn produced in the US is made into ethanol. 

In the face of lower expectations for US crop production this year, it would seem that food prices will continue at relatively high levels for at least another year. Add to this the falling value of the dollar which heavily influences most commodity prices, and an increasing world population which heavily influences consumption. 

World conditions certainly seem favorable to prove, within the next two years, if a connection does exist between food prices and rioting; and whether these researchers have discovered a coincidence or a direct relationship.