World food prices hit record high, so why no riots?

January 6, 2011 10 By admin

According to the Financial Times, the FAO has just reported that world food prices are now higher than their peak FAO food prices 0111during the ‘food price crisis’ of 2008 (see graph). But the last spike was marked by riots in some 30 countries, global emergency meetings, new initiatives etc. Why is everything so quiet this time around? Some possible explanations

Domestic prices aren’t as badly affected. Some of the spike is due to a weak US currency, (the FAO uses dollars for world food prices on its excellent global tracking site, source of the graph). The FAO site’s national data aren’t up to date, so hard to check this – anyone got independent sources of info?

Consumers have got used to higher prices, so aren’t reacting as violently this time around.

The main rises have been in sugar, meat and oil seeds, not the more politically explosive cereals responsible for most of the riots last time (wheat prices are rising fast, but have not yet reached their 2008 levels, while rice is relatively stable).

Most donors are busily cutting or freezing their aid budgets so any civil servant suggesting a new initiative may not get much of a hearing.

As for causes, the Guardian quotes Julian Jessop, chief international economist at Capital Economics, as saying “the surge in agricultural food prices is largely a consequence of supply shocks, such as droughts in major wheat producing countries. These have been compounded by speculative pressures.”

Update: for more on this (and an identical title, but I was first Alex!) see Alex Evans on Global Dashboard