Why you should be skeptical about food riots

Much is being made of the food riots in Mozambique. The global food system and climate change are held to blame. Many predict a future of ever-increasing riots as climate shocks intensify.

Here’s what a closer look at your economics and political science can tell you.

Expect price volatility to fall over time. Globalization and growth should reduce price spikes in future. More countries are producing crops. Climate shocks in Argentina are not that tied to climate shocks in Russia or China, and so price volatility from supply shocks should be going down. Falling transport costs also mean that more substitutes are available, further reducing price volatility. So things should be getting better over time, not worse, especially if trade allows countries to diversify their diet. Envision a future of diminishing instability.

Don’t forget the dogs that don’t bark. Grain prices are rising everywhere, yet most places do not riot. Why exactly are we blaming global grain prices?

Is there even a sytematic relationship between prices and riots? Mozambique’s violence, and the food riots of 2008, might be evidence that higher prices lead to riots. But we also see riots in periods when there are no price changes, or times of falling prices. In short, we see a lot of riots. I’m almost finished a paper right now that demolishes the myth that falling export prices lead to political instability. I suspect someone could do the same with decent riot and import data. I predict no correlation. My hypothesis? These external shocks are not the real cause of violence, but at best a trigger. And there are no shortage of triggers.

For riots, look to poor policing, not poverty. Whether Jakarta, Toronto, or Maputo, there is no shortage of anger or unrest. Unrest and violence are endemic. It is the escalation of violence we need to explain. If poor places are more likely to be violent, it’s often because states police these places more poorly, not because poor people are more violent.

Look to local policy, not global markets, for the real instability. Bread prices climbed 30% in Maputo, apparently due to Russian wildfires. But global wheat prices have only risen 5%. Why the disproportionate effect? I wish I knew, except I haven’t a single report from the ground that points out the disparity, let alone one that searches for an answer. Government market interference? Poor ports and transport? Speculation or collusion by local traders? Odd quotas or import restrictions? I yearn for real information.

The punchline: Are bread prices the proximate cause of the riots? Probably. Are they the root cause? Unlikely. Are global grain markets to blame? Unclear. How about bad domestic policy? Almost certainly. How about shallow and alarmist journalism about those poor, violent, unwashed nations? There are some things you can bet your life on.

19 thoughts on “Why you should be skeptical about food riots

  1. We might also observe that two places with recent food riots…Mozambique and Egypt….food riots over the price of bread….are also two places where the government sets the price of bread.

  2. I am bit more pessimistic about the fall of food price instability over time – the fundamentals Chris mentions do play an important role and point in this direction but the policy interference in Ag markets should not be underestimated. It is not the Russian wildfires – it is the Russian ban on exports, and the Ukrainian musing over introducing export quotas which has put wheat futures markets on the move. Given the 2007/08 experience, and without a successful conclusion of the Doha round (including export policy disciplines), there is little hope that future policy responses will help to reduce price instability. BTW, global wheat prices have increased by much more than 5%; US hard red winter No. 2 (fob Gulf) which is often used as a proxy for the world wheat price has increased 50%: from pre-harvest 180 US $ per ton (monthly average for June) to about 270 US $ per ton (average August).

  3. Its also worth pointing out that Russia’s decision to shut down exports was a political one (as almost everything in Russia is these days). Friends of Putin wanted out of the futures contracts they had signed when prices were low, and the ability to sell at current (high) prices domestically.

    So Putin scratched his friends backs, doing nothing to actually lower grain costs in Russia. Links and discussion here: http://bit.ly/drfR7q

  4. I find this post persuasive, but also discomforting as it questions some of my previous beliefs. Some questions I have:

    1. Is it possible that globalization smooths out some “big” shocks (from the local supply chain) but at the same time makes a nation subject to a greater number of “small” shocks (from the global supply chain) in total?

    2. Are climate shocks in different continents actually uncorrelated? If climate change is the culprit, how fair is this assumption?

    3. Does the law of on price mean that globalized ag markets hurt lower income countries? A small price shock is a lot more devastating for the residents of Mozambique than for the residents of the US.

  5. Good point, but I’m also skeptical about your argument about globalization. It may be true all other things being equal, but they are not. Empirically it hasn’t been true. One can just look at recent FAO food price data *.

    Then the same reasoning theoretically holds for financial markets, but we know how that worked out. It seems to be a fair bit of evidence that financial markets can produce their own instability. Economist’s WA Brock, Cars Hommes have shown this using complex systems theory, and Hyman Minsky described it decades ago.

    * I did in a recent paper. The figure is not linkable, but see Figure 5b in Raudsepp-Hearne et al. 2010. Untangling the Environmentalist’s Paradox: Why Is Human Well-being Increasing As Ecosystem Services Degrade? BioScience. An open access version is available here: http://www.aibs.org/bioscience-press-releases/100901_researchers_analyze_the_environmentalists_paradox.html.

  6. Thanks, Garry, for the link to empirical data.

    Chris – I was surprised that the only leg of your argument for which empirical data is certainly available (and I didn’t need Garry’s link to know that the data was out there somewhere) didn’t get any discussion of … empirical reality. Instead, that leg of the argument is fueled by “should”, “expect” and “envision.” Not much more convincing, really, than scattershot journalism.

  7. Sociologists know that grievances, by themselves, aren’t enough to produce protest. There are a lot more people with grievances than there are protesters. Current social movement theory tries to take into account lots of other factors, such as political opportunities, the ability of protesters to mobilise various kinds of resources, the kinds of conceptual schemas that are used to persuade people to protest, etc. In any case, as Pierre Bourdieu pointed out in his analysis of the May 1968 protests in France (in his book Homo Academicus), it’s practically impossible to explain crises in a scientific way while they’re happening. Sociological research takes time, and its explanations always come along after the battle is over.

  8. Thanks for the post Chris, following on from Benjamin’s useful acknowledgment of the cause of crises like riots, I am left a bit concerned over your statement that riots are often a sign of poor policing (rather than the violence of poor people).

    While I completely agree that those living in poverty are no more or less violent than those who are not, are people really not rioting because functioning police systems are in place? Is most of the world being “kept in line” by the police? I hope that’s not what you’re really saying. The causes of not rioting are just as complex as the causes of riots themselves.

  9. Globalization increases also increases supply shocks by concentrating production in spaces which can be disrupted, and by increasing monoculture susceptibility to disease.

  10. “Government market interference? Poor ports and transport? Speculation or collusion by local traders? Odd quotas or import restrictions?”

    As a Maputo resident, I would say all of the above. The riots were all about Mozambique and our worsening governance situation, and very little to do with the price of bread.

  11. Chris,
    A quick note from Maputo — you’ve pretty much nailed it in your prediction that it’s domestic policy changes leading to the riots. In addition to the 5% increase in global wheat prices, the GoM is also in the process of fazing out a long-held wheat subsidy (among other commodities, such as gas) causing prices to rise here faster than in global markets. As is always the case, the other side of the coin is that the strain on government finances due to the subsidies has caused the Metical to depreciate ~40% over the last year, so they’re in a lose-lose — folks riot if prices rise, but if the govt. keeps it’s subsidies in place and the Metical continues to depreciate, well, I think we can make a good guess what might happen?

  12. 1. I think grievances in general have a much higher possibility of sparking violence if they are combined a police force that acts with impunity.

    2. Remember the oil-crisis of 2008? The food-crisis of the same time? These where both mainly speculation drives, as the global crisis progressed, there where no profitable investments, hence investors turned to massive speculation. I think we see this again. As wildfires, drought, and floods reduce the supply of grain, investors and traders anticipate increasing prices. However, as there are few other opportunities for profitable investment, all the cheap liquidity from various central bank policies are being channeled into a speculative bubble.

    3. I think there is little doubt that raising food prices will increase the risk of riots in a population that is generally discontent. Yes, there are issues regarding organizing the riots, and so on, but still, increasing food prices, which hurts the poor, will lead to increased risk of riots.

    4. Globalization won’t reduce this in the short run. The Great Recession 2.0 will increase it for the next few years to come. Think traders and investors hunting profits, and governments running out of cash. Climate change or not, that will bring volatility.

  13. Chris, your punchline is sound, but I feel your analysis is pretty weak…

    1. Riots caused by insufficient policing?
    Are fires caused by insufficient fire marshaling?

    2. Export price volatility to fall over time? Yes, this is what we learned in Econ 101. However, A. the climate is changing and weather patterns are increasingly volatile, B. population pressure on arable land is increasing faster than productivity gains in much of the developing world, C. there are externalities of agricultural policy.

    3. Riots in Maputo were directly caused by government policy as pointed out by another poster…the big reason was the withdrawal of subsidies and inflation passthrough from high metical depreciation…yes, global grain shortages were just one small ingredient…

    4.This may sound terrible to those of us with western guilt, but would it be incorrect to say that poor people are more violent, on average? Its not a leap of faith to say that people with more “triggers” would be more violent, on average, and that poor people have more than the average number of “triggers”, particularly in many developing countries where safety nets are weak or nonexistent.

    5. “How about shallow and alarmist journalism about those poor, violent, unwashed nations? There are some things you can bet your life on.”
    Are you saying that these riots were caused by alarmist journalism in the West about these unwashed nations? What is the result of shallow “academic” pontification?

  14. The article doesn’t say the Maputo riots are about food prices. It says that an increase in food *and* utility prices “set off” the riots. And most of the article is about global food prices and food security, not about “poor, violent, unwashed nations.” Shallow journalism deserves a critique. But this is a shallow critique of journalism.

  15. In what sense are transport costs falling? The freight shipping industry is hardly a hotbed of innovation. As oil prices go, so do long distance food transport costs.

  16. Transport costs could be falling if land-based infrastructure was consistently improving, which probably is true.

    This doesn’t change the fact that we would expect globalization, through its process of complicating supply chains and encouraging monoculture, to make food prices more volatile.

  17. People seem to be most likely to riot when governments reduce or abolish subsidies, or reduce pensions, or otherwise pay out less money.

    But any riot needs organisers as well as a crowd. The organisers will have a long term plan.