Food prices have the potential to change regimes and the course of history. When Marie Antoinette allegedly said ”Let them eat cake” in 1789, she was wondering why higher bread prices were causing so much trouble in Paris.
Food security analysts, NGOs, think tanks and the World Bank all say pushing the urban poor beyond their purchasing limits can, and will, cause unrest and net food-importing countries are most at risk. Leaders may not be facing the guillotine in 2008, but some are already feeling the sharp edge of popular uprising. The most obvious tools to cushion the effect of the price rises — tax cuts and subsidies — not only go against free-market dictums but are frequently unaffordable for governments, analysts say.
”Governments don’t generally worry overmuch for the fate of poor people most affected by dearth — until the protests mount,” said John Walton, who teaches sociology at the University of California, and is co-author of Free Markets and Food Riots. ”Regrettably, these pains are often justified in neo-liberal economic ideology as necessary reforms, despite a lack of evidence for their effectiveness.”
The recent spate of food riots and demonstrations in West Africa may signal a new phase in the protest cycle, he said. Many analysts agree.
At least two dozen deaths have been reported in riots sparked by a sharp increase in food and fuel prices around the world, most recently in Egypt, Senegal, Cameroon and Côte d’Ivoire.
IMF riots
The last protest wave arose in the late 1970s in response to food and fuel price hikes after the International Monetary Fund (IMF) and lender countries forced poor countries to implement budget cuts. The impact was felt worldwide, beginning in Latin America and extending to Africa and Asia, to include perhaps 200 instances in more than 40 countries, according to Walton.
The protests, known as the ”IMF riots”, were marked by strikes, demonstrations, rioting and looting and prompted by the contention that ”the poor were being made to suffer” because of the ”profligate lending by governments and banks”, he said.
While the current protests have been sparked by the hike in petrol prices and the related impact on food costs, noted Walton, ”the instances of popular demonstration and riots in Côte d’Ivoire, Guinea and Burkina Faso replicate in many ways the protest repertoire and sense of injustice that characterised the IMF riots and earlier historical protest cycles. Time will tell how large the current protest wave will become.”
”Agflation” is the new buzzword to describe the food price hikes, on account of an increase in demand for cereals such as maize and soybean for human consumption and biofuels. The price of non-fuel-related grains such as rice and wheat has also rocketed.
The World Bank announced last week that at least 33 countries, which depend largely on imported food, could face potential social unrest.
”Resource scarcity is a long-term problem and is likely to get worse with climate change — which will see reduced productivity, especially in countries where resources such as land, food, income, are ”captured’ by an elite and/or where inequalities are particularly bad,” according to social historian Diana Cammack, with the United Kingdom Overseas Development Institute.
Urban poor
There is already a ”tremendous amount of anger” in urban areas in most African countries on issues such as high unemployment rates and social delivery, said David Zounmenou, a researcher with the Institute for Security Studies. ”High food prices can only add fuel to this and can be exploited by the opposition or other interest groups to create instability.”
He added that ”political discontent” was ”already brewing” in Cameroon, Burkina Faso, Côte d’Ivoire and Senegal. After the violent price protests in Cameroon, which left at least 24 people dead, President Paul Biya went on state media on February 27 during the rioting to say that ”certain politicians” were seeking to overthrow his government in a coup d’état.
Tempers have been quelled in Côte d’Ivoire, which witnessed two days of violent protests in which one person was killed. The government announced a 50% cut in VAT last week, said Auguste Kpognon, country director of Care in Côte D’Ivoire. ”But we are waiting for an explanation from the government about how it intends to pay for it.”
Stop-gap subsidies
Subsidies are not a sustainable solution, according to Marc Cohen, a research fellow at the United States-based International Food Policy Research Institute. ”A case in point is the urban population in Egypt, which has enjoyed subsidies for many decades. Should subsidies be removed, things can get very violent — but subsidies are increasingly unaffordable.” Egypt is reportedly the world’s second-largest importer of wheat.
According to the Middle East Business Intelligence, the Egyptian government ”seems to be losing control of spending on subsidies. It budgeted for $1,7-billion worth of food subsidies in the current tax year, but spending will be $2,2-billion or even higher because of the increase in global food prices at the end of 2007.”
Agricultural investment
A long-term sustainable solution would be to invest in agriculture, said Cohen. But political stability governs investment in agriculture.
A scenario by the United States Department of Agriculture’s Economic Research Service (ERS), which assumed a near-28% increase in grain prices for last year (prices have actually doubled in many countries since then), followed by increases of 1% a year through 2016, found that in sub-Saharan Africa, countries most susceptible to economic shocks are often those suffering from political instability, which stifles domestic production.
Last week the World Bank announced it intended to double its lending to Africa from $450-million to $800-million for the fiscal year next year to help revive agriculture in a bid to combat escalating food prices.