Food Prices and Political Instability

Arezki, Rabah; Brückner, Markus

doi:10.5089/9781455221066.001

Cited by 110 publications

(81 citation statements)

References 5 publications

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“…Overall GFSI results based on relevant sources (FAO, WB, WTO, EIU, WHO) placed Serbia in the second out of four group of countries 5 . This was due to obtained general score of 56.8 in 2013 and somewhat slightly higher 59.6 score in 2012.…”

Section: The Situation In Serbia: Serbia Gfsi Overviewmentioning

confidence: 99%

“…Some estimates suggest that food insecurity costs developing economics around US$450bn in lost GDP each year (ActionAid, 2010), what is more than 10 times the amount the UN estimates would be needed to achieve the Millennium Development Goals (MDGs) hunger targets. A food shortage is correlated with a significant deterioration of democratic institutions and a significant increase in the incidence of anti-government demonstrations, riots, and civil conflict in low-income countries (Arezki et al, 2010).…”

Section: Introductionmentioning

confidence: 99%

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Measuring food security in the Republic of Serbia

Brankov¹,

Milovanović²

2015

Ekon Polj

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Section: The Situation In Serbia: Serbia Gfsi Overviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Measuring food security in the Republic of Serbia

Brankov¹,

Milovanović²

2015

Ekon Polj

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“…This growing body of research has evidenced a link between the natural environment and instability [35] and an increase in the occurrence and intensity of intra-state conflict. In particular, climate change [41][42][43][44][45], resource scarcity [3,[46][47][48][49][50][51][52][53][54] and prices of food [3,45,[55][56][57][58][59][60][61] have been highlighted as stressors or catalysts for conflict or, more generally, as a threat for a country's national security.…”

Section: Introductionmentioning

confidence: 99%

Quantitative Assessment of Political Fragility Indices and Food Prices as Indicators of Food Riots in Countries

2015

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Abstract:The impact of resources on social unrest is of increasing interest to political leaders, business and civil society. Recent events have highlighted that (lack of) access to critical resources, including food, energy and water, can, in certain circumstances, lead to violent demonstrations. In this paper, we assess a number of political fragility indices to see whether they are good indicators of propensity to food riots. We found that the most accurate is the Political Instability and Absence of Violence Indicator of the Worldwide Governance Indicators by the World Bank. We compute a likelihood of experiencing a food riot for each quartile of this index. We found that the self-sufficiency of food does not seem to affect the likelihood of the occurrence of food riots, but that the level of political stability of a country does have a role. In addition, we identify a monthly and annual threshold for the Food and Agriculture Organisation Food Price Index, above which food riots in fragile states are more likely to occur.

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“…The pricing mechanisms of the spot food price market confirm that futures prices are the primary price-setting mechanism, and that the duration of commodity bubbles is consistent with the delay in supply-and-demand restoring forces. Despite the artificial nature of speculation-driven price increases, the commodities futures market is coupled to actual food prices, and therefore to the ability of vulnerable populations-especially in poor countries-to buy food (139,(159)(160)(161)(162).…”

Section: Discussionmentioning

confidence: 99%

Accurate market price formation model with both supply-demand and trend-following for global food prices providing policy recommendations

Lagi

Bar-Yam

Bertrand

et al. 2015

Proc. Natl. Acad. Sci. U.S.A.

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Recent increases in basic food prices are severely affecting vulnerable populations worldwide. Proposed causes such as shortages of grain due to adverse weather, increasing meat consumption in China and India, conversion of corn to ethanol in the United States, and investor speculation on commodity markets lead to widely differing implications for policy. A lack of clarity about which factors are responsible reinforces policy inaction. Here, for the first time to our knowledge, we construct a dynamic model that quantitatively agrees with food prices. The results show that the dominant causes of price increases are investor speculation and ethanol conversion. Models that just treat supply and demand are not consistent with the actual price dynamics. The two sharp peaks in 2007/2008 and 2010/2011 are specifically due to investor speculation, whereas an underlying upward trend is due to increasing demand from ethanol conversion. The model includes investor trend following as well as shifting between commodities, equities, and bonds to take advantage of increased expected returns. Claims that speculators cannot influence grain prices are shown to be invalid by direct analysis of price-setting practices of granaries. Both causes of price increase, speculative investment and ethanol conversion, are promoted by recent regulatory changes-deregulation of the commodity markets, and policies promoting the conversion of corn to ethanol. Rapid action is needed to reduce the impacts of the price increases on global hunger.behavioral economics | agricultural commodities | food prices | nonequilibrium markets | global crisis I n 2007 and early 2008 the prices of grain, including wheat, corn, and rice, rose by over 100%, then fell back to prior levels by late 2008. A similar rapid increase occurred again in the fall of 2010. These dramatic price changes (1) have resulted in severe impacts on vulnerable populations worldwide and prompted analyses of their causes (2-57). Among the causes discussed are (i) weather, particularly droughts in Australia, (ii) increasing demand for meat in the developing world, especially in China and India, (iii) biofuels, especially corn ethanol in the United States and biodiesel in Europe, (iv) speculation by investors seeking financial gain on the commodities markets, (v) currency exchange rates, and (vi) linkage between oil and food prices. Many conceptual characterizations and qualitative discussions of the causes suggest that multiple factors are important. However, quantitative analysis is necessary to determine which factors are actually important. Although various efforts have been made, no analysis thus far has provided a direct description of the price dynamics. Here we provide a quantitative model of price dynamics demonstrating that only two factors are central: speculators and corn ethanol. We introduce and analyze a model of speculators describing bubbles and crashes. We further show that the increase in corn-to-ethanol conversion can account for the underlying price trends when we excl...

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Food Prices and Political Instability

Cited by 110 publications

References 5 publications

Measuring food security in the Republic of Serbia

Measuring food security in the Republic of Serbia

Quantitative Assessment of Political Fragility Indices and Food Prices as Indicators of Food Riots in Countries

Accurate market price formation model with both supply-demand and trend-following for global food prices providing policy recommendations

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