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The blog of the Wilson Center's Environmental Change and Security Program
  • High Food Prices an Unlikely Cause for the Start of the Arab Spring

    April 7, 2014 By Richard Cincotta
    Tunisian_flag

    Just months after popular uprisings toppled Tunisia and Egypt’s authoritarian regimes, a trio of complex-system researchers published a brief article linking these demonstrations with high levels of the UN Food and Agriculture Organization’s international Food Price Index. Marco Lagi, Karla Bertrand, and Yaneer Bar-Yam’s model, which predicts outbreaks of deadly social conflict when the index tops 210, has since become a popular explanation wielded by many for bouts of popular unrest, including the Arab Spring and overthrow of Ukraine’s government. But were food prices really an underlying “hidden” cause for the start of a wave of instability that is still being felt today?

    Not everyone is convinced, least of all, international food policy analysts.

    Local Context Matters

    An important factor to consider is the difference between the aggregate, international prices tracked by the FAO Food Price Index and the prices paid on the street for the same “basket” of commodities.

    Several analysts have shown that in Tunisia – the political epicenter of the Arab Spring, the most successful pro-democracy movement (so far), the enabler of other anti-regime movements that soon followed, and a heavily import-dependent consumer of grain – government food-price controls held fast. Both before and during the demonstrations that ultimately toppled President Zine El Abidine Ben Ali, Tunisia’s consumer food price index showed few signs of being influenced by the rapid rise of the FAO index.

    Figure 1: International vs. Local Food Prices in Tunisia

    The first evidence suggesting Tunisia’s pro-democracy demonstrations erupted independently from the surge in international food prices actually preceded the article by Lagi and his colleagues. On January 31, 2011, GIEWS – the FAO’s on-the-ground early warning system – released a bulletin reporting “relatively stable domestic prices despite high international food prices” in Tunisia’s consumer food markets during the winter months of 2010 to 2011. The bulletin also explained that “the hike in international food prices has not translated into high domestic prices.” In fact, Tunisia’s consumer food price index declined slightly between November and December 2010.

    The government’s food price management efforts buffered prices through 2010 and into July 2011

    An April 2012 review of Tunisia’s pre- and post-revolution inflation trends by the African Development Bank’s Chief Economist Complex makes it similarly clear that the government’s food price management efforts, which included tightly regulated prices on about 30 percent of common food items and a compensation fund for subsidizing poor consumers and farmers, buffered prices through 2010 and into July 2011. The authors note that the local index rose slowly only after the transition government relaxed some controls in mid-2011 in order to relieve fiscal pressure on the compensation fund and slow the accumulation of debt.

    Further, a World Bank report from March of 2012 compared consumer food prices among the countries of the region and found that Tunisia was among the most insulated from changes in international prices. Because food price controls insert a time lag between international food prices and the response in local consumer markets, food policy analysts use a lag indicator called the “pass-through coefficient” (PTC). The PTC estimates the proportion of change in the FAO Food Price Index that is transmitted to the consumer food price index over a specified time (usually six months or a year). The lower the coefficient, the more protected local food markets are from international price spikes.

    According to this report, Tunisia and Algeria maintained the lowest food price PTC during the 2010 to 2011 period. Six months after a one-unit rise in the FAO Food Price Index, Tunisian and Algerian consumers could expect to experience an average food price increase of only about 0.05 units. In contrast, Egyptian consumers were much less sheltered – that country’s PTC for the same six-month period was higher, allowing a rise of 0.33 units for every unit of change – and the coefficients were even larger in the local markets of some Gulf States.

    Controlling Prices

    Controlling food prices may sound like a simple matter, but it’s not. Farm subsidies, underwriting food imports, and the operation of government storage and disbursement facilities are financially costly, and they undercut market efficiencies and production incentives. Moreover, it takes considerable institutional capacity to effectively police markets, and firmly and fairly regulate merchants without facilitating corruption, encouraging black marketeering, or forcing food suppliers out of business.

    The rapidly growing urban populations of low-income, import-dependent countries are the most vulnerable

    Theoretically, those states with substantial institutional capacity, adequate foreign currency reserves, and a significantly productive agricultural sector should be the most likely to buffer international price shocks. Empirically, that is indeed the case – with the exception of a few cases where grain exporters poorly managed the outflow of domestic grain onto the export market (e.g., Argentina in 2008). An International Monetary Fund study shows that, for the most part, the rapidly growing urban populations of low-income, import-dependent countries (many in sub-Saharan Africa) are the most vulnerable to food-price fluctuations and related episodes of political violence today.

    Nonetheless, food insecurity remains an enormous concern among the medium-income, heavily import-dependent states of North Africa and the Middle East – regions that were once the breadbasket of ancient empires. Since the middle of the 20th century, the combined population of the Arab-majority states has grown by more than five times – from about 70 million in 1950, to more than 360 million today – a trend that is not expected to stop anytime soon. As per-capita freshwater and cropland resources have dwindled, even the most agrarian among these economies have become grain-import dependent, making food-price controls a perceived political necessity.

    While the pass-through coefficients of Arab-majority states vary significantly, by and large these countries have succeeded in sheltering consumers from international food price fluctuations, despite their heavy dependence on the international grain market. Published just before Tunisia’s revolution, the FAO and World Food Program’s 2010 State of Food Insecurity in the World indicated that none of the Mediterranean North African countries (Morocco, Algeria, Tunisia, Libya, and Egypt) were at risk of food insecurity. The FAO’s most recent analysis finds North Africa with the lowest proportion of undernourished (less than five percent) among all developing regions.

    Food and Politics

    In Tunisia’s case, the evidence is overwhelming: The “Dignity Revolution” that toppled Ben Ali, spawned a new constitution, and initiated a long political struggle toward democracy, cannot be written off as a “food fight.” But Lagi and his colleagues were not alone in their thinking that food prices played a major role. During the first week of January 2011, at the height of popular demonstrations in Tunis, Ben Ali’s government announced that the price of basic food stuffs would be lowered. No one responded.

    Do food prices figure into global security? They do – now, as in the past. Historians credit famine and upward surges in food prices with triggering, or at least contributing to, scores of popular revolts (see Jack Goldstone’s chapter in Revolutions: Theoretical, Comparative, and Historical Studies). But determining when and how food prices interact with state stability is not always as simple as tracking an index – local context matters a great deal.

    As of this writing, the nominal FAO Food Price Index (uncorrected for inflation) has remained above 200 for more than three years, the likely product of rising demand, speculation, and ethanol production. For food importers with enough foreign currency reserves and institutional capacity to maintain a low pass-through coefficient, the trend is costly, draining capital reserves and inhibiting the import of capital goods. Among low-income countries, where food local prices are not as well insulated, the trend breeds food insecurity and political risk – conditions that are unlikely to recede anytime soon.

    Richard Cincotta is a Wilson Center global fellow and the demographer-in-residence at the Stimson Center.

    Sources: African Development Bank, BBC, Global Information and Early Warning System, International Monetary Fund, New England Complex Systems Institute, Stimson Center, UN Development Program, UN Food and Agriculture Organization, UN Population Division, Vice, World Bank, World Food Program.

    Photo Credit: Tunisian flag from a protest in Paris, January 2011, courtesy of flickr user Gwenael Piaser.

    Topics: Africa, agriculture, Algeria, conflict, development, economics, Egypt, featured, food security, Middle East, security, Tunisia, Ukraine, UN, urbanization
    • Yaneer Bar-Yam

      Dear Richard,

      I read with interest your post about Tunisian food prices on the New Security Beat. The question of whether the prices in Tunisia at the end of 2010 were controlled surely requires careful study. There is some divergence of opinion among different accounts; the reports you cite are inconsistent with many others about how prices were perceived by the population itself, which seem to differ from official inflation reports.

      The importance of food is clear from the slogan ‘Bread and water without dictatorship’, which was chanted during the protest movement of January 2011 (Gana, 2012 http://ijsaf.org/archive/19/2/gana.pdf and Face2face Africa, 2011 http://face2faceafrica.com/article/tunisians-and-african-youths-we-want-bread-and-water-and-no-ben-ali#.U0Lu2q1dWhU). Food scarcity was also cited as a factor by reporters based upon local information http://www.aljazeera.com/news/africa/2011/01/201114101752467578.html. The decision of former Tunisian President Ben Ali on Jan 13 to reduce the prices of sugar, milk and bread, as you yourself note, further demonstrates the significance of food prices; however, it seems this move came too late.

      The AfDB report you cite deemed it necessary to address (in Point 5) the origin of “Divergences between Official Inflation and the Actual Inflation Perceived by the Population” and states:

      “Considerable discrepancies (from 10 to 30% locally) between the official prices and the selling prices of a number of products, particularly food products, have been noted. However, these increases do not appear to be reflected in official inflation indicators recorded in January and February 2012.”

      Note that a discrepancy of 30% percent in prices (not inflation) would make a huge difference, particularly for the poor. The report points to sampling issues in measures of inflation for the discrepancy and to the difficulties of controlling prices for the existence of such high prices. These undermine the utility of the national inflation indicators.

      Given their origins, the fact that the official inflation measures do not reflect the complaints of the population about rising food prices as noted in the report may not be surprising. It may very well be reasonable to expect that government price sampling reflects government price controls more than would be found “on the street.”

      Government measures of “inflation,” the CPI, also often assume that consumers substitute less expensive products. Thus the CPI does not reflect the rising prices directly. Whether these assumptions are valid for poor people is unclear. For example, let us consider the cost of a standardized basket of foods used to calculate prices, and they increase in price. It is assumed that people substitute low-priced foods for high-priced ones, which would lower the price of the basket significantly compared to price of the basket without substitution. However, those who only eat the low-priced foods would not have anything to substitute. So the poor would be strongly affected by the price increases even if the inflation index doesn’t show it.

      The other report you cite, despite your description of it as the FAO’s “on-the-ground early warning system,” is actually based on government inflation indicators. It is not independently obtained data. These official government measures are the origin of your figure on inflation in Tunisia.

      A European Commission report published in Jan 2011 analyzes the pass-through of global prices to local prices comparable with other countries (Albers and Peters, 2011 http://mpra.ub.uni-muenchen.de/28788/1/MPRA_paper_28788.pdf). This report also points to the link of food prices and unrest. Importantly, this report finds Tunisia to have a higher pass-through than neighboring Algeria.

      There is little doubt about the primary role of food prices in the co-occuring protests in Algeria. The Algerian government acknowledged the role of food prices in the unrest. On January 10 (a few days before Tunisia took action on food prices) Algeria acted to counter rapidly rising food prices, and made its understanding of the connection to the unrest quite clear (Middle East Online, 2011 http://www.middle-east-online.com/english/?id=43540).

      It is surely worth noting that even if the prices were better controlled in Tunisia, the contagion of protests to and from countries where prices were less well controlled is sufficient to account for the widespread uprisings being triggered by high food prices. Accordingly, high food prices created a condition in which social unrest was explosively contagious. Otherwise a local act would have remained a local act. As you note, high food prices are generally known to fuel social unrest, and the food prices were surely very high at that time for many of the people in North Africa and the Middle East where revolutionary events occurred.

      It is important to note that one of our reports identifying the connection of food prices and social unrest was submitted to the U.S. government prior to the events in Tunisia. High food prices today continue to be a context in which there is widespread unrest. I am comfortable again making a prediction that if higher global food prices occur we will have more social unrest, and if the prices decline there will be much less. If you disagree with this statement I would welcome further discussion.

      Best,

      Yaneer Bar-Yam

      Professor and President, New England Complex Systems Institute

    • http://www.stimson.org/experts/rcincotta Richard Cincotta

      Dear Yaneer,

      Thanks very much for your comments. I appreciate your reply and willingness to
      discuss the model’s scope. My argument is, in essence, that it has been
      extended to a set of countries for which its predictions are dubious (medium
      income states, with low pass-through coefficients). And, I assert, that
      Tunisia’s social conflict, and the “Arab Spring” that followed, were
      merely coincidental to the high international food prices at the time. At the end of this reply, I will ask you to devise an adequate test of the model, in the future, to alleviate those doubts — since you seem so willing (and since the International Food Price Index, once again, exceeds your threshold value of 210 (all of March 2014)).

      As for your evidence that food prices were important, I’m not sure that models
      will ever rise and fall on the slogans of some members of a crowd, nor on the
      desperate machinations of a dictator in political free-fall — or even news
      reports from Al Jazeera or the BBC. If it is the poor’s perceptions of food
      prices that you feel are important, clearly few of them were involved in Tunisia’s
      demonstrations (unless they’re the “stylish poor”). The media has never been a dependable source for elucidating causality: it’s too complex for them, and (as you’re well aware) complexity doesn’t sell newspapers — simple heartfelt grievances do.

      Both you and I agree: the threshold model predicting elevated
      violence (FFPI>210) makes sense for low-income countries with high pass
      through coefficients (prices easily perturbed by international prices). You
      assert that it can be extended beyond those states — and that’s where I
      disagree. If you’re (as you state, above) “comfortable again making a
      prediction that if higher global food prices occur we will have more social
      unrest” — then it’s time for you to make those predictions because —
      according to the FAO – the nominal international Food Price Index (FFPI) was
      again over 210 (your threshold for elevated levels of conflict) in March (it
      averaged 214; see http://www.fao.org/worldfoodsituation/foodpricesindex/en/. )
      and it appears to be rising.

      Here’s my proposal: Let’s devise a fair test, both for low income
      countries, and medium income countries, over a set period of time IN THE
      FUTURE. Let’s choose a data base (not your own) for the data on conflict, and a
      criterion for a “social conflict”. Also, you’ll need a background
      rate (below FFPI 210) against which to test, and a set of states to test (that
      appear in that database).

      Clearly, you’re a scientist, Yaneer, so you realize that it is
      your duty to put the model through tests that others can reproduce (I applaud the clarity of your model). And unless you continually devise tests for the model on specific time periods in the future, and demonstrate that it can be relied upon to generate similar results, then your model is doomed to vanish within the vast body of
      unfalsifiable models that now populate political science.

      Once again, thanks for your reply. /s/ Rich

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