From the Middle East to South America, rising food prices fuel social and political unrest. A look at Egypt and Bolivia.
The link between food prices and social conflict has a long history. Already in the 18th century, the rise in the price of bread served as a catalyst for the revolution in France. And it still holds true today. So we shouldn’t really be surprised to find this element also when looking at recent revolutionary developments in North Africa and the Middle East. Despite all discussion about freedom and Facebook, food plays an essential role, too.
As the March issue of Foro Nacional/Internacional (www.foro-nacional-internacional.pr) explains, rising global food prices in early 2011 have fueled considerably the unprecedented social and political unrest in the Middle East and North Africa. They were certainly not the only factors but they added to an already volatile situation. When people are hungry, they protest.
And this isn’t true for the Arab world alone, as a look at South America, particularly Bolivia, reveals. In fact, any country that suffers deep-rooted poverty and relies heavily on food and fuel imports is particularly sensitive to a spike in global food prices and might experience social and political unrest in this context.
Global food prices have been on the rise for years and data suggest that this is indeed a long-term trend; see, for example, the Food and Agriculture Organisation of the United Nations (http://www.fao.org/). Many experts link this to growing demand especially from emerging countries, rise of fuel prices, climate change and increased biofuel production. The spike in food prices in 2008 and 2009 has driven about 44 million people into poverty, according to the World Bank. This caused significant protests in developing countries, among them Egypt and Bolivia. A spike in food prices threatens food security, too, because it disproportionately affects those who spend a large portion of their income on food.
In Egypt, the population was hit particularly hard by rising food prices: Poverty rates are high with over 40 percent of the 81 million inhabitants living on less than US$ 2 a day. Food expenses are relatively high, too, with 40 percent of monthly income being spent on food. The trend of rising global prices also undermined the government’s subsidy programs for staples such as bread and sugar, rendering them ineffective and expensive. Moreover, the country is the world’s largest importer of wheat and greatly dependent on foreign food and oil, and the prices of food and oil are closely linked.
There were, of course, other reasons for widespread discontent along the Nile: Egypt’s economic growth during the past decade has largely bypassed the poor. Unemployment and underemployment remained unabatedly high, particularly among young Egyptians. This fueled the feeling of ever increasing inequality, not to mention the repressiveness and cruelty of the Mubarak regime itself.
With a somewhat lower profile in the global news Bolivia, too, has been shaken by revolts and protests over food prices and shortages in recent months. Yet, the situation in South American and Egypt are similar in many respects.
Bolivia today boosts the highest level of poverty and extreme poverty in the South American region. Underemployment is widespread and affects millions, while food spending takes a healthy bite of household expenditures. Moreover, Bolivia’s dependency on foreign foods is on the rise as total food imports rose by 24 percent between 2006 and 2009. This is accompanied by an increase in diesel and gasoline imports from, among others, Venezuela and Chile. That occurs despite the fact that Bolivia is a net exporter of energy.
And as in Egypt, food and fuel prices in Bolivia are deeply intertwined. When the government abandoned its gasoline subsidies in December 2010, for example, fuel prices rose by more than 80 percent overnight which immediately induced a rise in food prices.
In an attempt to counter the effects of rising prices and scarcity of goods, including stables such as sugar, rice and soy wheat, the Bolivian government has begun importing and directly selling food through the government agency Emapa. State intervention, however, met with strong resistance, particularly in the Santa Cruz department, a region in East Bolivia which has let the opposition to the regime of president Evo Morales.
Hence, together with considerations regarding the scope and content of public policy and governance, Bolivia’s entrenched poverty and reliance on food and fuel imports puts a limit to the government’s ability to control rising prices and protect its citizens from its dire consequences. This exposes the country to social and political unrest ever more.
Thus, as Foro Nacional/Internacional concludes, in both Bolivia and Egypt protests against rising food prices quickly began targeting other longstanding social and political grievances.
So what should be done?
For most countries subsidy schemes for food and fuel, which support particularly the poor population, are likely to be effective and affordable only in the short term. Governments must, therefore, address the issue of food security directly through investment in agricultural production and innovation, paired with economic and social policies that address inequality, unemployment and poverty adequately.
Of course, the rise in global food prices also has its good side, for some at least. Net exporters of food and energy, such as Argentina, will be able to improve their international terms of trade.
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