Food Prices and Global Hunger Equal Riots, Civil Wars and Revolution
April 05, 2011
For those who think there’s a real world beyond their video-game trading terminals and bubble-induced “Fed’s got my back” commodities speculations comes yet another instance of what will be a long chain reaction of riots and supply disruptions. At this stage, you could probably just spin the globe and point. In the Ivory Coast, violence has erupted and continues to escalate. These disruptions are cumulative. In Ivory Coast’s case, disruptions include rubber, cocoa and oil.
Next up may be Nigeria, which is holding an election this month. Nigerian elections are notorious for creating disorder, and now we have magnitude-9 food inflation and hunger on the stage. Ten percent of U.S. oil imports come from Nigeria, and it’s the sweet oil variety that can’t be substituted.
This chaos isn’t about “tear down these walls” and democracy. A basic understanding of hunger and human behavior is in order. The Food and Agriculture Organization (FAO) at the United Nations puts out a global hunger index (pdf). The most recent was from 2010, well before this year’s 45 percent price spike in foodstuffs. According to the IMF, each 10 percent increase in food prices doubles the likelihood of civil disorder, riots or worse by 100 percent [The Food Riot and Revolution Index]. By my math, we are at a four or five-fold increase and still ramping up. In the FAO’s scoring, a hunger score above 30 is considered extremely alarming, 20-29 is alarming, and 10-19 is serious. With the massive food inflation, I submit that it’s reasonable to add about 10 to the old, quickly outdated (by the day) 2010 number. If you care to argue this point, fine; but add something substantial. Nigeria was 18 in 2010, so this would be in the high 20s today, and at the upper end of the alarming score. Potential hotbed Pakistan was 19 in 2010.