Wheat Fightin’ Man

Reexamining cereal price spikes and food-related instability over the past 25 years.

Photo: Sleepy Claus/Flickr

“Bread or blood!” the women chanted as they looted shops, caravans, and warehouses in search of flour, beef, and bacon. Food prices in the short-lived Confederate States of America increased ten-fold from 1861 to 1863, until tensions boiled over into the Richmond bread riots that winter.

The ties between food prices and public frustration are well-documented, and increasingly there’s an understanding that food security can be a significant factor in social instability. Here at Natural Security, we’ve covered the impact of food price increases in South Sudan and Venezuela with a particular emphasis on how food shocks can exacerbate already fragile economies and societies.

In my post on the drought in California’s Central Valley, I wrote about why the inelasticity of demand for staple crops like wheat, corn, and rice make these prices changes so much more impactful than price changes for fruits or vegetables.

Since 1990, there have been four major spikes in the Cereal Price Index, which factors in a range of wheat, maize, and rice prices. Below is a chart showing monthly global cereal prices from January 1990 to June 2016 based on data from the UN’s Food and Agriculture Organization.


Chart of cereal price index 1990-2016
Cereal price changes from January 1990 to June 2016. (Author's chart based on data from the U.N. Food and Agriculture Organization)

The two biggest price increases in absolute terms are the 2006-2008 and 2010-2011 crises. These two periods have been studied at length in part because of the series of food riots that broke out around the world in response.

During the 2006-2008 period, riots and protests took place in more than 15 countries from Latin America and Africa to the Middle East and Asia, including Haiti, India, Burkina Faso, Yemen, Senegal, Mozambique, Cameroon, and Côte d’Ivoire. The 2010-2011 food crisis is a dominant theme in retrospectives on the Arab Spring protests that erupted across the Middle East in early 2011, particularly in Egypt, the world’s biggest importer of wheat.

But the other two major price spikes don’t get much attention due to the lack of widespread bread riots. There were some protests in Jordan in 1996, but nothing approaching the scale of global unrest in 2008 or 2011. Egypt had major anti-government protests beginning in late 2012 that eventually unseated President Mohamed Morsi, but wheat prices weren’t considered a major factor in the protests at the time.

A few theories about why the 2006-2008 and 2010-2011 price spikes were so different than the 1995-1996 and 2012 price spikes:

  • The total change in prices is more important than the rate of change in prices. There was a 16% increase in cereal prices from June to July 2012, a much stronger monthly change than in 2006 or 2010 - 5.1% and 6.6% respectively. But over the course of these two periods, prices increased significantly more in absolute terms than 2012. I originally thought the sticker shock of such quick price increases would be just as important as the total amount of the price increases, but that doesn’t appear to be the case. To me, this implies that the pure economics, and not the psychological impact, is a bigger factor in bread riots.
  • The overall food basket matters more than cereals. This contradicts the argument in my piece about California that the inability of consumers to effectively substitute away from cereals make their prices more important than other foods, but one of the big differences between these four periods is that the cereal price increases in 1995 and 2012 were muted by the stability of meat, dairy, oil, and sugar prices. By comparison, those other goods also increased significantly in price in 2006-2008 and 2010-2011, making the price of the entire food basket rise significantly.
  • Global prices aren’t predictive of local effects. Food purchases don’t happen in a perfectly competitive global market. Many countries have price controls, quotas, subsidies, and aid programs that distort the local impact of global price changes. Price changes at a global level aren’t felt the same way locally in any two countries. It’s possible that these policy differences have such a big impact that a global price index is too crude of a measure to analyze local responses. A more relevant, but much more difficult task would be to analyze price changes on a country by country basis and look at how different segments of society were affected by those price changes and whether or not there was some food safety net in place to mitigate the impact of price changes.

Sharon adds another valuable hypothesis for why these price spikes produce such uneven results:

  • It might not actually be about food prices. If we were to do a deeper analysis of these price spikes to look at what else what going on with energy prices and supplies, water, employment, demographics, conflict (both within communities and across borders), politics, and other macroeconomic and social factors, we might find that it's not necessarily the price of food that causes unrest, but rather how food prices interact with other variables. It's very hard to analyze and understand complexity in that way, but the fact is that we do actually live in one big, complex model, so it's worth a try. 

The greater role of food security, and subsequently food prices, in the conversation around international stability, conflict, and security is unquestionably positive, but simply looking at global prices isn’t enough to predict conflict. Unless protesters explicitly shout “Bread or blood!” like the angry Confederates did in 1863, it’s also hard to measure the role of food prices as a direct cause for social upheaval. Understanding the role food price will play in the next Arab Spring will require studying the issue at multiple layers: the economic and the psychological; the short and the long-term; the local and the global.

Author:

Ken Sofer was a summer fellow with the Resource Security program at New America where he worked on the intersection between climate change, resource competition, and international security.