Interesting paper has appeared on arXiv. It is written by Marco Lagi, Yavni Bar-Yam and Yaneer Bar-Yam. They focus on recent US drought, the overall food crises and link with social unrest.  Last year, social unrest swept the world like a forest fire. Many places suffered unusual riots, from the Arab Spring in North Africa and the Middle East to the streets of London and Manchester in the UK. It's not easy to pinpoint the cause of riots but these authors published a fascinating analysis saying that the unrest could be blamed on a single factor - the price of food.


Their conclusion is based on a comparison between the variation of food prices over time and the frequency of riots. This seems to show that when food prices rise above a certain threshold, riots are much more likely. It stands to reason that people become desperate when they can't feed themselves or their families. High food prices simply create the conditions in which riots can flourish. Then almost anything can trigger them.


At the end of 2010, food prices reached a peak. Within days, the events that later became known as the Arab Spring began to unfold. Since then, global food prices have dropped but today, this is about to change. Authors claim food prices are set to peak again because of the drought in the Midwestern US that has devastated crops and led to a dramatic rise in the price of US corn and soya beans. Since US corn production represents about 40% of the global total this is likely to trigger a big rise in food prices around the world, they say. And given the extreme social events that occurred last time food prices peaked, we should brace ourselves for the worst.




There are a couple of factors that may mitigate the problem. The first is corn-to-ethanol conversion, which in 2011 accounted for 40% of the US corn market. This obviously puts pressure on food prices. The second is greater speculation which has caused unsustainable peaks and troughs in prices. US authorities have taken action to reduce the effect of both these processes. At the end of 2011, US government allowed ethanol subsidies to expire (although it still guaranteed demand for 37% of the US corn crop). At the same time, financial regulators have agreed to limit speculative trading on certain foods from the end of 2012, although the extent of these limits and their potential impact is much debated. The big question is to what extent these changes will prevent a spike in food prices - aurhors of paper do not seem to be optimistic. Their big fear is that speculation will push food prices beyond the threshold before the limits come into effect. In that case, the level of earlier riot-inducing bubbles is reached before the end of 2012 and prices continue to rise much higher. Let's hope they are wrong (oh wait, Turkey just attacked Syria).



Credits: arXiv, Technology Review