Food Security and the Social Order
This past weekend, 30,000 people rioted and Paris burned in response to a 23% increase in fuel and 3.9-7.6 cent increase hydrocarbon fuel taxes by the French Government (Read, 2018, paras. 5-7). What hasn't been discussed is the effect which increased fuel prices and taxes have on the social order. SYF has noted a similar pattern in history and our perspective is from a food based perspective.
Lloyd's of London
Lloyd’s of London commissioned their analysts to determine the impact the insurance industry would have from prohibitive food prices. Titled, “Food System Shock: The insurance impacts of acute disruption to global food supply,” details the conditions that would cause food prices to spike and its effects on the social order. Prohibitive food prices would impact the social order in the form of rioting, unrest, and damage (Lloyd's, 2015, p. 7). Presently, the food system is a complex machine that is under continual stress from economic, political, and environmental actions and events.
Setting the Table
Our third blog post detailed a major loss that the EU has not really recovered from. In February of 2017, a series of extreme weather events resulted in the loss of nearly 80% of fruits and vegetables in Southern Europe. This led to an initial doubling of prices and shortage of produce. The U.S. was sourced as an alternative but there were no surplus to be shared. As time progressed, there was a quadrupling of prices, controls on how much could be purchased, and establishment of a black market for produce. To remedy these conditions, the E.U. sought to relax import regulations to import produce from North Africa.
In this atmosphere, prices for produce has remained somewhat elevated since that time. The Food Price Index for France has shown that prices for food has remained on par with the country’s inflation rate for June and July before rising above for August and September. The black line and blue shaded area is the forecast trend going forward for the price of food while the blue bars represent the months. With the coming implementation of additional taxation, it will be interesting to observe the response by people and resultant increase in prices.
In late 2010 and continuing into 2011, a series of unrest, protests and rioting across North Africa and the Middle East resulted in regime changes, called the Arab Spring. Researchers have noted a correlation between increasing food prices and social unrest. Recent studies seem to confirm this assertion, rapid increases in food prices can result in social unrest (Bellmare, 2015, p.24). The cause of the Arab Spring unrest, from food price spikes, may have been the price speculation by commodities traders and diversion of corn for ethanol production (Merchant, 2015. Para. 2).
In our own societies, we seek to mitigate basic needs help with social programs. We fund food banks, support food drives, and give money to organizations who work with those experiencing need. This safety net helps to keep people fed one wonders if those regimes that changed hands would not have done so with similar social programs we employ.
There is a historical analog to rioting in France and is something to consider for what is occurring in France. Previous to the start of the French Revolution, the price of bread, which was a staple, shot up to 88% of a worker’s wage (Bramen, 2010, para.4). The sustained increase in fuel prices and taxes will make everything cost more and it is likely that the French people have had enough.
As prices continue to increase, what kind of social pressure can we expect here as prices become hard to sustain? What can be done to lessen the effect of ever increasing prices? From a government and economic perspective, without the commodity controls established after the depression, it is likely that rapid price increases will result in social disorder (Merchant, 2015, para.14). Individually, these trends may very well urge society to grow their own food once more.
Bellemare, M. F. (2015). Rising food prices, food price volatility, and social unrest. American Journal of Agricultural Economics, 97(1), 1-21. Retrieved from https://academic.oup.com/ajae/article/97/1/1/135390
Bramen, L. (2010, July 14). When Food Changed History: The French Revolution. Retrieved from www.smithsonian.com
Bresson, T. (2018). Mouvement des gilets jaunes, Andelnans, 24 Nov 2018 [Photograph]. Retrieved from https://www.flickr.com/photos/computerhotline/45314995274/in/photolist
Lloyd's (2015). Food System Shock. Retrieved November 28, 2018 from https://www.lloyds.com/~/media/files/news-and-insight/risk-insight/2015/food-system-shock/food-system-shock_june-2015.pdf
Merchant, B. (2015). Commodity Traders Helped Spark the War in Syria, Complex Systems Theorists Say. Retrieved November 28, 2018 from https://motherboard.vice.com/en_us/article/wnxe4y/commodities-traders-helped-spark-the-war-in-syria-complex-systems-theorists-say
Read, C. (2018, November 24). PARIS BURNS: Riot police fire tear gas as 30,000 protesters furious at Macron hit France. Retrieved from https://www.express.co.uk/news/world/1049731/France-protests-paris-riots-police-emmanuel-macron-latest-france-news
Trading Economics (2018). France Food Inflation Forecast [Graph]. Retrieved from https://tradingeconomics.com/france/food-inflation
Production woes and extreme weather
Across the world, the indicators we follow have shown a decrease in food production. We observe regional news reports which all seem to have a similar theme, the cost of extreme weather and declining food production.
In both hemispheres, the 2018 growing season has resulted in downward declines of projections. One class of crops we follow is wheat, as it is one of the main staples of our diet.
Wheat production and grains as a whole is decreasing worldwide. According to the USDA’ World Agricultural Supply and Demand Estimates (WADSE), the 2017/18 to 2018/19 wheat production has decreased while use (consumption) has increased (USDA, 2018, WADSE-581-8).
In the Southern Hemisphere, Australia has experienced the lowest production in decades due to an extensive drought (Thukral & Barrett, 2018, para.8). Malawi, and Zimbabwe experiences sub average numbers due to insufficient moisture during critical times (Demaree-Saddler, 2017, para.7).
Bread baskets across the Northern Hemisphere has suffered similar conditions as their numbers has been reduced.
Last year, world wheat production was a surplus due to a bumper crop in Russia while this year India produced a number crop that buoyed global production numbers (Donley, 2018, para.1). Initially, Russia's forecasted similar numbers from 2017 but those expectations were dashed in June (Devitt, 2018, paras. 3-5).
Spring wheat production in the U.S. was projected to be the smaller in a hundred years (Parkin & Newman, 2018, para.2). In Canada, our production has dropped 3.3% from last year (Skerritt, 2018, para.2).
Spring planting was delayed to due to cold and wet conditions in mid to late spring. As the summer came to end the province was still in a state of moderate to extreme drought (Shooshtarian, 2018, para.2). Provincial harvest was delayed by wet and cold conditions which resulted in 70% of the harvest left in northwest fields, around 50% in central and northeast regions and 29% left in the south (Shooshtarian, Table 1, 2018, para.2).
As a whole, our focus on wheat is meant for understanding and the inclusion of other grains into the discussion highlight this negative trend even more. According to the WADSE, total grains show production declining and use increasing.
As a result, carryover stock is declining and this has resulted in some interesting things occurring. When grains are classified, those with a high nutritional content are designated for human consumption while low nutritional content are meant for feed for animals. The Ukraine has reduced the number of classes for wheat from six to four (Polityuk, 2018, para.1). No rationale was given but a reduction from five classes to three for human consumption is something to note.
Another occurrence which we have observed is the grains that are grown are being kept within the countries which is being produced. The European Union and Russia is contemplating the restriction of exports of wheat (Norton, 2018, Wheat, para.1). The result of these occurrences impacts trade and also increases the world price for grains.
If present trends continue, we expect reclassifications and export controls to become more common. This will most likely have the effect of increasing food prices. We are reminded of the Lloyds of London’s Food Shock report where extreme weather events occur in breadbasket resulting in prohibitive food price increases and unavailability. Our next report will detail this report along with commentary on the Canadian Food Price Index.
Demaree-Sadler, H. (2018, September 21). Conflicts, climatic shock exacerbated food insecurity. World Grain. Retrieved from http://www.world-grain.com
Norton, A. (2018, September 2). Russian wheat export restriction expected. Agweek. Retrieved from http://www.agweek.com/
Parkin, B. & Newman, J. (2018, January 12). U.S. Winter Wheat Planting Touches Century Low. Wall Street Journal. Retrieved from http://www.wsj.com/
Shooshtarian, A. (2018). Crop Conditions as of October 9, 2018 (Abbreviated Report). Retrieved from Alberta Agriculture and Forestry website: http://www1.agric.gov.ab.ca/$Department/deptdocs.nsf/all/sdd16741
Skerritt, J. (2018, August 31). ‘Shock’ estimates on Canadian wheat, canola crops boost prices. Business News Network Bloomberg. Retrieved from http://www.bnnbloomberg.ca/
Statistics Canada (2018). Estimated areas, yield, production, average farm price and total farm value of principal field crops, in metric and imperial units. Retrieved from https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3210035901
Thukral, N. & Barrett, J. (2018, May 1). Australian wheat farmers plant in dust bow and pray for rain. Reuters. Retrieved from http://www.reuters.com/
U.S. Department of Agriculture (2018). World Agriculture Supply and Demand Estimates. Retrieved from https://www.usda.gov/oce/commodity/wasde/latest.pdf