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Norio Nishihata

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Skyrocketing Global Food Prices and Worldwide Food Riots

Norio Nishihata
Specially Appointed Professor, Faculty of Economics, Chuo University
Areas of Specialization: International Development, International Cooperation, Project Management

A mail from my former student stationed as a JOCV in Malawi

I received an e-mail from a former student who is in Malawi, Southern Africa a few days ago.

She graduated as a member of my seminar class three years ago, worked for Recruit for three years, and was just posted in Malawi as a Japan Overseas Cooperation Volunteer in mid-June, as she had originally planned. "Mass demonstrations broke out throughout Malawi, and I am now stuck at the JICA dormitory. It is very rare in Malawi that deadly violent actions are committed in town, and the transportation network such as minibuses and long-distance coaches have been affected. Also, a lot of gloomy news going on, as the UK, the largest aid donor of Malawi, withdrew from the country, and exports of tobacco, the country's largest export, dropped drastically. I can't precisely analyze the background of the demonstrations, but I just wanted to report what's actually happening in this small country on the African continent." This is roughly what she wrote in her e-mail. Malawi had been an agricultural country with a long period of political stability since its independence, and it was such a peaceful society that those working on aid called it "Loving Malawi." These demonstrations represented the citizens' humble actions to petition for relief from their hard living. Lately, gasoline and food prices have been rising sharply, and as a natural consequence, goods and hard currency have disappeared from the market, except some foreign-capitalized supermarkets, causing the local currency (kwacha) to weaken. As I have experienced three coups in Nigeria, it is not difficult to imagine how much the local living has degraded. They eat only one meal a day, sharing with their family.

The sharp rise in food and fuel prices and its backdrop

According to the FAO, it can be said that the world food situation was sound as a whole for about 25 years from the early 1980's. Major global food prices, however, have been increasing since 2006. Rice, for example, rose by 217%, flour by 136%, maize by 125%, and soy beans by 107% between 2007 and 2008. At the same time, gasoline and kerosene prices rose following food prices, which hit citizens' lives directly. As for escalating oil prices, for instance, the crude oil price of $30 per barrel in 2003 doubled to $60 in two years, and then rose to $140 in another two years in 2008. The oil price hike has a speculative nature due to excess liquidity, and it is not clear whether prices will stabilize in a short period of time. The crude oil price hike also boosted the prices of pesticides, fertilizer, and farm equipment. This led to the production of alternative energies. These energies are mainly produced from corn and sugar cane, which were supposed to serve as staples but were actually diverted for the production of alcohol, and which in turn may affect the food situation in developing countries and eventually grain prices. Furthermore, this hike resulted in rising prices for alternative grains including wheat, soybeans, rice, and vegetable cooking oil. This situation radically progressed from 2008 until now.

It is not the world growing population that boosted food prices, however changes in the quality of diet due to the advent of emerging countries such as China and India, and the replacement of meat protein with grain partly contribute to the staple price hike. Also, although this is not necessarily proven scientifically, soaring staple prices can be attributed largely to the tight global grain supply and the demand arising from poor harvests in many areas, which were triggered by climate changes such as global warming.

Food riots in developing countries

Food riots have broken out in: West Africa including Burkina Faso, Cote d'Ivoire, Cameroon, and Senegal; Southern Africa including South Africa, Zambia, and Malawi; Egypt, Yemen, Bangladesh, Pakistan, Uzbekistan, Sri Lanka, Mexico, and Bolivia; Maghreb countries including Tunisia and Libya in recent years. Although turmoil can be avoided even with slightly high prices as long as they are stable, people are unsettled once fluctuations of around 50% or more in fuel and staple prices start within a matter of months. Many citizens with low or no income end up with little hope of surviving. These food riots, then, can very easily turn into political riots. In these environments, food exporting countries are beginning to control the outflow in an obvious move to form a block economy. What did the world learn from the imbalance in the trade structure during an interwar period?

Food security and the future

It is envisaged that world food price fluctuations boost the prices of hundreds of items including dry noodles, bread, and flour starting this month (July) in Japan. It is indeed an issue in the matter of human history how we realize world food security, and how we protect the lives of two billion who have difficulty obtaining food out of the planet's 6.8 billion people. In order to protect people's lives in Africa, persistent efforts are urgent to elevate the abilities of the government systems that can enhance agricultural productivity, to renovate and build educational and agricultural infrastructures, and particularly to improve irrigation technologies and selective breeding. In addition, agreements are urgently needed to facilitate the market environment which could possibly manipulate prices of foods that are essential to life, and at least to regulate speculative behavior in food markets.

Reference
  • Cereal prices hit poor countries, BBC, February 14, 2008.
  • Kenzo HEMMI, Recent World Food Situation with Reference to Japan's Food and Agricultural Policies, MACRO REVIEW,Vol.21,No.1, 1-10, 2008
  • Mulat Demeke, Guendalina Pangrazio and Materne Maetz,
  • Initiative on Soaring Food Prices: Country Responses to the Food Security Crisis: Nature and Preliminary Implications of the Policies Pursued Agricultural Policy Support Service, Policy Assistance and Resource Mobilization Division, FAO,
  • Financial speculators reap profits from global hunger, www.globalresearch.ca
  • E-mail report from Ms. Nanako Ebata (She completed FLP in Professor Nishihata's seminar courses in 2008, and is currently posted as a Japan Overseas Cooperation Volunteer in Malawi)

Note: Staple refers to grains as the main part of the diet, such as rice, barley/wheat, maize, and cassava; and food refers to food items in general.

Norio Nishihata
Specially Appointed Professor, Faculty of Economics, Chuo University
Areas of Specialization: International Development, International Cooperation, Project Management
Professor Nishihata was born in Hyogo Prefecture on April 23, 1947.
He completed his graduate study at the University of Bradford, UK in 1981. He left the Doctoral Program upon completing course requirements at the International Institute of Social Studies of Erasmus University Rotterdam, Netherlands in 1983. After working for the Japan International Cooperation Agency (JICA) for 32 years, and assuming the position of Visiting Professor at the Graduate School, Tokyo University of Foreign Studies, he became Specially Appointed Professor, Faculty of Economics, Chuo University in April, 2004. He teaches international development and seminar courses at Faculty of Economics and Faculty of Policy Studies as well as the Graduate School.
He held various posts, including chairman for the 4th long-term comprehensive planning council of Inagi City, lecturer for the citizens' college courses provided by the Inagi City Board of Education, director of an incorporated nonprofit organization, JADE (Japan Agency for Development and Emergency), instructor for JICA training programs on foreign government VIPs, and expert advisor for African Studies Group, Institute of Developing Economics, Japan External Trade Organization.
Experience of working abroad: Embassy of Japan in Nigeria, Ministry of Foreign Affairs and Trade, Mongolia