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The price of rice

March 29, 2008


The price of internationally traded rice has roughly doubled in the past several months. There are several independent factors that seem to be contributing causes for this sudden spike in prices (New York Times story, Toronto Globe and Mail story), but the bottom line is that this is very bad news for many developing countries in Asia and Africa. Poor people everywhere spend a high percentage of their income on food. If the price of the chief staple food rises abruptly, this will predictably cause suffering and hunger among the poor. Amartya Sen’s penetrating ideas on issues of hunger and famine are as relevant today as they were two decades ago (The Political Economy of Hunger, Poverty and Famines: An Essay on Entitlement and Deprivation). And, as Sen discovered, prices and incomes are critical determinants of malnutrition and famine. And recall that current estimates of the number of malnourished people in the world approach one billion!

Another important symptom of food distress for the world’s poor — the UN food program announced a few days ago that high prices have exhausted its budget (emergency appeal). It has called upon donor nations to provide immediate supplemental funds to permit it to continue its crucial programs.

This shift in international market conditions will also have the potential for creating civil unrest in several countries. There are already signs of urban unrest in the Philippines, where rice riots and disturbances have already occurred. The Times story cited above mentions food riots in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen. Governments that fail to assure the availability of affordable food supplies will be reminded of the volatility of the issue of food — from medieval Europe to revolutionary France to Poland in the 1970s.

There seems to be a similar issue percolating in North America — a sustained rise in the prices for wheat and maize over the past year. In this case the cause seems to be the increased demand for grain created by ethanol production on a large scale. Americans spend a smaller percent of income on food, so the immediate consequences are less damaging to population welfare. But this trend suggests a similar caution that we need to heed — we need to pay attention to the stability and sustainability of the world’s food system.

Food security is an important dimension of a developing country’s long-term welfare and stability. These issues haven’t gotten much attention in the international press in the past decade or so. Neo-liberal doctrines, market restructuring, and the Washington Consensus have pushed these more material aspects of economic development to a lower priority and visibility. But maybe current conditions will bring the issue back to center stage.

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