Globalization and food riots

I had just finished writing an article on Chinese agritech companies, when I ran across a post by Chris Blattman, and a response by Duncan Green, on food prices, food riots, and globalization, and because of that fortuitous timing I'm going to break my rule of never getting in the middle of a conversation between PH.D's and throw my two cents in.

Green agreed with Blattman on the majority of his post, but took issue with this one paragraph.

‘Globalization and growth should reduce price spikes in future. More countries are producing crops. Climate shocks in Argentina are not that tied to climate shocks in Russia or China, and so price volatility from supply shocks should be going down. Falling transport costs also mean that more substitutes are available, further reducing price volatility. So things should be getting better over time, not worse, especially if trade allows countries to diversify their diet. Envision a future of diminishing instability.’

Responding:

This reminds me of the apocryphal French diplomat arguing in a Brussels punch-up ‘I can see it works in practice, but does it work in theory?’ Here’s the practice – you can clearly see food prices pretty smooth up til 2007, then going haywire.

Time to adjust the theory, rather than deny the reality, Chris?

In general I think using the term "globalization" and "agriculture" in the same sentence is a pretty bad idea, as agriculture is dependably the least globalized commodity in the world, and is likely to stay that way for a long time in the future. Yes, theoretically globalization in agriculture would lead to less price spikes, and I don't think pointing to a graph that shows prices spiking right at the time numerous countries shut down their exports of grains disproves that. 

Similarly I think Blattman is being overly optimistic. Yes, the damage from weather shocks is now spread across the world, but global warming has caused more and more over the past decade, and government response to a major is always to shut down the global trading system that diminishes the damage. And global supply will continue to be unpredictable, as agricultural programs in most developing countries usually take a back seat to industrial programs, developed world agriculture is basically a protection racket, and political interference in the sector makes it prone to shocks. All while demand is consistantly growing.

I agree with both of them that there are multiple causes to food riots, but that shouldn't distract from the fact that shoddy agricultural policy is pretty much a global constant, and that policies that encouraged global trade in agriculture are still needed, and would greatly help countries like Mozambique.

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