More than a dozen countries have recently seen public demonstrations against rising food prices. The widespread and violent character of this upheaval (and its repression) has captured the attention of the media and given way to a narrative of ‘global food crisis’. This research will examine these events, focusing on the relationships between primary commodity markets, violence, and financial speculation. The objective of this research are to document the emergence of the contemporary global ‘food crisis’ (the last one dating back to the mid-1970s associated with the oil and debt crises and associated structural adjustments), and to improve understanding of the relationship between primary commodity markets, violence, and speculation.
This research will first examine the relationship between violence and speculation in primary commodity markets. The main hypothesis is that speculation is associated with price increase spikes and occurrences of violence. Major price increases in the oil market, for example, were associated with wars and political instability. The threat of seeing oil production declined not only generated higher demand to build stock, but also speculative moves on the part of financial markets expecting rising prices. In turn, increased supply of ‘petro-dollars’ to the banking sector meant that capital chased high return opportunities in other sectors, diffusing and amplifying speculative behaviour. The resulting inflationary cycle and narrative of crisis was associated with a deep restructuring of the economy, spreading anxiety, hardships, and expressions of discontent among a broad public. The media play an important role in this regard, as violence disproportionably captures international media attention and can thus affect markets perception by analysts, producers, and consumers, as well as policy-making. Violence, in other words, may further increase speculation.
This research will then focus on contemporary ‘food riots’, mapping out their occurrences, the evolution of food prices, and the diffusion of the idea of a ‘world food crises’. So far food riots have occurred in at least 15 countries, with about 50 countries taking measures to attenuate price hikes. Policies and institutions are particularly responsive, although in different ways, to violence. The violence characterizing some of the recent food crises, such as the death of demonstrators due to police repression, have brought down governments or change in trade policies. While individual citizens and ‘speculate’ that food riots can alter government policies, and beyond reducing prices contribute to broader reforms (such as the abandonment of neoliberal policies that have increased food import dependence among many poor countries (see Walton and Seddon, 1994; Khor, 2008)
Finally, this research will sketch out a research agenda to better study the ‘winners’ and ‘loosers’ of crisis in primary commodity markets, in this case foodstuff. Whereas farmers and multinationals are often presented as the main winners, more attention will be given to fund managers.
Contact Philippe Le Billon
Photo credit – World Food Program