Tilted Forum Project Discussion Community - View Single Post - Revolution in Tunisia & Egypt, Protests in Libya, Bahrain, Oman & Yemen

aceventura3 · 02-03-2011, 10:52 AM

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Originally Posted by roachboy

as far as background is concerned, this is far closer to the facts of the matter than any of the conservative gibberish ace is littering the thread with:

Not just me:

Quote:

The Egyptian government does subsidize bread and other staples for poorer Egyptians, ameliorating the price increase somewhat. But most Egyptians purchase bread beyond what the subsidy allows. And the threat of instability has already pushed food costs higher in the Egyptian capital and elsewhere. Plus, rising food prices have a long history of causing social unrest in the country. In 1977, the state cut subsidies of basic staples, leading to deadly riots. In 2008, when food prices hit their first peak, Egyptians again took to the streets.

None of that comes as a surprise to social scientists. Economists at the University of Adelaide, for instance, recently examined the impact that food prices have on civil conflict in 120 countries in the past 40 years. "Our main finding is that in low-income countries increases in the international food prices lead to a significant deterioration of democratic institutions and a significant increase in the incidence of anti-government demonstrations, riots, and civil conflict," the researchers note. The same finding does not hold true in high-income countries, where citizens can better afford food.

So what is causing the rise in food prices—and might prices abate, easing tensions in Egypt? Unfortunately, the answer is probably no. Commodity speculation by hedge funds and financial entities might be contributing to the global run-up in prices. But much of the recent increase can be explained by the simple laws of supply and demand. First, there are constraints on yields, caused by recent droughts in Russia, floods in Australia and Pakistan, and increased production of crops for ethanol and other biofuels, rather than food. At the same time, demand for food commodities has continued to climb in big and fast-growing countries like India and China. And rising oil prices—a key component of food costs, given the cost of shipping goods—aren't helping, either.

So why haven't Americans noticed an uptick in costs at the supermarket? Mostly because raw food costs are a smaller proportion of overall food costs for American consumers. When you buy a box of Wheaties, you're paying for packaging, advertising, and processing, as well as the wheat, making the price more insulated from inflation. In addition, U.S. food producers tend to trade in the futures markets to smooth costs—meaning ingredient costs get locked in months or even years in advance.

So, the global food crisis has remained mostly invisible in the United States. But it is all too visible in Egypt and other Northern African emerging economies. And the economic forces do not look like they will abate any time soon.

Egyptian protests: How a food crisis is driving a political crisis. - By Annie Lowrey - Slate Magazine

Think about it. What actually triggered these protests what was the most direct proximate cause? Mubarak announcing an end to food and energy subsidies.