The impact of food price spikes

2013-05-24 06.53.06 amAs we discussed in a previous post, several causes led to a massive spike in food prices internationally in 2008 and again a few years later. The average world price of rice, for example, rose by 217% between 2006 and 2008. Classical theories have suggested that we shouldn’t worry about these spikes: that the high prices will lead to more production (attracting farmers to produce more, which will drive prices back down), people’s wages will adjust to costs of living, and people will be able to substitute for expensive items with other foods. But a new report tracking how the most-affected people have responded to the food spikes reveals that classical theories may be a bit out of touch…

The report, commissioned by Oxfam International, involved three related, year-long quantitative and qualitative analyses of the food price spikes: (1) the analysis of key global food security indicators, including availability of food for consumption (amount, type, and quality); access (to the required type, quality, and quantity of food in terms of affordability, adequacy of allocation mechanisms, and meeting social and other preferences); and utilization (the ability to benefit from consumed food, which is dependent on the nutritional content, the social value, and the safety of available and affordable food) [for those who would like to analyze this data themselves, it’s publicly available here]; (2) twenty-three qualitative community case studies in  10 countries facing spikes, including interviews in both urban and rural areas to identify how people coped with price spikes volatility; and (3) an iterative ‘Q-squared’ process that involves both qualitative and quantitative analysis, in which the qualitative research informed lines of quantitative enquiry, whose findings in turn suggested issues to probe in future rounds of qualitative work.

2013-05-24 07.16.26 am

Theory versus data

The findings from these analyses were profound. Indeed, as predicted by classical theories, many people are earning more money, but at great cost, and not necessarily with great benefits to them. Wage rises did not typically match rises in the cost of living. Rather, people had to cut back on food and other expenditures, substitute for inferior quality food, spend significant time shopping around, and spend more time and money growing and gathering food. The impacts are felt in homes, relationships, communities, and work-places, causing both stress and inter-personal conflicts.

Directly linked to the food price spikes, the researchers observed a major social transformation in several communities: that “crisis mode” for families became routine. Being stressed and desperate for food became a normal part of daily life, and money itself and its pursuit become so obsessively prevalent in the researcher’s longitudinal observations that it was notably ruining social status, relationships, love, and values. Everyone’s priorities and relationships seemed to be profoundly affected by the food price volatility.

One of the major findings was that while much of our conversations around food and public health are centered on the question of cost, the volatility itself–not just the absolute price–seems to have its own major impact. Furthermore, contrary to classical theory, food price rises don’t seem to have attracted young people into farming; agriculture is simply unappealing because of unpredictable returns in the context of volatility, high input costs, and difficult living. No one in their right mind wants to put up with the difficulties of being a farmer, essentially. And there’s no sign that the price rises are going back down at this point. Projections suggest continued high prices in the most-affected regions, even though other commodity prices have decreased (reducing wages) and volatility has decreased around the stably-high price levels.

2013-05-24 07.19.10 am

Many of the non-farmer laborers also had difficulties coping with the cost of living issues presented by the food price spikes. Some formal sector groups mobilized successfully to demand higher pensions (Bolivia), or to increase wages (Bangladesh and Indonesia), but they also entered into riskier work situations: gold mining; sex work; and fishing in dangerous conditions. Migration also increased in the context of searching for higher-wage work. In most of the 23 research sites, while wages rose, this increase has not kept pace with the rising costs of fuel, rent and agricultural inputs, which climbed again in 2012, in the wake of five years’ worth of price rises.

Food substitution

While people did start substituting for their usual foods with less expensive ones, this substitution appeared to present several important public health conundrums. People ended up consuming less than their nutritional requirements, risking micronutrient deficiencies. Surprisingly, even some better-off urban populations were unable to afford basic foods, eating less diverse diets and substituting for foods they dislike using ‘hunger recipes’ that are designed to stretch meals. While this is classically described in the hunger literature, more surprising and atypical was that processed foods and sauces marketed by multinational food companies also became popular ways of making plain food a bit more palatable during this food price spike, and these cheap flavorings contain high quantities of substances associated with chronic cardio-metabolic disease. Food safety also became an issue as people relied more on foods that were of questionable quality, and included potentially-contaminated fish, poultry, and meat and broken eggs.

What to do

The researchers asked the people most affected what they thought would be most helpful in this situation, and supplemented that qualitative analysis with the statistical study of what seems to have worked well in the past. A few key recommendations emerged out of the report: (1) since it is too late to start developing price-buffering schemes when a price spike strikes, communities and governments need to design social assistance policies aimed at protecting against spikes in the form of temporary cash or food transfers, or by providing subsidies that are automatically triggered by price rises; these should be adjusted to real changes in needs by linking social protection to inflation; (2) food security policies need to buffer not just against cost but also against price volatility through appropriate management of food reserves, and regulation of anti-competitive behaviour in the grain trade (hoarding); and (3) future farmers need to be supported, as volatility and low returns to small-scale farming is turning people away from a life on farms.

But despite these explicit recommendations, one of the most striking aspects of this report is understated: that it goes into far more depth, with more careful and longitudinal qualitative ethnographic detail, that many prescriptive or analytic reports on the food price spikes. Indeed, the care with which this report was conducted reveals that another deficit in our conversations on food policy is actual monitoring of the experiences of those most affected. Rather than theorizing about equilibrium prices, the report’s authors reveal that directly monitoring how people are actually paying for food and other basic living costs needs to be conducted to correct often outdated theories, and monitoring real wages and earnings may help us better understand vulnerability, resilience and the impact of global price shocks on nutrition and livelihoods.

Comments are closed.