x Abu Dhabi, UAEWednesday 17 January 2018

Food prices always a political hot potato

Food, or the lack of it, is always an emotive issue, writes Rupert Wright. According to a pamphlet prepared by the Georgia State College of Agriculture during the Second World War: 'Beans are Bullets - Potatoes are Powder.'

It is an irony that a protest sparked by rising food prices and the ability to sell vegetables in Tunisia is leading to rising food prices throughout the world.

As the situation in Egypt worsens, shoppers in Britain are finding Egyptian new potatoes are either becoming more expensive or are unavailable. British shoppers will doubtless be able to put vegetables from elsewhere in their shopping trolleys but, for Egyptians, lack of food supplies might soon play a key role in the crisis buffeting the north African country. They will also suffer from a lack of sales and exports.

Food, or the lack of it, is always an emotive issue. According to a pamphlet prepared by the Georgia State College of Agriculture during the Second World War: "Beans are Bullets - Potatoes are Powder."

In a new book called The Taste of War: World War Two and the Battle for Food, Lizzie Collingham, a former research fellow at Jesus College, Cambridge, estimates that 20 million people died of starvation and malnutrition during the war, slightly more than the 19.5 million military deaths.

Controlling access to food and its price is power. As Ms Collingham says: "Food was the fundamental basis for every wartime economy."

This suggests even the efficient financial markets are underestimating the importance of food. Credit default swaps, an instant indication of risk, are charging US$42,986 (Dh157,887) to insure $1 million worth of 5-year Egyptian bonds for a year.

The charge has leapt in the past few days but is still cheaper than insuring a similar amount of Dubai debt. Doubtless this discrepancy will change in the next few days.

Water, electricity and communication networks are key to any economy. But the struggle in Egypt may yet come down to the price of a pound of potatoes, or the availability of wheat to make bread.

 

rwright@thenational.ae