x Abu Dhabi, UAETuesday 25 July 2017

Will Mozambique riots sow global seeds of discontent?

Violent food-price protests and Russia's export ban on wheat have brought fears of a return to the developing-world turmoil of 2008. But things are different this time.

Could Mozambique be the canary in the coal mine? Food riots in the southern African state, one of the world's poorest countries, suggest the global price protests of two years ago may be here again.

Over the past week Mozambican police have fought rioters using rubber bullets, batons and occasionally live ammunition. Protesters have used text-messaging to co-ordinate their actions, set up barricades of burning tyres and hurled rocks and bottles at police. At least 13 people have died as a result of the violence, authorities say. The protests were against the sudden leap, of up to 30 per cent, in the price of bread. With households spending three quarters of their incomes on food, the price rises have hit many people hard.

Mozambique is one of the world's poorest nations and most of its 22 million citizens live on less than US$3 (Dh11) a day. The country produces less than 5 per cent of its wheat consumption, relying on imports for the rest. Drought and fires in Russia that destroyed a quarter of its wheat crop and prompted a ban on exports that forced up world prices is being blamed as a direct cause of the crisis.

Whatever the reason, food riots are becoming increasingly common as prices rise above what many in the developing world can pay. In 2008, violent protests boiled around the developing world, from Haiti to Bangladesh to Egypt. Economists said record oil prices and the demand for biofuels, which resulted in arable land being diverted from food production to energy-producing grains, had much to do with it.

Today, the price of fuel is lower and the rampant inflation that drove price action has subsided. But for the poor in developing countries, little has changed. Any benefit from lower energy costs was wiped out by the global downturn, which resulted in fewer jobs. Franciscus Welirang, the chairman of the Flour Mills Association in Indonesia, warned last month Asia may be staring down the barrel of another food crisis if the surge in wheat prices sparked by Russia's export ban drove other staples higher. Indonesia is Asia's largest buyer of the grain.

"It's the end of cheap wheat," Mr Welirang told Bloomberg. The UN Food and Agricultural Organisation (FAO) says world food prices have climbed to their highest in two years, although they are still substantially below 2008 levels. Officially the FAO, based in Rome, has played down the unrest by saying global conditions are substantially different from 2008. But it is concerned enough to have called for a special meeting of global leaders to discuss the issue on September 24.

Anger over rising prices has also been noted in Egypt and Serbia. In Pakistan, where floods have destroyed a fifth of the country's crops, the prices of many food items have risen 15 per cent. The FAO warned in a recent report that food prices could rise as much as 40 per cent over the next decade. With more than 1 billion people worldwide regarded as living in poverty, the potential for civil strife is high.

Tragically, one of the main long-term drivers of food inflation is the improved economic fortunes of developing countries. As their economies have grown, often from the sale of commodities such as oil and metals, so has their demand for food. Mozambique is a case in point. Still listed among the world's least developed nations, it has managed economic growth of about 8 per cent over the past 10 years. This year it expects 6 per cent growth.

Much of this was the result of sales of commodities such as natural gas, coal and aluminium. With economic growth comes greater demand for food as the population grows and prospers. One saving grace has been that as Russia dries up, the US has been enjoying a bumper harvest. Food commodity prices will inevitably rise but greater supply could prevent a panic. business@thenational.ae