Today we'll look deeper at some numbers to understand why the current unrest in the Middle East and North Africa is food-based. First, below are two maps from the FAO that present two important features of the food marketplace in the region.
The first titled "Dietary Energy Consumption" shows that per capita daily calorie intake in all of the countries in the region except Yemen is over 3,000. That is on par with Australia and Spain, for example. Egypt, specifically, is better off than the other countries in the neighborhood. This makes sense if you look closer at the table of largest wheat importers from yesterday. Third on the list was Egypt in dollar value, but in terms of total volume they are first. They just get a really good per unit price on their wheat (I can't imagine how that happened). In general, the people in these countries have enough to eat. The situation is much different throughout the rest of Africa, India, and in parts of South America.
The next map entitled "Net Trade in Food" shows us the balance of food exports and imports divided by consumption. The dark green countries consume quite a bit, as the map above shows, but they are the production powerhouses that export huge amounts of food, especially staple commodities. The orange areas in North Africa indicate a huge negative balance. If we look at the map above again and recall that those countries have enough food to consume, the negative balance must mean that they are big food importers. Egypt is better off than others in the region because they export a lot of high value fruit crops.
So we know that the countries in the region have plenty of access to food, but that they are highly reliant on imports to meet those needs. Why does this matter? Think about it this way. Joe lives in a relatively modern country with plenty of access to food even though he is poor and spends a large percentage of his income on it. Nancy lives in a developing country where food scarcity is common, she is also poor and spends a lot of her income on food. In both countries wheat prices have led to significant disruption in food distribution and huge retail prices increases. If you are a dictator, which country would you rather rule? My answer: the country where technology does not make organizing protests really easy, and where people are accustomed to being hungry.
Below is a chart showing percentage expenditures on food in various countries, sorted by percent expenditure on cereals, like wheat and corn. This is not a comprehensive list, rather representative countries that illustrate the trade imbalance in staple foods between Western countries and those in the subject region.
First note the difference in percent food expenditures between countries like Egypt and Morocco, and Germany and Australia. The yellow hi-lighted countries spend a relatively small percentage of expenditures on food, and we see that the types of food they import are items like wine and cheese, not staple foods.
This data was compiled by the USDA's Economic Research Service, and it is based on a 1996 survey. I added to it the 2008 top three food imports from the FAO database, and the last column on the right is the percentage of wheat consumption that was produced in the subject country. Those percentages only appear for countries where wheat was the number one import (also hi-lighted in green). All of the green hi-lighted countries are in the subject region, wheat is their number one import, and they spend a large percentage of income on both cereals and all foods. The countries with red hi-lighted text are those that spend over 1/3 of their income on food, and import over 1/2 of their wheat.
Turkey and Iran are very close to that threshold, and Spain and Italy should be on the watch list as all their numbers are creeping up, and they import a lot of soybeans and wheat, respectively. They are also two of the Mediterranean countries having major financial problems.
All of the countries hi-lighted in green have experienced recent protests or revolutions sparked by sharp increases in food prices. Algeria, with its very large wheat imports, could be next. Even if countries subsidize bread and other basic foodstuffs, they can only maintain those emergency measures for so long. What we saw last year was pure speculation, but what we'll see now will be actual hoarding. Prices will continue to rise with scarcity, and unrest will continue. Of course, most of the countries on this list also import large amounts of corn and soybeans. The prices of those two commodities has risen sharply, but those increases began a few months after wheat. Just wait until those increases begin to affect retail prices.
Policy makers can wring their hands about who will take over in these countries in the near term, but it won't matter. Tunisia set off a food-based economic death spiral in the region that will not end with current leaders being deposed. Anybody who wants to step forward and occupy the palace had better sleep with one eye open.
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