INVESTORS abhor uncertainty. And despite the robust economic growth in Africa the unpredictability of politics and policies have been persistent concerns, leading to many sinking their money into fancy tools to gauge the continent’s risk.
They need not look too far when dealing with social risk—barring a global spike, food prices will this month mark a year of steady decline.
The Food and Agriculture Organisation’s Food Price Index last month dropped 1.5% from February, and 18.7% or 40 points below its level a year earlier.
Falling prices for cereals, sugar, vegetable oils and meat offset a rise in dairy prices, the organisation said in a statement.
The index is a weighted list that tracks prices of these five major food commodity groups on international markets.
The dip in prices was attributed to bumper supplies, especially for wheat and maize, and a rising dollar which supported more exports.
The estimated cereal output for last year rose to 2,544 million tonnes, after the European Union reported a better than expected maize harvest.
Global wheat production is forecast to reach 722 million tonnes this year, just 1% shy of last year’s output. FAO said while China, India and Pakistan are all expected to harvest at this year’s record levels, production would decline in Russia and Ukraine.
Output in Russia is often closely watched. In 2010, the country, one of the world’s biggest growers, banned wheat exports after wildfires and a drought-induced heat wave destroyed crops in many parts of the country.
This triggered a surge in international wheat prices following concerns over shortages. The immediate effect was rising food prices with riots as far out as in Mozambique, where protests claimed seven lives.
In Egypt, the world’s biggest importer of wheat and where the government subsidises millions of citizen’s daily bread, authorities struggled to cope, while markets all over Africa saw upward swings in the prices of many commodities.
FAO said that at the time, world food prices were at their highest in two years, just off the June 2008 peak, when a global food crisis saw protests in at least 40 countries in the world, including in Egypt.
The crisis of 2007/08 was triggered by increased oil prices and the use of crops for biofuel, and coincided with the financial depression that caught many analysts and investors unaware.
The “Arab Spring” was generally profiled as a rejection of autocratic leaders and an endorsement of Western liberal values and institutions. But lost in the coverage was that rising food prices in 2008 and 2010, which saw state subsidies unable to prevent the prices of stables from rising, trigged the protests which mothballed into revolutions.
Food might also explain, although tangentially, why a lot of the violence in Africa is fuelled by jihadist ideology—the northern regions of countries like Nigeria and Kenya are the most arid, tend to be more food insecure, and also to pay more for it than their southern countrymen and women who live in more fertile. These northern areas, for historical reasons in these two countries, are also populated mainly by Muslim nationals. It is a link that needs to be investigated further.
Despite these regional differences within countries, globally Africa is the world’s most food-insecure continent, despite huge arable farmlands, with seven in every ten people being farmers. The continent spends more than $50 billion a year buying food from rich countries, with one reason for this being reduced yields at home.
It could get trickier—in 2050, the global population is expected to top 9 billion people, with projections being that food supply will need to more than double, despite increasingly tight land and water constraints.
Africa’s inhabitants will double from the current 1.2 billion to 2.4 billion, according to data from Unicef. In 2100, they will reach 4.2 billion.
If Africa does not counter this pressure, it could be a major trigger of unrest, beating even the political uncertainty that follows many elections on the continent.
IN this way food price volatility could be argued as a better indicator of Africa’s stability, despite the array of dozens of other trendy indices deployed by analysts.