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Oil has long been regarded as the commodity with the most potential for economic mischief, and the one around which much of the world’s geopolitics revolves. But food is making a case for itself this year.
Riots and protests over food prices have broken out in 30 countries since 2007. Haiti’s prime minister was tossed out of office in April, largely because of protests over the price of food, and the Malaysian government is looking none too stable for similar reasons. In South Africa, discontent over soaring food and fuel prices provided the spark for violence that killed dozens of illegal immigrants last spring. Even in the United States, wholesalers such as Costco limited the amount of rice each person could buy, unsettling some consumers. It’s possible that the most consequential price spike of 2008 will be in food, not oil.
High food prices, like high oil prices, are partly the result of rising demand by a larger, wealthier world population. But food-supply problems have also contributed to the recent spike in prices, and food has become a source of international tension.
The growth of the global food market has meant more food for billions of people, yet it has also led to a greater concentration of supply. In 2006, the top five oil producers supplied 43 percent of the world’s oil. By comparison, the top five corn producers grew 77 percent of the world’s supply; rice producers, 73 percent; beef and wheat producers, 66 percent each. Because of this concentration, a supply disruption in even one place can ripple through the food market worldwide.