Theory
If all countries experience the effects of the food price shocks, why do protests occur in some countries but not others? Food price shocks can and have led to protests, and previous literature suggests that increased food prices have a direct impact on the income of poor people living in developing countries. When food prices increase, people do not buy less food but rather spend a greater percentage of their income on food, thus spending less on other consumer goods (Bates 2011). Although the entire country experiences the effect of food price shocks, it will likely have distinctive consequences in different areas of a country. Food producers in rural areas will likely profit from this development while those living in urban areas will be most vulnerable to the negative effects of rising food prices. In addition to profiting from food price shocks, the rural sector will be less likely to protest for several reasons. First, the collective action problem is much more difficult to resolve in rural areas. The ability to organize people who are scattered and geographically dispersed is more difficult than organizing individuals who are geographically concentrated in urban areas. Second, the rise in food price costs may be counteracted by farmers who engage in subsistence farming, whereby they can grow food for themselves and are less likely to be burdened by the rising food prices. Although subsistence farming may counter balance against rising food prices for the rural population, it does not provide the same relief to the urban population as they lack access to arable land. However, the divide between urban and rural areas of a country does not completely explain the existence of mass protests in one country and not in others.
The type of agriculture grown within a country may also play a significant role as not all farmers grow edible agriculture or engage in subsistence farming. In many countries, farmers specifically grow cash crops such as coffee, tea, cotton, or tobacco that often employ a large sector of the workforce. Although many people are involved in farming on cash crop farms, the agriculture cultivated on this type of farm does not contribute to the food markets, allowing the country to be vulnerable to global food price shocks. Countries that grow cash crops tend to import the majority of their food for consumption and with the majority of the population employed in the rural sector, food price shocks are expected to have a huge impact on livelihood.
H1: During global food price shocks, countries with a higher urban population will experience political unrest.
Based on these observations, I argue that food price protests are most likely in highly urbanized countries that are net importers of food and in countries that employ a large portion of the workforce in agriculture that produces cash crops and is therefore forced to import a majority of its food. On the other hand, countries that export food crops and have a majority of their population living in rural areas are less likely to experience political unrest due to food price shocks.
While food price shocks unambiguously lower the welfare of urban consumers, their impact upon the welfare of rural dwellers depends upon whether the shortages that generate them arise abroad or domestically. If they arise abroad, domestic producers will benefit from the price rise. If the shortages arise domestically, however, then the loss of crops – and incomes – of the rural dwellers needs to be added to the economic losses in the urban economy (Bates 2011: 3).
Countries that primarily import their food are typically at the mercy of the fluctuating market price of food which has steadily increased since the 1990s. Highly urbanized countries or countries with an agricultural sector focused primarily on cash crops must import food at market prices in order to feed their populations. Thus, when global food prices sharply increase, the populations feel the full effect of the price shock and respond to this development with mass dissent. When both the urban and rural sectors are subjected to the effects of rapidly increasing market prices, protests would seem most likely. Egypt is an example of a country that has a large urbanized population and imports the majority of its food. When cereal prices on the global market spiked in early 2008, protests were rampant across the country. Egypt is a net food importing country which means that it relies solely on the world market prices for food in order to feed its population. Since Egypt is mainly covered by deserts, there are no arable lands and consequently, no agricultural sector. Egypt relies on tourism as the biggest industry and thus employs the majority of its population in the urban sector. Consequently, when protests break out they take place in large cities such as Cairo and Alexandria.
H2: During global food price shocks, countries that import the majority of their food will experience political unrest.
Countries that are producers of their own food, on the other hand, are more likely to employ the largest sector of their population in the rural sector. When a country is a food producer, the effects of the global markets are less dramatic than a non-food producing country because they have the ability to keep resources at the local level. Farmers or citizens employed in the agricultural sector producing food are likely to grow food for themselves before becoming reliant on the global markets. Furthermore, when demand and market prices increase, the income of those employed in the rural sector should also increase. Thus, these countries are less likely to experience protests because a significant aspect of their population profits from the increase of market food prices. Therefore, the increase in food prices should produces an increase in the incomes of those involved in agriculture. In this case, where income matches the rising costs of food prices, protests would be the least likely.