By Brandon Keim, Wired
A new analysis of sudden rises in global food prices puts the blame on biofuel policy and mortgage-meltdown-style speculation, which may have fundamentally changed how food markets function.
Many other explanations have been proposed, and the latest analysis — a series of mathematical models and statistical evaluations that seem to match theory with real-world patterns — is not conclusive. But it does make a strong case.
“There’s a literature of a hundred-plus articles, saying this might be the cause, or that might be the cause,” said network theorist Yaneer Bar-Yam of the New England Complex Systems Institute. “We looked quantitatively, and found two important factors. Speculators cause the bubbles and crashes, and ethanol causes the background rise.”
Bar-Yam and the NECSI team, whose analysis was published Sept. 21 on arxiv, work at the intersection of social phenomena and network analysis. In earlier research, they’ve explored the global economy’s changing structure and early-warning signals signals that may precede crashes.
More recently, they’ve studied how social unrest may have been fueled by food price spikes in 2008 and again in 2011. It’s not only the rise in food prices that’s proved troubling, but the rapidity. Shifts have been big and sudden, in stark contrast to the generally slow fluctuation of food prices since the mid-20th century.
Among the possible causes put forward by economists are drought, meat-intensive dietary habits and market hypersensitivity to supply and demand. Another is corn-based biofuel: In less than a decade, some 15 percent of the world’s corn production has been converted from food to fuel. Perhaps most controversially, some economists have blamed a flood of speculators betting on the rise or fall of food prices.
To read more, visit: http://www.wired.com/wiredscience/2011/10/food-price-rises/