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CHAPTER 4


Learning from the Past: Comparisons to the 1972–74 Food Crisis


he recent surge in food prices has been commonly termed a crisis, and not without justification. But such a crisis is not new. The world experi- enced a remarkably similar event in the early to mid-1970s. In this chapter we ask whether there are common causes of these crises. In the next chapter we ask whether these events point to systemic problems in the global food system.


T


Food Crises Past and Present As discussed in Chapter 2, the 1972–74 crisis was of a similar scale and scope to the current food crisis (see Table 2.1 and Figure 2.1). In constant dollar terms, wheat and soybean price increases have been slightly smaller in the current crisis (in the case of wheat, increasing 180 percent during 1970–74 versus 110 percent from 2005 to May 2008), but the maize price increase has been slightly larger (80 percent in 1972–74 versus 90 percent during the current crisis). The increase in rice prices has been roughly the same (a little more than 225 percent in both cases). Changes in fertilizer prices have been about the same, although percentage changes in oil prices were much larger in the 1970s. Finally, the sudden decline in international food prices from June 2008 to March 2009—contrary to the predictions of lead- ing organizations and prominent experts—also closely follows the decline in food prices after mid-1974.1 By our calculations, real prices of staple grains dropped by a little more than 40 percent from 1974 to 1978, and from June 2008 to March 2009 staples have dropped by 35 percent on average. Hence the intertemporal and intercommodity profiles of price changes across the two crises are remarkably similar.


1 Gulati and Dutta (2009) nicely summarize the inflated predictions regarding food prices by such eminent writers as Jagdish Bhagwati, Jeffrey Sachs, and Paul Krugman, as well as high- level officials in prominent agricultural and development institutions, such as IFPRI, the FAO, and the World Bank.


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