32 CHAPTER 2 Figure 2.11 Global trends in stocks relative to consumption, 1960–2008


Estimated end-of-year stocks (percentage of consumption)


50 45 40 35 30 25 20 15 10 5


0 Source: Calculations by the authors using data from USDA (2008c).


acterized the 1950–60s, and the 1980–90s, but not the 1970s or the current decade. Indeed, declining stocks preceded the 1974 food crisis, when wheat stocks declined from 30–35 percent of consumption in the 1960s to just more than 20 percent in the early 1970s, and maize stocks declined from more than 20 percent in the 1960s to just 12 percent during the 1972–74 crisis (Rojko 1975). Rice stocks—which are primarily produced and consumed in developing Asia—were just being built up in the 1960s as the Green Revolution began, so they are less relevant in explaining the 1972–74 crisis. Likewise, in the recent crisis the stocks of all three staples declined at about the same time, 2000–2003, before the price surge. Maize stocks in particular have shrunk to well below the 17–18 percent benchmark, and rice and wheat stocks are now roughly at that benchmark. The facts support the conclusion that stock declines present a potentially powerful explanation for the price increases, because stocks declined across all three major staples, and these declines occurred well before the current crisis (and well before the 1972–74 crisis). Our view, however, is that stock declines only offer a superficial expla- nation for the price surge, and that the relevant factors determine what is behind the decline in stocks. We suggest three possible explanations of why


Average real price index (1960  1)


Wheat Rice Corn Average price


2.5


2.0


1.5


1.0


0.5


0.0


1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008


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