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52 CHAPTER 2


prices continued to increase. Abbott, Hurt, and Tyner (2008) show that the main difference between the current price surge and the 1995–96 price surge —which did not constitute a crisis—is the marked depreciation of the dollar this time around. The strengthening of the dollar since mid-2008 and the commensurate fall in food prices seem to support this association. Finally, all three analyses emphasize that rice is almost certainly a special case, given the sensitivity of rice prices to export restrictions, and all empha- size that a series of poor wheat harvests at least made matters worse. One area of ongoing contention is the role of stocks: some authors cite lower stocks as a potentially driving factor, while others view low stocks as a symptom of the crisis more than a cause. Causality undoubtedly runs both ways with stocks. We have shown that excluding China and the former USSR coun- tries leads to much more modest declines in grain stocks that occur fairly late in the game, which suggests that stocks were driven down by surging demand and some poor harvests. However, low stocks can certainly make matters worse, as market actors use stocks ratios to form their price expectations. Our own basic model of the food crisis is summarized in Figure 2.20. In this figure we also note those factors that we regard as key drivers of surging


Figure 2.20 Summary model of the principal causes of the crisis: A near-perfect storm


Source: Constructed by the authors. Notes:


Boxes in gray denote less significant, crop-specific causes. The decline of the U.S. dollar and the rise in oil prices are shown together because they are universal factors that may be causally related.


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