Stephen Jardine: A warning from the pages of history that spiralling food prices can lead to revolt

Published on Thursday 18 August 2011 21:47

Earlier this week the president of the Association of Chief Police Officers said the recent English riots could not have been anticipated. That's not quite true.

On 8 March 2011, Karen Ward, senior global economist at HSBC predicted trouble ahead. "People aren't getting more in their pay packets to compensate for increased food costs and as a result, I think we could see social unrest in parts of the developed world and the UK as well," she said. Now it wasn't the price of beans that led hooded youths to steal flatscreen TV's from Ealing High Street but with 15 per cent of our expenditure going on food and prices at record levels, it does form a key part of the economic background to the violence.

In relative terms, the United Nations says the cost of food is at its highest level for 21 years. The average basket of groceries now costs 6 per cent more than it did this time last year. Within that classification, certain foods are much, much dearer. Bread is up 98 per cent, chocolate biscuits 50 per cent and pasta by 29 per cent. Global factors such as bad weather, increased demand and poor harvests have been to blame but in Britain the rises have been sharper than elsewhere because supermarkets have taken advantage of their near monopoly on grocery sales. However as you queue at the checkout this weekend waiting for the total that is always more than you expected, there is some light beyond the abandoned trolleys. This week the Centre for Economics and Business Research predicted a dramatic drop in food prices in the second half of next year. Food inflation has already slowed but by the end of 2012, the CEBR believe prices will be dropping by nearly 2 per cent. They base their predictions on additional planting and good harvests producing increased wheat supplies which will dampen down the cost of that key commodity. The giant grain fields of Kansas are a world way from Moorhead and McGavin's factory on the outskirts of Motherwell but the two are inextricably linked. Since 1923 the company has been processing and supplying rice, pasta, cereals and pulses to manufacturing industry and the food services sector in Scotland. The rise in commodity prices has given the business some of its toughest times so the predicted falls should be good news. But company director Markos Dafereras is cautious. "I'd expected to see prices dropping but instead we've just heard the price of lentils is going up and other key ingredients like marrowfat peas and semolina are also rising and showing no signs of stopping." Experience has taught him that food prices are a complicated business. "Consumers are now far removed from farmers and there are a lot of people involved in the process of getting food onto people's plates. Through hoarding, future trading and farmers taking long positions, prices can be controlled and manipulated," he says. Back at the supermarket, hard-pressed consumers are also squinting for that ray of light when it comes to prices on the shelves.The CEBR is convinced it is coming and with added benefits. "Real disposable income will be lifted by falling food prices," says chief executive Douglas Williams. "In addition, the Bank of England will be more relaxed about monetary expansion and hence lower interest rates which should also help stimulate economic growth. Since it is the weekend, let's be optimistic and believe the worst of food price inflation seems to be over and calmer times are ahead. As the price of bread soared in pre-revolutionary France, Marie Antoinette said, "let them eat cake" and paid the price at the guillotine. With some bread products here now costing almost twice what they did a year ago, those who ignore the link between social unrest and high food costs do so at their peril.