Taking the strain

Font Size

Print

Feedback

Email

Discuss

Pakistan) or setting up and expanding social-protection programmes (this is happening almost everywhere, even America). Sometimes, admittedly, reactions are fairly daft. Thailand proposed an OPEC-style cartel for rice, an idea that went nowhere. Many food exporters have gone for beggar-thy-neighbour trade restrictions. Each time one limits or bans food exports, it pushes up world prices—and other governments, equally anxious to keep food inside the country, follow suit. About 30 countries have imposed some form of trade restraint.

Food importers don’t have the luxury of making such mistakes. They are buying time by, for example, boosting food subsidies or hiking wages. In Egypt, bread used to be about a fifth of the world price; now it is less than a tenth. Several Arab states have decreed hefty pay rises: 25% for public-sector workers in Syria, 30% in Egypt.

These policies are inflationary and expensive. Oil exporters, or countries like Egypt that benefit from big remittances from them may be able to afford them for a while. Others are not so lucky. In Indonesia, where half the population lives on less than $2 a day, inflation is 9% and food prices are soaring (the price of subsidised rice to the poor was jacked up 60% in April). The government is planning to fuel subsidies, which would make social protection and subsidised rice more affordable. The response: more protests.