Plunging global agricultural prices significantly increase the risk of civil war in developing countries, according to a column by economist Antonio Ciccone published by the Centre for Economic Policy Research (CEPR). Analyzing extensive data from 118 low- and middle-income countries between 1957 and 2007, Ciccone finds that a one-standard-deviation drop in international agricultural commodity prices increases the risk of civil war onset by about 30% globally and by 45% in sub-Saharan Africa.
The findings address a major discrepancy in development economics over the relationship between commodity market shocks and internal conflict. While previous research found that agricultural price declines could trigger localized civil violence, influential studies suggested that they did not lead to full-scale civil wars.
Ciccone argues that this apparent exception resulted from flawed price indices based on time-varying export weights. Those indices inadvertently conflated changes in world prices with shifts in countries’ export shares and persistent measurement errors in export data.
By using time-invariant export weights to isolate international price shocks, the study finds that agricultural price declines consistently precede civil war outbreaks. During the three years before civil wars began, agricultural price growth was as much as 9.8 percentage points lower than in years without conflict. Historical cases, including the civil wars in Rwanda and Burundi in the 1990s following the collapse of coffee prices, further illustrate the relationship.
Rural incomes are the key mechanism
Ciccone notes that the destabilizing effect operates through rural producer incomes rather than consumer food prices. Controlling for local food price shocks leaves the estimated conflict risk unchanged, suggesting that falling farm incomes may lower the opportunity cost of rural workers joining insurgencies.
The effect is particularly pronounced in lower-income countries, net food-exporting countries and economies dependent on cash crops such as coffee, cocoa and cotton. Moreover, greater pass-through of international prices to local farmers following agricultural policy reforms after 1980 suggests that falling global commodity prices could pose an even greater conflict risk today.
