A recent post widely shared in China’s social media stated that the Iran’s recent protests could trace its direct cause to India’s demonetisation in 2016.

The post went like this:

“Do you still remember Modi’s demonetisation last year?

As a result, many farmers in India could not buy seeds or fertiliser, not only causing the rice production to be down by 2%, but also turning India from a net exporter to a net importer of wheat.

Global food prices grew in consequence, and farmers in Iran could not afford the chicken feed made of corn.

Therefore, chicken prices rose sharply, and people were on the streets.”

butterfly effect?

Sounds logical (and interesting), except… the facts are wrong.

Yes, the sharp rise of egg prices was the prosaic trigger of the first protests in Iran.

This report came two days before the eruption of the protests: https://financialtribune.com/articles/economy-business-and-markets/78667/dramatic-rise-in-egg-prices

“Egg prices marked a 9% hike during the week to Dec. 22 compared to the previous week and a 53.7% rise compared with last year’s corresponding week, reaching 126,000-175,000 rials ($3-4.1) for each tray of 30 eggs, a report by the Central Bank of Iran announced.”

The price hike was blamed on the the outbreak of avian flu (which caused tens of millions of livestock to be culled) and the “80% rise in chicken feed prices”.

However, sources (including a Rabobank report:  https://www.rabobank.nl/images/pdf_rabobank_poultry_quarterly_q2_2017_29907053.pdf ) pointed to relatively stable prices of main ingredients of chicken feed.

No shocker, really

By now, we can safely conclude that India’s demonetisation was not the cause of Iran’s protests.

The rapid of depreciation of Iranian Rials was probably one of the main contributing factors for the feed price increase:

IRR depreciated drastically over the last months

By the way, we discovered something interesting during the simple exercise. When you search for “animal feed price”, guess what came out: the first three non-ad results are all from alibaba.com.

Making business easy, everywhere

 

 

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at hello@mworks.asia and let us know how we can help.

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