Who Wins and Who Loses from Staple Food Price Spikes?
Changes in food prices – triggered frequently by natural disasters, macroeconomic shocks or regional market disruptions– can lead to large household welfare effects. At over 60 and 40 percent, food budget shares remain high in rural and urban Mozambique, respectively. Furthermore, nearly 70 percent of the population depends on agriculture for their livelihoods. To determine the net impact of food price changes on consumption and poverty, we performed incidence analysis combining household and farmer survey data with disaggregated, market-level price data on major staples (maize, rice, and cassava). Overall, we find evidence for a large net negative welfare effect of price rises in rural areas, and a small, negative effect in the urban areas. For instance, A 10 percent increase in maize prices is associated with an average reduction of 1.2 percent in consumption per capita in rural areas and 0.2 percent in urban areas. Not all households are affected equally. Overall, the negative impacts are larger for the bottom half of the distribution. As a result, the sharp food price spike observed in 2016–17 may have translated into a poverty increase of 4-6 percentage points, with some of the poorest provinces bearing much of the brunt. These findings underscore the importance of improving the functioning of agricultural input and output markets, developing early food security warning systems, and increasing the availability of rapidly scalable safety nets.
| Main Authors: | , , |
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| Format: | Brief biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019-06
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| Subjects: | FOOD PRICES, HOUSEHOLD WELFARE, CONSUMPTION, POVERTY, FOOD SECURITY, MAIZE PRICE, DISTRIBUTIONAL IMPACT, |
| Online Access: | http://documents.worldbank.org/curated/en/142931560187776814/Who-Wins-and-Who-Loses-from-Staple-Food-Price-Spikes-Welfare-Implications-for-Mozambique https://hdl.handle.net/10986/31842 |
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| Summary: | Changes in food prices – triggered
frequently by natural disasters, macroeconomic shocks or
regional market disruptions– can lead to large household
welfare effects. At over 60 and 40 percent, food budget
shares remain high in rural and urban Mozambique,
respectively. Furthermore, nearly 70 percent of the
population depends on agriculture for their livelihoods. To
determine the net impact of food price changes on
consumption and poverty, we performed incidence analysis
combining household and farmer survey data with
disaggregated, market-level price data on major staples
(maize, rice, and cassava). Overall, we find evidence for a
large net negative welfare effect of price rises in rural
areas, and a small, negative effect in the urban areas. For
instance, A 10 percent increase in maize prices is
associated with an average reduction of 1.2 percent in
consumption per capita in rural areas and 0.2 percent in
urban areas. Not all households are affected equally.
Overall, the negative impacts are larger for the bottom half
of the distribution. As a result, the sharp food price spike
observed in 2016–17 may have translated into a poverty
increase of 4-6 percentage points, with some of the poorest
provinces bearing much of the brunt. These findings
underscore the importance of improving the functioning of
agricultural input and output markets, developing early food
security warning systems, and increasing the availability of
rapidly scalable safety nets. |
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