Poverty Effects of Higher Food Prices : A Global Perspective

The spike in food prices between 2005 and the first half of 2008 has highlighted the vulnerabilities of poor consumers to higher prices of agricultural goods and generated calls for massive policy action. This paper provides a formal assessment of the direct and indirect impacts of higher prices on global poverty using a representative sample of 63 to 93 percent of the population of the developing world. To assess the direct effects, the paper uses domestic food consumer price data between January 2005 and December 2007--when the relative price of food rose by an average of 5.6 percent --to find that the implied increase in the extreme poverty headcount at the global level is 1.7 percentage points, with significant regional variation. To take the second-order effects into account, the paper links household survey data with a global general equilibrium model, finding that a 5.5 percent increase in agricultural prices (due to rising demand for first-generation biofuels) could raise global poverty in 2010 by 0.6 percentage points at the extreme poverty line and 0.9 percentage points at the moderate poverty line. Poverty increases at the regional level vary substantially, with nearly all of the increase in extreme poverty occurring in South Asia and Sub-Saharan Africa.

Bibliographic Details

Main Authors:	De Hoyos, Rafael E., Medvedev, Denis
Language:	English
Published:	2009-03-01
Subjects:	AGRICULTURAL ACTIVITIES, AGRICULTURAL ACTIVITY, AGRICULTURAL COMMODITIES, AGRICULTURAL ECONOMICS, AGRICULTURAL INCOMES, AGRICULTURAL OUTPUT, AGRICULTURAL PRICES, AGRICULTURAL PRODUCERS, AGRICULTURAL PRODUCTION, AGRICULTURAL PRODUCTIVITY, AGRICULTURAL PRODUCTS, AGRICULTURAL SECTOR, AGRICULTURAL SECTORS, AGRICULTURAL SELF-EMPLOYMENT, AGRICULTURAL WAGE, AGRICULTURE, CA, CALORIC INTAKE, CENTRAL BANKS, CHANGES IN POVERTY, CLIMATE CHANGE, COMMODITY, COMMODITY PRICES, COMPETITION POLICY, CONSUMER DEMAND, CONSUMER DEMANDS, CONSUMER PRICE INDEX, CONSUMER PRICES, CONSUMPTION BASKET, CONSUMPTION PATTERNS, CORN, CROP YIELDS, DEMOGRAPHIC, DEMOGRAPHIC CHANGES, DEMOGRAPHIC STRUCTURE, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT ECONOMICS, DEVELOPMENT ISSUES, DOLLAR POVERTY INCIDENCE, DOMESTIC COMPETITION, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC PRICE, ECONOMIC GROWTH, ECONOMIC POLICY, ECONOMIC REVIEW, ECONOMIC THEORY, EMPIRICAL QUESTION, ENVIRONMENTAL IMPACTS, EXPENSIVE FOOD, EXPORT PRICE INDEX, EXTREME POVERTY, EXTREME POVERTY LINE, FACTORS OF PRODUCTION, FAIR TRADE, FARM ACTIVITIES, FARM HOUSEHOLDS, FARM INCOMES, FARMER, FARMERS, FARMING ACTIVITIES, FINANCIAL CRISIS, FOOD BASKET, FOOD BASKETS, FOOD BUNDLE, FOOD BUYERS, FOOD COMMODITIES, FOOD CONSUMERS, FOOD CONSUMPTION, FOOD EXPENDITURE, FOOD ITEM, FOOD ITEMS, FOOD PRICE, FOOD PRICES, FOOD PRICING, FOOD PRODUCERS, FOOD SHARE, FOOD STAPLES, FOOD SUPPLY, FREE TRADE, GLOBAL ECONOMIC PROSPECTS, GLOBAL POVERTY, GOVERNMENT INTERVENTION, GRAINS, GROWTH RATE, GROWTH RATES, HARMONIZATION, HEADCOUNT RATIO, HIGH-INCOME COUNTRIES, HOUSEHOLD BUDGET, HOUSEHOLD HEAD, HOUSEHOLD INCOME, HOUSEHOLD LEVEL, HOUSEHOLD PER CAPITA INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, IMPACT ON POVERTY, INCIDENCE OF POVERTY, INCOME, INCOME DISTRIBUTION, INCOME GAINS, INCOME GROUPS, INCOME ON FOOD, INEQUALITY, INFLATION RATES, INSTITUTIONAL CONSTRAINTS, INTERNATIONAL TRADE, LABOR MARKET, LAND PRICES, LIBERALIZATION, LIVING STANDARDS, LOCAL CURRENCY, LOW-INCOME COUNTRIES, MACROECONOMIC POLICIES, MARKET ACCESS, MARKET CONDITIONS, MARKET DISTORTIONS, MEAN INCOME, MEATS, MIDDLE-INCOME COUNTRIES, MILLION PEOPLE, NATIONAL POVERTY, NATIONAL POVERTY HEADCOUNT, NATURAL RESOURCES, NET FOOD CONSUMERS, NEW POOR, NON-FOOD CONSUMPTION, NON-FOOD EXPENDITURE, NON-FOOD ITEMS, NONFOOD ITEMS, PADDY, PER CAPITA CONSUMPTION, POLICY RESEARCH, POOR, POOR CONSUMERS, POOR HOUSEHOLDS, POOR INFRASTRUCTURE, POOR PEOPLE, POORER HOUSEHOLDS, POORER REGIONS, POVERTY ESTIMATES, POVERTY IMPACT, POVERTY INCREASE, POVERTY INDICATOR, POVERTY INDICATORS, POVERTY INDICES, POVERTY LINES, POVERTY POVERTY, POVERTY RATE, POVERTY RATES, POVERTY REDUCTION, PRICE CHANGES, PRICES INCREASE, PROCESSED FOODS, PURCHASING POWER, REAL INCOMES, REAL TERMS, REDUCTION IN POVERTY, RELATIVE PRICE, RELATIVE PRICES, RURAL, RURAL AREAS, RURAL HOUSEHOLD, RURAL HOUSEHOLDS, RURAL INCOME, RURAL POVERTY, RURAL WELFARE, SAVINGS, SMALL FARMERS, SUGAR, SUGAR CANE, TARGETING, TOTAL POVERTY, URBAN AREA, URBAN AREAS, URBAN CONSUMERS, URBAN HOUSEHOLDS, WAGE EARNERS, WAGE PREMIUM, WELFARE INDICATOR, WELFARE MEASURES, WHEAT, WORLD DEVELOPMENT INDICATORS, WORLD TRADE,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090330112537 https://hdl.handle.net/10986/4082
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