The Impact of Commodity Price Changes on Rural Households : The Case of Coffee in Uganda

Policies and external shocks affecting agriculture, the main source of income for rural households, can be expected to have a significant impact on poverty. The authors study the case of Uganda. Throughout the 1990s, more than 90 percent of its poor lived in rural areas and, during the same period, large international price fluctuations as well as an extensive domestic deregulation affected the coffee sector, its main source of export revenues. Using data from three household surveys covering the 1990s, the authors confirm a strong correlation between changes in coffee prices (in a liberalized market) and poverty reduction. This is highlighted by comparing the performance of different households grouped according to their dependence on coffee farming. Regression analysis (based on pooled data from the three surveys) of consumption expenditure on coffee-related variables, other controls, and time-fixed effects corroborates that the mentioned correlation is not spurious. The authors also find that while both poor and rich farmers enter the coffee sector, the price boom benefits the poorer households relatively more, whereas the liberalization seems to create more opportunities for richer farmers. Finally, notwithstanding the importance of the coffee price boom, the agricultural policy framework and the thorough structural reforms in which the coffee market liberalization was embedded have certainly played a role in triggering overall agricultural growth. These factors appear to matter especially in the second half of the 1990s when prices went down but poverty reduction continued.

Bibliographic Details

Main Authors:	Godart, Olivier, Bussolo, Maurizio, Lay, Jann, Thiele, Rainer
Language:	English en_US
Published:	World Bank, Washington, DC 2006-12
Subjects:	AGRICULTURAL ACTIVITIES, AGRICULTURAL GROWTH, AGRICULTURAL INCOMES, AGRICULTURAL INPUTS, AGRICULTURAL POLICY, AGRICULTURAL PRODUCTION, ALTERNATIVE CROPS, CAPITA CONSUMPTION, CAPITA INCOMES, CHANGES IN POVERTY, CLIMATIC ZONES, COFFEE, COFFEE CROP, COFFEE FARMERS, COFFEE GROWERS, COFFEE MARKET, COFFEE MARKETS, COFFEE PRICE, COFFEE PRICES, COFFEE PRODUCERS, COFFEE PRODUCTION, COFFEE SECTOR, COFFEE YIELDS, COMMODITY, COMMODITY PRICE, CONSUMPTION AGGREGATE, CONSUMPTION EXPENDITURE, CONSUMPTION EXPENDITURES, COTTON, COTTON PRODUCTION, COUNTERFACTUAL, CROP, CROP AGRICULTURE, CROP INCOME, CROP PRICES, CROPS, CULTIVATION, DIVERSIFICATION, DOMESTIC MARKET, ECONOMIC GROWTH, EXPENDITURE, EXPENDITURES, EXPORT CROPS, FARM, FARM EMPLOYMENT, FARM HOUSEHOLDS, FARM INCOME, FARM LABOR, FARM SIZE, FARMER, FARMERS, FARMING, FARMS, HARVESTING, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, IFPRI, IMPACT ON POVERTY, INCOME DISTRIBUTION, INCOME GAP, INCOME GROWTH, INCOME SHARES, INFLATION, LAND SIZE, LANDHOLDINGS, LIVING STANDARDS, MACROECONOMIC STABILITY, MARKET LIBERALIZATION, MARKET PRICE, MARKET PRICES, MARKET STRUCTURE, MARKETING, PER CAPITA CONSUMPTION, PLANTING, POOR, POOR BENEFIT, POOR FARMERS, POORER FARMERS, POORER HOUSEHOLDS, POVERTY IMPACT, POVERTY LINES, POVERTY REDUCTION, PRICE CHANGES, PRICE EFFECT, PRICE FLUCTUATIONS, PRICE INCREASE, PRICE INCREASES, PRICE LIBERALIZATION, PRODUCE, PRODUCER PRICES, PURCHASING, REDUCTION IN POVERTY, RURAL, RURAL AREAS, RURAL GROWTH, RURAL HOUSEHOLDS, RURAL PHENOMENON, RURAL POVERTY, SAVINGS, SCHOOLING, SMALL LANDHOLDINGS, STRUCTURAL ADJUSTMENT, STRUCTURAL ADJUSTMENT PROGRAMS, STRUCTURAL REFORMS, SUB-SAHARAN AFRICA, WELFARE MEASURE, WORLD MARKET, WORLD MARKETS, YIELDS,
Online Access:	http://documents.worldbank.org/curated/en/2006/12/7255566/impact-commodity-price-changes-rural-households-case-coffee-uganda https://hdl.handle.net/10986/9278
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