Poverty Impact of Commodity Price Boom Using Household Survey - The Case of Maize in Zambia (original) (raw)
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Using three waves (2008/09, 2010/11, 2012/13) of the Tanzanian National Panel Survey, this study investigates the impact of maize price shocks on household food security. Between 2008/09 and 2012/13, calorie intake stagnated for urban households, yet sharply deteriorated for rural households. The latter was driven by a significant decline in the consumption of the major staple maize which showed strongest price hikes among all major food items. Fixed-effects regressions indicate a clear negative relationship between maize prices and average household energy intake. Almost all population groups were found to be negatively affected by maize price shocks, with rural landless households being the most vulnerable group. In particular, a 50 percent rise in maize prices decreases caloric intake for rural (urban) households on average by 4.4 (5.4) percent, and for rural landless households by 12.6 percent. Results further indicate that subsistence agriculture can act as an effective strategy to insure against food price volatility.
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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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Agriculture in Paraguay plays a key role in economic development and economic growth. Fluctuations in commodity prices have been added to the inherent sector’s volatility linked to climate conditions. Since a vast share of households in developing countries like Paraguay are both consumers and producers of food the welfare effects of commodity prices fluctuations are not obvious: higher prices hurt consumption but benefit production. In this paper we simulate the welfare effects of a potential hike in food prices. We use the traditional agricultural model, households’ survey data and monthly price data for 127 food items. Our main results suggest that the expenditure effect is negative and regressive for all households, but larger in rural than urban areas. The income effect is positive and progressive in rural areas and negligible in urban ones. Therefore, we find that the potential overall impact of a potential increase in food prices in Paraguay has a very flat U-shaped curve eff...
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Distributional Effects of Maize Price Increases in Malawi
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In the wake of highly volatile world prices of staple commodities, we examine the impacts of increases in maize prices on various categories of households in Malawi. Using household-level data, changes in household income are calculated taking into account the net maize production status of the household and food price elasticities estimated from a censored demand system. While maize price increases have unequivocal deleterious effects on the incomes of urban households, rural households experience differential impacts. Net producing households in rural areas benefit from price increases with households above the poverty line obtaining proportionally higher incomes.
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Regions of Malawi based on household survey data collected for the period 2005-2010. Households are assumed to be drudgery averse and rational given their preferences and the resource constraints and imperfect markets they face. The impacts of varying access to resources, input subsidies, off-farm employment opportunities, and prices during the period of study are simulated. The models in particular demonstrate the vulnerability of land-poor households and their dependence on non-farm income for them to meet their basic needs. Access to improved maize varieties and subsidies may facilitate land use intensification and survival on smaller farms. Price shocks in form of higher fertilizer prices and lower tobacco prices contribute to further impoverishment while the costs of the input subsidy program also reached nonsustainable levels during the period of study. The models give insights about some possible avenues for scaling down the subsidy program towards a more sustainable level. Reduction of subsidies from two bags to one bag of fertilizer per household and concentration of targeting towards more land-poor households can be two important mechanisms. Rather than providing free improved maize seeds it may be better to improve the availability of improved seeds in local markets.