The effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural Kenya 1 (original) (raw)
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Food Pricing Policy and Rural Poverty: Insights from Maize in Kenya
2006
This study estimates the effects on poverty resulting from maize price changes associated with the operations of the maize marketing board in Kenya. We consider both supply and demand responses and the accompanying adjustments in rural labor markets in estimating a second order approximation to equilibrium income changes. We then use stochastic dominance techniques to generate poverty rankings between the distribution of income with the effects of the government marketing operations and the distribution of counterfactual incomes. This approach effectively addresses concerns regarding the sensitivity of poverty estimates to the type of poverty measure used. Results indicate that the price-elevating effects of government maize marketing operations have exacerbated rural poverty in all regions of the country except the region from which the largest part of surplus maize originates.
Poverty Impact of Rising Maize Prices in Kenya
2010
The recent hike in food prices has been of great concern to policymakers, international organisations and donor agencies. In this paper we discuss, both from a partial and general equilibrium perspective, the impact of the recent price increase on maize on Kenyan households. Simulating a 100% increase in maize prices, we find that the headcount ratio in urban areas increased by 3-4 percentage unit points, depending on the size of windfall gain to producers. Based on the assumption that the price shock is passed through in total to the farmers, food poverty in the rural areas could be reduced by almost 14%. If incomes are not passed through, rural food poverty would increase quite significantly in some provinces. It is the poorest of the poor in both urban and rural areas who are most adversely affected. Policy reforms, which would reduce marketing margins and fertiliser prices, would be important factors in promoting a positive impact on performance in the maize sector. The regional maize trade within East Africa seems to have a role to play, and exploring the impact of total integration of the maize markets could be a topic of further research.
2013
I wish to start by thanking God almighty because I would not have made it this far without His grace, blessings and guidance. I would like to express my sincere gratitude to my supervisors Associate Professor Patrick Kambewa and Dr. Regson Chaweza for the continuous support of my MA study and research, for their patience, motivation, enthusiasm immense knowledge and guidance. Besides my supervisors, I would like to thank Dr. Evious Zgovu, Dr. Richard Mussa, Associate Professor Blessings Chinsinga, Mr. Gowokani Chirwa and Mr. Alick Mphonda for their insightful comments and hard questions. My gratitude goes to the Evidence for Development and Self Help Africa for the financial support and the field work. I especially thank Dr. Celia Petty, Dr. John Seaman and Wolf Ellis whose comments helped to shape this work. I would also like to thank the team of research assistants that did an amazing job in data collection. Many thanks also go to my classmates at Chancellor College and the AERC Joint Faculty for Electives in Kenya, my friends, the lecturers and the rest of the staff at the Department of Economics for their support during the entire study period. In a special way I would like to thank my family for all kinds of support, motivation and encouragement. Dr. E. Zgovu your confidence in me has really carried me through. Last but not least my appreciation goes to my dear daughter Jameela Issat and dear Bashir Issat, my sisters Lydia and Ester Ngoleka for their love and care.
Distributional Effects of Maize Price Increases in Malawi
Journal of Development Studies, 2014
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.
Poverty Impact of Commodity Price Boom Using Household Survey - The Case of Maize in Zambia
SSRN Electronic Journal, 2000
This paper uses Household Survey data to analyze the possible effects that a food price surge could have on poverty and overall welfare. In particular, we use the Zambian Living Conditions Monitoring Survey I collected in 1996 (LCMS I) to estimate a demand system that enables us to simulate various price scenarios for the Zambian main staple and its possible effects for different population categories. Differently from previous studies, in our demand system we address two flaws usually encountered in this type of applications: one is the possible selection bias due to non-consumption of a particular staple among households, the other is the difference between the quantity used for estimation (typically logarithm) and the quantity of interest (level). Jointly, this increases the reliability of our technique. Our results show that a 50 percent increase in maize prices, which is in line with the actual surge in Zambia, could lead to an average consumption decrease of 17 percent among Zambian households and overall poverty could rise from 40 percent to 43 percent fairly quickly at national level. JEL Classification: C15, Q11, Q12
Impact of increasing prices of agricultural commodities on poverty
Rome: FAO, 2008
The present paper attempts to identify the groups of households that most likely will face positive or negative welfare consequences as a result of the continuing food price increases. Using data from household surveys and differentiating urban from rural areas as well as food buyers ...
Input subsidies and demand for improved maize: Relative prices and household heterogeneity matter!
This study uses simple non-separable farm household models calibrated to household, market, farming and policy context conditions in Central and Southern Malawi. The models are used to simulate how household characteristics, design and access to input subsidies affect the demand for improved maize seeds; how increasing land scarcity affects the cropping system and demand for improved maize; and how access to improved maize seeds affects household welfare with varying access to input subsidies. The model simulations demonstrate that a) there is a high risk that access to subsidized improved maize seeds can crowd out commercial demand for improved maize seeds but the effect is very sensitive to household characteristics, market characteristics and relative prices; b) increasing land scarcity increases the demand for improved maize seeds and improved maize facilitates intensification among others through intercropping of maize with legumes such as beans and pigeon peas; c) the welfare effects depend on households' ability to utilize the potential of the improved varieties by combining them with complementary inputs.
2012
This study uses three waves of nationally representative household-level panel data from Malawi to estimate how receiving an additional kilogram of subsidize fertilizer affects maize production and the value of total crop output across the distribution of smallholder farm households. We use quantile regression and a correlated random effects estimator to deal with potential endogeneity of subsidized fertilizer. We then estimate the impact of subsidizing fertilizer at the 10%, 25%, 50%, 75%, and 90% of the maize production and value of total crop output distributions. Results from this study indicate that an additional kilogram of subsidized fertilizer contributes 2.61 additional kilograms to household maize production at the 90 th percentile, but just 0.75 additional kilograms to maize production at the 10 th percentile. Results also indicate that an additional kilogram of subsidized fertilizer has an effect of generating an extra US $0.80 at the 90 th percentile of the value of total crop output distribution, but has no statistically significant effect at the 10 th percentile of the distribution. These results raise the question of whether or not fertilizer subsidies can substantially boost maize production and reduce poverty at the same time, because the major returns from the subsidy program seem to accrue to households at the top of the maize production and value of total crop output distributions. Many households at the bottom of theses distributions seem unable to generate a substantial response from the subsidized fertilizer that they acquire.
Ex-Post Impacts of Improved Maize Varieties on Poverty in Rural Ethiopia
Public agricultural research has been conducted in Africa for decades. While many studies have examined its aggregate impacts, few have investigated how it affects the poor. This paper helps fill this gap by applying a new procedure to explore the ex post impacts of improved maize varieties on poverty in rural Ethiopia. Plot-level yield and cost changes due to adoption are first estimated using instrumental variable and marginal treatment effect techniques where possible heterogeneity is carefully accounted for. A backward derivation procedure is then developed to link treatment effect estimates with an economic surplus model to identify the counterfactual household income that would have existed without improved maize varieties. Poverty impacts are finally estimated by exploiting the differences between observed and counterfactual income distributions. Improved maize varieties have led to a 0.8-1.3 percentage drop of poverty headcount ratio and relative reductions of poverty depth and severity. However, poor producers benefit the least from adoption due to the smallness of their land holdings.
2012
This paper analyses the impact of the intensity of improved maize varieties adoption on food security and poverty using data collected in 2010 from maize-legume farming systems in rural Tanzania. We used a continuous treatment approach using generalized propensity score matching and parametric error correction approaches to reduce potential biases stemming from difference in observed characteristics. Estimates of the dose-response functions reveal that average probability of food security, average per capita food expenditure and the average probability of break-even and food surplus increase with the intensity of adoption. On the other hand, the probability of being poor, chronic and transitory food insecurity declines with the intensity of adoption. The results provide strong evidence for heterogeneous food security impacts at different levels of adoption. At low levels of adoption, the average and marginal treatment effects are low while the food security impacts increase substant...