Poverty Effects of Higher Food Prices: A Global Perspective

34 Pages Posted: 20 Apr 2016

See all articles by Rafael E. De Hoyos

Rafael E. De Hoyos

United Nations - United Nations University (UNU)

Denis Medvedev

World Bank; American University

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2009

Abstract

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.

Keywords: Rural Poverty Reduction, Food & Beverage Industry, Poverty Lines, Emerging Markets

Suggested Citation

De Hoyos, Rafael E. and Medvedev, Denis, Poverty Effects of Higher Food Prices: A Global Perspective (March 1, 2009). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2009. Available at SSRN: https://ssrn.com/abstract=1372964

Rafael E. De Hoyos (Contact Author)

United Nations - United Nations University (UNU) ( email )

Tokyo, 150-8925
Japan

Denis Medvedev

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

American University

4400 Massachusetts Avenue N.W.
Washington, DC 20016-8029
United States

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