Publication: The 2022 Global Food Price Shock in Chile and Colombia: Stylized Facts from Customs Data
Loading...
Date
2024-07-22
ISSN
Published
2024-07-22
Author(s)
Editor(s)
Abstract
This note uses transaction level customs data for Chile and Colombia to provide insights into food price transmission from global markets to import prices. This is a non-trivial relationship with significant cross-country variation that is relevant for policy design for the management of future shocks. Transaction level data makes it possible to look beyond average prices at underlying dynamics in terms of import prices, volumes, origins, etc. Focusing on price movements for wheat and maize during 2021-2022, a time of significant price variation in global markets, the note finds that exchange rate depreciation contributed significantly to rising import prices in local currency in Chile and Colombia. There were also significant differences in world price transmission between the two countries, with increases in median import prices materializing later for Chile but persisting longer. Neither country was able to significantly mitigate global market price increases through short-term adjustments of the times of purchase. Regional trade had a significant stabilizing role on import prices for both countries as import prices from regional trading partners increased less than global prices. Increases in global transport and fuel costs, on top of already high levels in 2021, accounted for significant shares of the import price increase in wheat in both countries. Finally, import structures changed somewhat during 2022, with potential implications for price transmission to consumers due to higher price dispersion and importer concentration observed for Chile.
Link to Data Set
Citation
“World Bank. 2024. The 2022 Global Food Price Shock in Chile and Colombia: Stylized Facts from Customs Data. Prosperity Insight Series; Macroeconomics, Trade and Investment. © World Bank. http://hdl.handle.net/10986/41920 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication How Vulnerable Are Arab Countries to Global Food Price Shocks?(World Bank, Washington, DC, 2012-03)This paper presents new estimates of pass-through coefficients from international to domestic food prices by country in the Middle East and North Africa. The estimates indicate that, despite the use of food price subsidies and other government interventions, a rise in global food prices is transmitted to a significant degree into domestic food prices in many countries in the Middle East and North Africa, although cross-country variation is significant. In nearly all countries, domestic food prices are highly downwardly rigid. The finding of asymmetric price transmission suggests that not only international food price levels matter, but also food price volatility. High food pass-through tends to increase inflation pressures, where food consumption shares are high. Domestic factors, often linked to storage, logistics, and procurement, have also played a major role in explaining high food inflation in the majority of countries in the region.Publication Higher Fuel and Food Prices : Impacts and Responses for Mozambique(Washington, DC, 2008-12)The dramatic increases in world food and fuel prices during 2007 and early 2008 may set back Mozambique's considerable advances in poverty reduction during the past decade. This study assesses the impact of higher fuel and food prices at both household and macroeconomic levels, and also considers policy options to mitigate some of the negative impacts of higher prices. Rising world prices certainly represents a negative terms-of-trade shock for Mozambique, since the country imports almost all of its fuel and is a net importer of food. The report is structured in six sections. Section two presents information on the extent of international food and fuel price increases and their transmission to local markets in Mozambique. Section three presents household-level analysis focused on the first order impact of the food price increases. Section four complements previous sections by examining the impact of higher food and fuel prices within a general equilibrium framework. Section five discusses the likely impact of alternative policy options in the short and long term. Section six summarizes and concludes.Publication Implications of Higher Global Food Prices for Poverty in Low-Income Countries(World Bank, Washington, DC, 2008-04)In many poor countries, the recent increases in prices of staple foods raise the real incomes of those selling food, many of whom are relatively poor, while hurting net food consumers, many of whom are also relatively poor. The impacts on poverty will certainly be very diverse, but the average impact on poverty depends upon the balance between these two effects, and can only be determined by looking at real-world data. Results using household data for ten observations on nine low-income countries show that the short-run impacts of higher staple food prices on poverty differ considerably by commodity and by country, but, that poverty increases are much more frequent, and larger, than poverty reductions. The recent large increases in food prices appear likely to raise overall poverty in low income countries substantially.Publication Managing Food Price Risks and Instability in an Environment of Market Liberalization(Washington, DC, 2005)This report, Managing Food Price Risks and Instability in an Environment of Market Liberalization, studies the food price instability and risk problem in low-income countries and investigates the benefits and costs of alternative policy responses, and provides guidance on how to make the transition from state-dominated markets to private markets. The report concludes that problems of food price instability and food insecurity need to be addressed by developing: measures to improve overall productivity of food staples, measures to promote irrigation or crop diversification to reduce climate risks, improvements of the overall efficiency of markets, including investments in transport and communication infrastructure, storage, information systems, and market regulations. The report stresses that direct public interventions in food markets to manage food price risk should be a last resort. Specific policy recommendations are made to achieve these objectives.Publication Poverty Effects of Higher Food Prices : A Global Perspective(2009-03-01)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.
Users also downloaded
Showing related downloaded files
Publication Finance and Prosperity 2024(Washington, DC: World Bank, 2024-08-29)While financial sector risks in the larger and higher per capita countries are moderate, half of lower-income countries face significant risks over the next 12 months. Nearly 70 percent of countries facing high financial sector risks are currently not adequately prepared to handle financial stress. The report also identifies a particular risk facing financial sectors in several countries: a large and growing exposure to sovereign debt. This exposure surged to its highest level in the past decade. Finally, the report looks at how countries can enable more climate finance through the banking sector without compromising on the important goals of financial sector stability and inclusion for underserved people.Publication Economic Recovery(World Bank, Washington, DC, 2021-04-06)World Bank Group President David Malpass spoke about the world facing major challenges, including COVID, climate change, rising poverty and inequality and growing fragility and violence in many countries. He highlighted vaccines, working closely with Gavi, WHO, and UNICEF, the World Bank has conducted over one hundred capacity assessments, many even more before vaccines were available. The World Bank Group worked to achieve a debt service suspension initiative and increased transparency in debt contracts at developing countries. The World Bank Group is finalizing a new climate change action plan, which includes a big step up in financing, building on their record climate financing over the past two years. He noted big challenges to bring all together to achieve GRID: green, resilient, and inclusive development. Janet Yellen, U.S. Secretary of the Treasury, mentioned focusing on vulnerable people during the pandemic. Kristalina Georgieva, Managing Director of the International Monetary Fund, focused on giving everyone a fair shot during a sustainable recovery. All three commented on the importance of tackling climate change.Publication South Asia Development Update, April 2024: Jobs for Resilience(Washington, DC: World Bank, 2024-04-02)South Asia is expected to continue to be the fastest-growing emerging market and developing economy (EMDE) region over the next two years. This is largely thanks to robust growth in India, but growth is also expected to pick up in most other South Asian economies. However, growth in the near-term is more reliant on the public sector than elsewhere, whereas private investment, in particular, continues to be weak. Efforts to rein in elevated debt, borrowing costs, and fiscal deficits may eventually weigh on growth and limit governments' ability to respond to increasingly frequent climate shocks. Yet, the provision of public goods is among the most effective strategies for climate adaptation. This is especially the case for households and farms, which tend to rely on shifting their efforts to non-agricultural jobs. These strategies are less effective forms of climate adaptation, in part because opportunities to move out of agriculture are limited by the region’s below-average employment ratios in the non-agricultural sector and for women. Because employment growth is falling short of working-age population growth, the region fails to fully capitalize on its demographic dividend. Vibrant, competitive firms are key to unlocking the demographic dividend, robust private investment, and workers’ ability to move out of agriculture. A range of policies could spur firm growth, including improved business climates and institutions, the removal of financial sector restrictions, and greater openness to trade and capital flows.Publication Media and Messages for Nutrition and Health(World Bank, Washington, DC, 2020-06)The Lao People’s Democratic Republic (Lao PDR) has experienced rapid and significant economic growth over the past decade. However, poor nutritional outcomes remain a concern. Rates of childhood undernutrition are particularly high in remote, rural, and upland areas. Media have the potential to play an important role in shaping health and nutrition–related behaviors and practices as well as in promoting sociocultural and economic development that might contribute to improved nutritional outcomes. This report presents the results of a media audit (MA) that was conducted to inform the development and production of mass media advocacy and communication strategies and materials with a focus on maternal and child health and nutrition that would reach the most people from the poorest communities in northern Lao PDR. Making more people aware of useful information, essential services and products and influencing them to use these effectively is the ultimate goal of mass media campaigns, and the MA measures the potential effectiveness of media efforts to reach this goal. The effectiveness of communication channels to deliver health and nutrition messages to target beneficiaries to ensure maximum reach and uptake can be viewed in terms of preferences, satisfaction, and trust. Overall, the four most accessed media channels for receiving information among communities in the study areas were village announcements, mobile phones, television, and out-of-home (OOH) media. Of the accessed media channels, the top three most preferred channels were village announcements (40 percent), television (26 percent), and mobile phones (19 percent). In terms of trust, village announcements were the most trusted source of information (64 percent), followed by mobile phones (14 percent) and television (11 percent). Hence of all the media channels, village announcements are the most preferred, have the most satisfied users, and are the most trusted source of information in study communities from four provinces in Lao PDR with some of the highest burden of childhood undernutrition.Publication Remarks at the United Nations Biodiversity Conference(World Bank, Washington, DC, 2021-10-12)World Bank Group President David Malpass discussed biodiversity and climate change being closely interlinked, with terrestrial and marine ecosystems serving as critically important carbon sinks. At the same time climate change acts as a direct driver of biodiversity and ecosystem services loss. The World Bank has financed biodiversity conservation around the world, including over 116 million hectares of Marine and Coastal Protected Areas, 10 million hectares of Terrestrial Protected Areas, and over 300 protected habitats, biological buffer zones and reserves. The COVID pandemic, biodiversity loss, climate change are all reminders of how connected we are. The recovery from this pandemic is an opportunity to put in place more effective policies, institutions, and resources to address biodiversity loss.