Publication:
Are Low Food Prices Pro-Poor? Net Food Buyers and Sellers in Low-Income Countries

Loading...
Thumbnail Image
Files in English
English PDF (303.61 KB)
777 downloads
English Text (101.37 KB)
315 downloads
Date
2008-06
ISSN
Published
2008-06
Editor(s)
Abstract
There is a general consensus that most of the poor in developing countries are net food buyers and food price increases are bad for the poor. This could be expected of urban poor, but it is also often attributed to the rural poor. Recent food price increases have increased the importance of this issue, and the possible policy responses to these price increases. This paper examines the characteristics of net food sellers and buyers in nine low-income countries. Although the largest share of poor households are found to be net food buyers, almost 50 percent of net food buyers are marginal net food buyers who would not be significantly affected by food price increases. Only three of the nine countries examined exhibited a substantial proportion of vulnerable households. The average incomes (as measured by expenditure) of net food buyers were found to be higher than net food sellers in eight of the nine countries examined. Thus, food price increases, ceteris paribus, would transfer income from generally higher income net food buyers to poorer net food sellers. The analysis also finds that the occupations and income sources of net sellers and buyers in rural areas are significantly different. In rural areas where food production is the main activity and where there are limited non-food activities, the incomes of net buyers might depend on the incomes and farming activities of net food sellers. These results suggest the need for reevaluation of the consensus on the impact of food prices on food needs. Further work on the regional differences, and more important, on the second order effects, are necessary to answer these questions more precisely. Only on the basis of further analysis can we start generating better policy responses.
Link to Data Set
Citation
Aksoy, M. Ataman; Isik-Dikmelik, Aylin. 2008. Are Low Food Prices Pro-Poor? Net Food Buyers and Sellers in Low-Income Countries. Policy Research Working Paper No. 4642. © World Bank. http://hdl.handle.net/10986/6660 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Report Series
Other publications in this report series
  • Publication
    The Future of Poverty
    (Washington, DC: World Bank, 2025-07-15) Fajardo-Gonzalez, Johanna; Nguyen, Minh C.; Corral, Paul
    Climate change is increasingly acknowledged as a critical issue with far-reaching socioeconomic implications that extend well beyond environmental concerns. Among the most pressing challenges is its impact on global poverty. This paper projects the potential impacts of unmitigated climate change on global poverty rates between 2023 and 2050. Building on a study that provided a detailed analysis of how temperature changes affect economic productivity, this paper integrates those findings with binned data from 217 countries, sourced from the World Bank’s Poverty and Inequality Platform. By simulating poverty rates and the number of poor under two climate change scenarios, the paper uncovers some alarming trends. One of the primary findings is that the number of people living in extreme poverty worldwide could be nearly doubled due to climate change. In all scenarios, Sub-Saharan Africa is projected to bear the brunt, contributing the largest number of poor people, with estimates ranging between 40.5 million and 73.5 million by 2050. Another significant finding is the disproportionate impact of inequality on poverty. Even small increases in inequality can lead to substantial rises in poverty levels. For instance, if every country’s Gini coefficient increases by just 1 percent between 2022 and 2050, an additional 8.8 million people could be pushed below the international poverty line by 2050. In a more extreme scenario, where every country’s Gini coefficient increases by 10 percent between 2022 and 2050, the number of people falling into poverty could rise by an additional 148.8 million relative to the baseline scenario. These findings underscore the urgent need for comprehensive climate policies that not only mitigate environmental impacts but also address socioeconomic vulnerabilities.
  • Publication
    Exports, Labor Markets, and the Environment
    (Washington, DC: World Bank, 2025-07-14) Góes, Carlos; Conceição, Otavio; Lara Ibarra, Gabriel; Lopez-Acevedo, Gladys
    What is the environmental impact of exports? Focusing on 2000–20, this paper combines customs, administrative, and census microdata to estimate employment elasticities with respect to exports. The findings show that municipalities that faced increased exports experienced faster growth in formal employment. The elasticities were 0.25 on impact, peaked at 0.4, and remained positive and significant even 10 years after the shock, pointing to a long and protracted labor market adjustment. In the long run, informal employment responds negatively to export shocks. Using a granular taxonomy for economic activities based on their environmental impact, the paper documents that environmentally risky activities have a larger share of employment than environmentally sustainable ones, and that the relationship between these activities and exports is nuanced. Over the short run, environmentally risky employment responds more strongly to exports relative to environmentally sustainable employment. However, over the long run, this pattern reverses, as the impact of exports on environmentally sustainable employment is more persistent.
  • Publication
    The Macroeconomic Implications of Climate Change Impacts and Adaptation Options
    (Washington, DC: World Bank, 2025-05-29) Abalo, Kodzovi; Boehlert, Brent; Bui, Thanh; Burns, Andrew; Castillo, Diego; Chewpreecha, Unnada; Haider, Alexander; Hallegatte, Stephane; Jooste, Charl; McIsaac, Florent; Ruberl, Heather; Smet, Kim; Strzepek, Ken
    Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
  • Publication
    The Asymmetric Bank Distress Amplifier of Recessions
    (Washington, DC: World Bank, 2025-07-11) Kim, Dohan
    One defining feature of financial crises, evident in U.S. and international data, is asymmetric bank distress—concentrated losses on a subset of banks. This paper proposes a model in which shocks to borrowers’ productivity dispersion lead to asymmetric bank losses. The framework exhibits a “bank distress amplifier,” exacerbating economic downturns by causing costly bank failures and raising uncertainty about the solvency of banks, thereby pushing banks to deleverage. Quantitative analysis shows that the bank distress amplifier doubles investment decline and increases the spread by 2.5 times during the Great Recession compared to a standard financial accelerator model. The mechanism helps explain how a seemingly small shock can sometimes trigger a large crisis.
  • Publication
    Impact of Heat Waves on Learning Outcomes and the Role of Conditional Cash Transfers
    (Washington, DC: World Bank, 2025-07-14) Miranda, Juan José; Contreras, Cesar
    This paper evaluates the impact of higher temperatures on learning outcomes in Peru. The results suggest that 1 degree above 20°C is equivalent to 7 and 6 percent of a standard deviation of what a student learns in a year for math and reading tests, respectively. These results hold true when the main specification is changed, splitting the sample, collapsing the data at school level, and using other climate specifications. The paper aims to improve understanding of how to deal with the impacts of climate change on learning outcomes in developing countries. The evidence suggests that conditional cash transfer programs can mitigate the negative effects of higher temperatures on students’ learning outcomes in math and reading.
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    The Role of Services in Rural Income : The Case of Vietnam
    (World Bank, Washington, DC, 2007-03) Aksoy, M. Ataman; Isik-Dikmelik, Aylin
    This paper investigates the role of services in the household response to trade reforms in Vietnam. The relative response of the households and income growth after a major trade liberalization in rice are analyzed aiming to answer the following questions: What type of households, in which locations, having access to what type of services, benefited more from the reforms? It focuses on services that have an impact on transaction costs (roads or quality of roads, public transportation, access to credit, extension services, and availability of markets in communication services) because transaction costs are often cited as a barrier to rural households in responding to the price changes and increased incentives offered by trade and other policy reforms. The results suggest that availability of production related services contributes positively to the impact of trade reforms. Although most of the service variables have a positive and significant effect on growth in income, some that are expected to have an impact are not significant. This may be explained by the exceptional coverage of infrastructure services in Vietnam even before the reforms. When service availability is very similar across different localities, household characteristics become more important in determining the response.
  • Publication
    Poverty Effects of Higher Food Prices : A Global Perspective
    (2009-03-01) De Hoyos, Rafael E.; Medvedev, Denis
    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.
  • Publication
    Niger : Food Security and Safety Nets
    (Washington, DC, 2009-02-18) World Bank
    Niger is a very poor country that faces serious problems of poverty and household food insecurity. With a per capita gross national income (GNI) of US$240 and an estimated 62 percent of the population living below the poverty line, Niger is one of the lowest-ranked countries on the United Nations' human development index. Reducing vulnerability and ensuring food and nutrition security is an overarching priority for the Government. Maintaining food security at the national and household level is an important priority for developing countries in general, both for the welfare of the poor and for political stability. In order to ensure food security, governments have adopted various strategies, including efforts to increase staple food crop production, market interventions, and a variety of safety net programs, especially during emergencies. In Niger, where profound vulnerabilities combined with a high level of population growth have resulted in endemic food insecurity, the Government is faced with a serious challenge. In this context, the purpose of this study is to contribute to the existing strategy and assist the Government in developing a holistic, multi-sectoral, and institutional approach to reducing the population's vulnerability to food insecurity. This report adds value to the ongoing policy discussions in two ways: first, it presents new empirical analysis of: i) food insecurity and vulnerability of households during the period of food crises as well as during normal period, ii) the structure and integration of cereal markets within Niger and with markets in neighboring countries, and iii) causes of the 2005 food crisis, and lessons learned on implications of various levels of cross-border flows between Niger and Nigeria. Second, it provides concrete short- and medium-term recommendations for helping government to improve the performance of existing programs to increase food security, particularly related to preparedness for and responses to food crises, and to design efficient safety nets mechanisms for vulnerable population.
  • Publication
    Higher Fuel and Food Prices : Impacts and Responses for Mozambique
    (Washington, DC, 2008-12) World Bank
    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
    Niger : Food Security and Safety Nets
    (World Bank, Washington, DC, 2009-02) Aker, Jenny C.; del Ninno, Carlo; Dorosh, Paul A.; Mulder-Sibanda, Menno; Razmara, Setareh
    This study aims to assist the Government of Niger in developing a multi-sectoral approach to reducing the population s vulnerability to food insecurity. The study reviews food security policies and programs in Niger, and provides an action plan for strengthening the existing system and developing an effective safety net strategy. The study finds that targeting of food aid has been either weak with significant leakages. Moreover, although the need to support poor and food insecure households is substantial, safety nets are small, receive limited funding, and are designed for emergency food crises. The study recommends to improve the efficiency and scope of safety net programs in Niger and to promote effective strategies to improve food availability and the emergency response systems.

Users also downloaded

Showing related downloaded files

  • Publication
    Breaking the Conflict Trap : Civil War and Development Policy
    (Washington, DC: World Bank and Oxford University Press, 2003) Collier, Paul; Elliott, V. L.; Hegre, Håvard; Hoeffler, Anke; Reynal-Querol, Marta; Sambanis, Nicholas
    Most wars are now civil wars. Even though international wars attract enormous global attention, they have become infrequent and brief. Civil wars usually attract less attention, but they have become increasingly common and typically go on for years. This report argues that civil war is now an important issue for development. War retards development, but conversely, development retards war. This double causation gives rise to virtuous and vicious circles. Where development succeeds, countries become progressively safer from violent conflict, making subsequent development easier. Where development fails, countries are at high risk of becoming caught in a conflict trap in which war wrecks the economy and increases the risk of further war. The global incidence of civil war is high because the international community has done little to avert it. Inertia is rooted in two beliefs: that we can safely 'let them fight it out among themselves' and that 'nothing can be done' because civil war is driven by ancestral ethnic and religious hatreds. The purpose of this report is to challenge these beliefs.
  • Publication
    Governance Matters VIII : Aggregate and Individual Governance Indicators 1996–2008
    (2009-06-01) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.
  • Publication
    Government Matters III : Governance Indicators for 1996-2002
    (World Bank, Washington, DC, 2003-08) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.
  • Publication
    Governance Matters IV : Governance Indicators for 1996-2004
    (World Bank, Washington, DC, 2005-06) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.
  • Publication
    Design Thinking for Social Innovation
    (2010-07) Brown, Tim; Wyatt, Jocelyn
    Designers have traditionally focused on enchancing the look and functionality of products.