An Empirical Assessment of the Welfare Impacts of the Rising Global Price of Food: The Case of Haiti

Abstract

Global food price inflation has serious implication toward welfare and food and nutrition security in developing countries where most of the population are classified as low-income and are net-food importers. Haiti is one such nation which depend heavily on trade for food, making them extremely vulnerable to global food price increase. This study aims to investigate the welfare impact of rising global prices of imported food on Haitian consumers using annual data from 1980-2021. The LA-AIDS model was employed to estimate Hicksian price and income elasticities for the five major imported food categories, and compensating variation was used to assess the welfare impacts of rising global food prices on Haitian consumers. The study finds that all imported food categories were import price inelastic, except for meat which was price elastic. Cross-price elasticities indicated substitution and complementary relationships between various pairs of imported food categories. Income elasticities showed that demand for cereals and dairy was income inelastic, while demand for meat, vegetable oil, and sugar was income elastic. The welfare exercise revealed that price increases between 2006-2008, 2010-2013, and 2020-2021 resulted in welfare losses of around US$223.91 million, US$89.33 million, and US$458.50 million, respectively. It was also discovered that imported cereals and vegetable oil accounted for most of the lost welfare during the study periods. The results of this study provide valuable information for policymakers to develop policy intervention strategies that aims to safeguard the welfare of Haitian consumers.