Rising Food Prices and Household Welfare: Evidence from Brazil in 2008

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Food price inflation in Brazil in the twelve months to June 2008 was 18 percent, while overall inflation was 5.3 percent. This paper uses spatially disaggregated monthly data on consumer prices and two different household surveys to estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage-earning agricultural labor force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. While the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, the market income effect was positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U-shaped, with the middleincome groups suffering larger proportional losses than the very poor. Nevertheless, since Brazil is 80 percent urban, higher food prices still led to a greater incidence and depth of poverty at the national level. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: D31, I38, O15

Food Price Changes, Price Insulation, and Their Impacts on Global and Domestic Poverty

“…It has focused on the effect of food price changes on individuals and households. As shown by Ferreira et al (2013) for Brazil, many people may be adversely affected by food price changes even when their country as a whole benefits from the change. The evidence surveyed here strongly suggests that a rise in food prices will result in a net increase in poverty in the short run.…”

The welfare impact of rising food prices

“…The impact on inequality is more complex, however. Low-income groups are affected less than middle-income groups, while high-income groups are barely affected because they spend a much smaller proportion of their income on food [7]. As in the case of Côte d'Ivoire, the brunt of the food crisis appears to be borne by middle-income urban dwellers.…”

Food price policy in an era of market instability: a political economy analysis

“…If we want to understand the response by government to the food price crisis it is necessary to consider explicitly how different social groups, and particularly the poor, were affected. A recent study by Ferreira et al (2011) seeks to measure the impact of food price increases across percentiles of income classes. This study not only measures the effect on households' expenditures, but also the countervailing impacts of increased wage income for those engaged in food production as well as the increases in social transfers by the government as direct measures to mitigate the impact of the crisis on the poor.…”