The impact of the 2005–2010 rice price increase on consumption in rural Bangladesh

Abstract

This article studies the impact of the rice price increase between 2005 and 2010 on consumption in rural Bangladesh. Using the Household Income and Expenditure Survey (HIES) data, we compare net rice buyers and sellers to self-sufficient households. To identify the effect of rice price changes on household consumption of rice, nonrice food and nonfood items, we employ a difference-in-differences (DiD) technique. Our findings indicate that the surge in domestic rice prices between 2005 and 2010 reduced the nonrice food consumption of net rice buyer households by 7%, compared to the households who are self-sufficient in rice production. However, it did neither affect their rice nor their nonfood consumption. In contrast, while we find no significant effect of rice price increases on the rice consumption of net rice sellers, we observe a 9% increase in their nonrice food consumption. In such situation, a subsidy on low-quality rice may be effective in fulfilling the nutritional requirement of low-income households.JEL classifications: D12, I32, O13, O53, Q12

Farmers’ Net Income Distribution and Regional Vulnerability to Climate Change: An Empirical Study of Bangladesh

“…The livelihoods of the poor who are directly reliant on agriculture already face a profound threat due to the current climate change in Bangladesh [19,20], which could lead to increased pauperization. At the household level, climate change significantly affects food production [21] which in turn influences food prices and directly affects the poverty of low-income household [22,23]. Agricultural income and non-farm income are the most significant factors in poverty reduction among rural people [24][25][26][27].…”

Price Hike of Staple Food, Nutritional Impact and Consumption Adjustment: Evidence from the 2005-2010 Rice Price Increase in Rural Bangladesh

“…To confirm our findings for sellers, we repeat the previous analyses on sellers and find similar results. 10 Thus our analysis with sellers, together with the findings in Hasan (2016b), indicates that both sellers and autarkic households similarly change their consumption of rice, non rice food items and non food items. Combining the results for buyers and sellers indicate that rural households in Bangladesh exhibit a similar adjustment pattern in consumption of rice, non rice food items and non food items in the face of a surge in rice price.…”

“…However, the increase is much larger at higher quintiles of the dependent variables. Thus a reason for the findings in Hasan (2016b) can be the heterogeneity in non rice food consumption.…”

“…To examine the possibility, we repeat the analysis in Hasan (2016b) and use a specification similar to equation (1) with values of rice consumption, non rice food consumption and non food consumption as the dependent variable. However, to avoid the influence of large values, now we employ the dependent variables in logarithms.…”

Does a nutritious diet cost more in food deserts?

“…The small difference in EPI between food deserts and nonfood deserts suggests both limited market power of existing stores in food deserts and a relatively small welfare impact of living in a food desert, at least for those who can travel to neighboring census tracts to shop. Consequently, while higher food prices are associated with higher rates of food insecurity (Gregory and Coleman‐Jensen, ; Hassan, ), our results suggest that living in a food desert is unlikely to influence food insecurity to a great extent, at least in as much as substitute foods are available. (For more on food insecurity in the United States, see Gundersen and Ziliak, and Gundersen et al., .…”