Category: Food

Anecdotally, one would be tempted to infer the existence of a strong positive relationship between higher food prices and poverty. After all, it is the poor who spend a higher share of their food on basic staples and have the least means to buy food with their meager income. And several studies using the available, imperfect data tend to confirm that relationship.

This is despite the fact that three quarters of poor people live in rural areas and the majority of them earn their living from farming. Some poor farmers produce more food than they consume and hence benefit from higher prices, but many others are net buyers of food and hence lose out when food prices rise. But identifying which households gain and which lose, and hence the overall impact on poverty, requires knowledge of this relationship for all vulnerable households. A major problem is that we still lack the data for accurately gauging who, for a given level of production and pattern of food consumption and purchases, is more likely to be negatively impacted by higher food prices.

From a post by Gero Carletto over at the Development Impact blog.

This is a point that is too often forgotten by nonexperts when discussing the effects of high food prices: that rising food prices (much like food price volatility) generates winners and losers.