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Implications of high food prices for poverty in Pakistan

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  • Zahoor ul Haq
  • Hina Nazli
  • Karl Meilke

Abstract

The study estimates the impacts of rising world food prices on poverty in rural and urban areas of Pakistan. Household income and expenditure data for 2004/2005 is used to estimate compensated and uncompensated price and expenditure elasticities using the linear approximation of the almost ideal demand system. Taking the unexpected component of higher domestic food prices in 2007/2008, own and cross price compensated elasticities are used to derive the changes in the quantity consumed, food expenditure and impacts on poverty assuming the food crisis happened in 2004/2005. The results indicate that poverty increased by 34.8%, severely affecting the urban areas where poverty increased by 44.6% as compared to 32.5% in rural areas. The estimates show that 2.3 million people are unable to reach even one-half of poverty line expenditures while another 13.7 million are just below and 23.9 million are just above the poverty line. In the short run, it is important to ensure food availability to these people. In the long run, the policy environment of subsidizing urban food consumers by keeping wheat prices lower than the international price, needs to be reconsidered to provide the right incentives to increase food availability. Copyright (c) 2008 International Association of Agricultural Economists.

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Bibliographic Info

Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 39 (2008)
Issue (Month): s1 (November)
Pages: 477-484

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Handle: RePEc:bla:agecon:v:39:y:2008:i:s1:p:477-484

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Cited by:
  1. D'Souza, Anna & Jolliffe, Dean, 2010. "Food Security in Afghanistan: Household-level Evidence from the 2007-08 Food Price Crisis," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado, Agricultural and Applied Economics Association 61139, Agricultural and Applied Economics Association.
  2. Nora Lustig, 2009. "Coping with Rising Food Prices: Policy Dilemmas in the Developing World," Working Papers, Tulane University, Department of Economics 0907, Tulane University, Department of Economics.
  3. Anna D'Souza & Dean Jolliffe, 2012. "Rising Food Prices and Coping Strategies: Household-level Evidence from Afghanistan," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 48(2), pages 282-299, August.
  4. Anonymous, 2011. "Journal of International Agricultural Trade and Development, Volume 7, Issue 1," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 7(1).
  5. Francesco Caracciolo & Fabio Gaetano Santeramo, 2013. "Price Trends and Income Inequalities: Will Sub-Saharan Africa Reduce the Gap?," African Development Review, African Development Bank, vol. 25(1), pages 42-54, 03.
  6. Cardwell, Ryan & Kerr, William A., 2013. "Reforming WTO Rules on Export Restrictions - Is There Any Point?," Commissioned Papers, Canadian Agricultural Trade Policy Research Network 158894, Canadian Agricultural Trade Policy Research Network.
  7. Ian Coxhead & Vu Hoang Linh & Le Dong Tam, 2012. "Global market shocks and poverty in Vietnam: the case of rice," Agricultural Economics, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 43(5), pages 575-592, 09.
  8. Dimova, Ralitza & Gbakou, Monnet, 2013. "The Global Food Crisis: Disaster, Opportunity or Non-event? Household Level Evidence from Côte d’Ivoire," World Development, Elsevier, Elsevier, vol. 46(C), pages 185-196.
  9. Levin, Jörgen, 2010. "Poverty Impact of Rising Maize Prices in Kenya," Working Papers, Örebro University, School of Business 2010:9, Örebro University, School of Business.
  10. World Bank, 2010. "Food Price Increases in South Asia : National Responses and Regional Dimensions," World Bank Other Operational Studies 2885, The World Bank.
  11. Mazhar MUGHAL & Amar Iqbal ANWAR, 2012. "Remittances, Inequality and Poverty in Pakistan: Macro and Microeconomic Evidence," Working Papers 2012-2013_2, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Aug 2012.
  12. von Braun, Joachim & Tadesse, Getaw, 2012. "Global Food Price Volatility and Spikes: An Overview of Costs, Causes, and Solutions," Discussion Papers, University of Bonn, Center for Development Research (ZEF) 120021, University of Bonn, Center for Development Research (ZEF).
  13. Nazli, Hina & Haider, Syed Hamza & Tariq, Asjad, 2012. "Supply and demand for cereals in Pakistan, 2010-2030:," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1222, International Food Policy Research Institute (IFPRI).

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