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Did the commodity price spike increase rural poverty? Evidence from a long-run panel in Bangladesh

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  • Joseph V. Balagtas
  • Humnath Bhandari
  • Ellanie R. Cabrera
  • Samarendu Mohanty
  • Mahabub Hossain

Abstract

We assess the effects of the dramatic rise in agricultural commodity prices during 2007–2008 on income dynamics and poverty among rural households in Bangladesh. A unique panel data set allows us to put the effects of recent events in the context of long-run trends in income and poverty. We use data from a nationally representative longitudinal survey of rural households in Bangladesh collected in four waves in 1988, 2000, 2004, and 2008. Nargis and Hossain (Nargis, N., Hossain, M., 2006. Income dynamics and pathways out of rural poverty in Bangladesh, 1988–2004. Agric. Econ. 35, 425–435) analysed income dynamics and poverty incidence for the first three waves, finding a declining trend in both the incidence and severity of poverty, aided in particular by human capital development and off-farm employment opportunities. We update and extend the analysis to include data collected in 2008, at the height of a spike in agricultural prices. We find that the price of a balanced food basket increased by more than 50% during 2000–2008, while household income rose only 15%. As a result the incidence and severity of rural poverty in Bangladesh sunk to pre-2000 levels during 2004–2008. Thus, the price spikes in 2007–2008 helped push an additional 13 million people into poverty in rural Bangladesh. Moreover, we find that the determinants of poverty have not been time-invariant. In particular, agricultural production, which had previously been associated with a higher incidence of poverty, served as a hedge against higher food prices during 2004–2008.

Suggested Citation

  • Joseph V. Balagtas & Humnath Bhandari & Ellanie R. Cabrera & Samarendu Mohanty & Mahabub Hossain, 2014. "Did the commodity price spike increase rural poverty? Evidence from a long-run panel in Bangladesh," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 303-312, May.
  • Handle: RePEc:bla:agecon:v:45:y:2014:i:3:p:303-312
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    References listed on IDEAS

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    Cited by:

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    2. Khondoker Abdul Mottaleb & Mohammed Mainuddin & Tetsushi Sonobe, 2020. "COVID-19 induced economic loss and ensuring food security for vulnerable groups: Policy implications from Bangladesh," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-20, October.
    3. Headey, Derek D. & Hoddinott, John, 2016. "Agriculture, nutrition and the green revolution in Bangladesh," Agricultural Systems, Elsevier, vol. 149(C), pages 122-131.
    4. Nakelse, Tebila & Dalton, Timothy & Hendricks, Nathan & Kabore, Moussa, 2017. "The Impact of Changes in Commodity Prices on Household Welfare in Rural Burkina Faso," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252774, Southern Agricultural Economics Association.
    5. Christian Elleby, 2014. "Poverty and Price Transmission," IFRO Working Paper 2015/01, University of Copenhagen, Department of Food and Resource Economics.
    6. Akhter U. Ahmed & Salauddin Tauseef, 2022. "Climbing up the Ladder and Watching Out for the Fall: Poverty Dynamics in Rural Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 160(1), pages 309-340, February.
    7. Iqbal, Md Zabid, 2018. "The Effects of 2016-2017 Rice Price Increase on Household Welfare and Poverty in Rural Bangladesh," 2018 Annual Meeting, August 5-7, Washington, D.C. 273884, Agricultural and Applied Economics Association.
    8. Malek, Mohammad Abdul & Kikkawa, Aiko & Azad, Abul Kalam & Sawada, Yasuyuki, 2022. "Rural Development in Bangladesh Over Four Decades: Findings from Mahabub Hossain Panel Data and the Way Forward," ADBI Working Papers 1350, Asian Development Bank Institute.
    9. Juhee Singh Verma & Pritee Sharma, 2021. "Vulnerability of Small Farmers to High Food Prices – A Case Study of Indian Farmers," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 74-88.
    10. Mottaleb, K. & Erenstein, O., 2018. "Gender Differentiated Impacts of Commodity Price Shocks on Households’ Consumption Behavior: A Natural Experiment," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275915, International Association of Agricultural Economists.
    11. G.M. Monirul Alam & Khorshed Alam & Shahbaz Mushtaq, 2018. "Drivers of Food Security of Vulnerable Rural Households in Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 43-63, March.
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