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Local impacts of a global crisis: Food price transmission, consumer welfare and poverty in Ghana

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  • Cudjoe, Godsway
  • Breisinger, Clemens
  • Diao, Xinshen

Abstract

This paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in Ghana. It also assesses the impacts of food price increases on various household groups. Taking the 2007-2008 global food crisis as an example, we show that prices for domestic grain products are highly correlated with world market prices. This is true both for products for which Ghana is highly import-dependent (e.g., rice) and the products for which Ghana is self-sufficient (e.g., maize). The econometric results also show that price transmission is high between regional producer markets and markets located in the country's largest cities, and the distance between producer and consumer markets and the size of consumer markets matter in explaining the price transmission. The welfare analysis for households as consumers shows that the effect of world food prices appears relatively modest for the country as a whole due to relatively diverse consumption patterns within country. However, the national average hides important regional differences, both between regions and within different income groups. We find that the poorest of the poor--particularly those living in the urban areas--are hardest hit by high food prices. The negative effect of the food crisis is particularly strong in northern Ghana. The main explanations for this regional variation in the price effect is the different consumption patterns and much lower per capita income levels in the North of Ghana compared to other regions in the country.

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Bibliographic Info

Article provided by Elsevier in its journal Food Policy.

Volume (Year): 35 (2010)
Issue (Month): 4 (August)
Pages: 294-302

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Handle: RePEc:eee:jfpoli:v:35:y:2010:i:4:p:294-302

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Web page: http://www.elsevier.com/locate/foodpol

Related research

Keywords: Food crisis Price transmission Threshold cointegration Household welfare Poverty Ghana;

References

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  1. Bob Baulch, 1997. "Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 477-487.
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  9. Aksoy , M. Ataman & Isik-Dikmelik, Aylin, 2008. "Are low food prices pro-poor ? net food buyers and sellers in low-income countries," Policy Research Working Paper Series 4642, The World Bank.
  10. Sébastien Dessus & Santiago Herrera & Rafael de Hoyos, 2008. "The impact of food inflation on urban poverty and its monetary cost: some back-of-the-envelope calculations," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 417-429, November.
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Citations

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Cited by:
  1. Fujii, Tomoki, 2013. "Impact of food inflation on poverty in the Philippines," Food Policy, Elsevier, vol. 39(C), pages 13-27.
  2. Delphine Boutin, 2011. "D’une crise à l’autre : Mesurer l’impact des prix alimentaires sur la pauvreté," Larefi Working Papers 1106, Larefi, Université Bordeaux 4.
  3. Arora, Abhimanyu & Swinnen, Johan F.M. & Verpoorten, Marijke, 2012. "Self-Reported Food Insecurity in Africa During the Food Price Crisis," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126897, International Association of Agricultural Economists.
  4. repec:laf:wpaper:201106 is not listed on IDEAS
  5. Takeshima, Hiroyuki & Jimah, Kipo & Kolavalli, Shashidhara & Diao, Xinshen & Funk, Rebecca Lee, 2013. "Dynamics of transformation: Insights from an exploratory review of rice farming in the Kpong irrigation project:," IFPRI discussion papers 1272, International Food Policy Research Institute (IFPRI).
  6. Baltzer, Kenneth, 2013. "International to domestic price transmission in fourteen developing countries during the 2007-08 food crisis," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Chisanga, Brian, 2012. "Efficiency and integration in the Zambian sugar market: analysing price transmission, price formation and policy," Research Theses 134483, Collaborative Masters Program in Agricultural and Applied Economics.
  8. Delphine Boutin, 2011. "D'une crise à l'autre : mesurer l'impact des prix alimentaires sur la pauvreté," Working Papers hal-00637608, HAL.
  9. Coleman, Simeon, 2012. "Where Does the Axe Fall? Inflation Dynamics and Poverty Rates: Regional and Sectoral Evidence for Ghana," World Development, Elsevier, vol. 40(12), pages 2454-2467.
  10. Armand Faganel, 2011. "Recognized Values and Consumption Patterns of Post-Crisis Consumers," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 9(2), pages 151-170.
  11. Baquedano, Felix G. & Liefert, William M., 2014. "Market integration and price transmission in consumer markets of developing countries," Food Policy, Elsevier, vol. 44(C), pages 103-114.

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