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Impact of Rising World Rice Prices on Poverty and Inequality in Burkina Faso

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  • Fousseini TRAORE
  • Félix BADOLO

Abstract

Between January 2006 and April 2008, the prices of most of the agricultural products considerably rose in international markets. Empirical studies show that this spike in world food prices has increased the number of poor households in developing countries, but the magnitude is not the same in all countries. This paper assesses the impact of rising rice price on poverty and income inequality in Burkina Faso. We use a methodology based on the concept of compensating variation combined with the net benefit ratio (NBR) developed by Deaton (1989) and living standard survey (QUIBB, 2003). The results show that higher rice prices have a negative impact on income and poverty in the regions with a large proportion of households who are net buyers of rice. The poverty rate increases by 2.2 to 2.9 percentage points depending on the assumptions. The increase in poverty increase is higher in urban areas than in rural areas. Rising rice prices also increase income inequality. Income inequality particularly increases in urban areas and in relatively rich regions, but it decreases in poor regions with an important proportion of rice producers.

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Paper provided by CERDI in its series Working Papers with number 201222.

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Length: 39
Date of creation: 2012
Date of revision:
Handle: RePEc:cdi:wpaper:1369

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Keywords: Measuring and analysis of poverty; farm household; Price;

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  1. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 312-26, June.
  2. Klugman, Jeni & Loening, Josef, 2007. "Welfare Impacts of Food Price Inflation in Ethiopia," MPRA Paper 24892, University Library of Munich, Germany.
  3. Ulimwengu, John M. & Ramadan, Racha, 2009. "How does food price increase affect Ugandan households?: An augmented multimarket approach," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 884, International Food Policy Research Institute (IFPRI).
  4. Deaton, Angus, 1989. "Rice Prices and Income Distribution in Thailand: A Non-parametric Analysis," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(395), pages 1-37, Supplemen.
  5. Trairatvorakul, Prasarn, 1984. "The effects on income distribution and nutrition of alternative rice price policies in Thailand:," Research reports, International Food Policy Research Institute (IFPRI) 46, International Food Policy Research Institute (IFPRI).
  6. Christopher B. Barrett & Paul A. Dorosh, 1996. "Farmers' Welfare and Changing Food Prices: Nonparametric Evidence from Rice in Madagascar," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 78(3), pages 656-669.
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