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The Impact of Rising Food Prices on Household Welfare in India

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  • de Janvry, Alain
  • Sadoulet, Eliisabeth

Abstract

Food prices have more than doubled between mid-2006 and mid-2008, creating major istress among the poor across the world, but also gainers among farm producers. While transmission was largely averted in India, increasingly open food markets indicate the need to anticipate the welfare implications of a repetition of such events in the future. This paper simulates the welfare effects of the rise in the international price of cereals and edible oils on a comprehensive typology of Indian households. Results show that large farmers (with farm size of one hectare and more) would have gained as a group, and that the average gain is large for those who gain, but that 59% of them in fact lose. The main category of poor households negatively affected by the rise in prices is rural (representing 77% of all losing poor households), both farmers and non-farmers. This is contrary to conventional wisdom that looks at the urban poor as the main category to be sheltered from rising prices through safety net measures, and expects most farmers to gain. These rural households account for 79% of the aggregate welfare loss among the poor. This makes a forceful case for the need to look beyond the urban poor when food prices rise.

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Bibliographic Info

Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt7xj9n1qq.

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Date of creation: 01 Mar 2009
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Handle: RePEc:cdl:indrel:qt7xj9n1qq

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Cited by:
  1. Aye, Goodness C., 2012. "The Long and Short Run Impacts of Food and Energy Price Shocks: Evidence from Nigeria," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 125048, Australian Agricultural and Resource Economics Society.
  2. Clovis Freire & Alberto Isgut, . "High Food and Oil Prices and Their Impact on the Achievement of MDG 1 in Asia and the Pacific," MPDD Working Paper Series WP/11/18, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  3. Tefera, Nigussie, 2012. "Welfare Impacts of Rising Food Prices in Rural Ethiopia: a Quadratic Almost Ideal Demand System Approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126698, International Association of Agricultural Economists.
  4. World Bank, 2010. "Food Price Increases in South Asia : National Responses and Regional Dimensions," World Bank Other Operational Studies 2885, The World Bank.

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