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Rising Food Prices and Household Welfare: Evidence from Brazil in 2008

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Author Info

  • Ferreira, Francisco H. G.

    ()
    (World Bank)

  • Fruttero, Anna

    ()
    (World Bank)

  • Leite, Phillippe

    ()
    (World Bank)

  • Lucchetti, Leonardo

    ()
    (World Bank)

Abstract

Food price inflation in Brazil in the twelve months to June 2008 was 18 percent, while overall inflation was 5.3 percent. This paper uses spatially disaggregated monthly data on consumer prices and two different household surveys to estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage-earning agricultural labor force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. While the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, the market income effect was positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U-shaped, with the middle-income groups suffering larger proportional losses than the very poor. Nevertheless, since Brazil is 80 percent urban, higher food prices still led to a greater incidence and depth of poverty at the national level.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5713.

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Length: 44 pages
Date of creation: May 2011
Date of revision:
Publication status: published in: Journal of Agricultural Economics, 2013, 64 (1), 151-176
Handle: RePEc:iza:izadps:dp5713

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Keywords: food prices; poverty; inequality; welfare; price change incidence curve; Brazil;

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References

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  1. Jed Friedman & James Levinsohn, 2001. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A 'Rapid Response' Methodology," Working Papers, Research Seminar in International Economics, University of Michigan 482, Research Seminar in International Economics, University of Michigan.
  2. Deaton, A., 1990. "Price Elasticities From Surveys Data: Extensions And Indonesian Results," Papers, World Bank - Living Standards Measurement 69, World Bank - Living Standards Measurement.
  3. Ferreira, Francisco H. G. & Leite, Phillippe G. & Ravallion, Martin, 2007. "Poverty reduction without economic growth ? explaining Brazil's poverty dynamics, 1985-2004," Policy Research Working Paper Series 4431, The World Bank.
  4. Ravallion, Martin & van de Walle, Dominique, 1991. "The impact on poverty of food pricing reforms: A welfare analysis for Indonesia," Journal of Policy Modeling, Elsevier, Elsevier, vol. 13(2), pages 281-299.
  5. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
  6. Fabio Veras Soares & Sergei Suarez Dillon Soares & Marcelo Medeiros & Rafael Guerreiro Osório, 2006. "Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty," Working Papers 21, International Policy Centre for Inclusive Growth.
  7. Korinek, Anton & Mistiaen, Johan A. & Ravallion, Martin, 2005. "Survey nonresponse and the distribution of income," Policy Research Working Paper Series 3543, The World Bank.
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Cited by:
  1. repec:fpr:export:1342 is not listed on IDEAS
  2. Alderman, Harold, 2014. "Can transfer programs be made more nutrition sensitive?:," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1342, International Food Policy Research Institute (IFPRI).
  3. Sakai, Yoko & Estudillo, Jonna P. & Fuwa, Nobuhiko & Higuchi, Yuki & Sawada, Yasuyuki, 2012. "Do Natural Disasters Affect the Poor Disproportionately? The Case of Typhoon Milenyo in the Rural Philippines," PRIMCED Discussion Paper Series, Institute of Economic Research, Hitotsubashi University 31, Institute of Economic Research, Hitotsubashi University.
  4. Kostakis, Ioannis, 2. "The Determinants Of Households’ Food Consumption In Greece," International Journal of Food and Agricultural Economics (IJFAEC), Niğde University, Faculty of Economics and Administrative Sciences, Niğde University, Faculty of Economics and Administrative Sciences, vol. 2(2).
  5. Khandker, Shahidur R. & Koolwal, Gayatri B. & Haughtonm Jonathan & Jitsuchon, Somchai, 2012. "Household coping and response to government stimulus in an economic crisis : evidence from Thailand," Policy Research Working Paper Series 6016, The World Bank.
  6. Lederman, Daniel & Porto, Guido, 2014. "The price is not always right : on the impacts of (commodity) prices on households (and countries)," Policy Research Working Paper Series 6858, The World Bank.

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