The effects of rising food prices on poverty in Mexico
AbstractWe evaluate the impact of the rise in food prices during 2006-2008 on the poverty and extreme poverty rates in Mexico. We concentrate on the poor’s consumption of staple foods, and analyze the change in their consumption brought about by changed prices. We also allow households receiving income from the farming and livestock sector to benefit from increases in prices of food products. We find a modest increase in poverty using 2006-2007 prices, however, there is a daunting effect on the poor once the 2008 prices are taken into account. After considering the positive effects of public policies announced in 2008, such as reduced taxes and tariffs on food products and greater subsidies to the extremely poor, the poverty rate measured through consumption increases from 25% to 33.5%, and the extreme poverty rate from 10.58% to 16%, given the increase in food prices. Further analysis using the theory of optimal taxes suggests policies oriented towards relieving the food price pressure on the Mexican poor should aim at lowering the prices of eggs, vegetable oil, milk, and chicken.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10221.
Date of creation: 22 Aug 2008
Date of revision:
Food price changes; Poverty; Mexico;
Other versions of this item:
- Jorge N. Valero-Gil & Magali Valero, 2008. "The effects of rising food prices on poverty in Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 485-496, November.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2008-09-05 (Agricultural Economics)
- NEP-ALL-2008-09-05 (All new papers)
- NEP-DEV-2008-09-05 (Development)
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