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The effects of rising food prices on poverty in Mexico

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  • Jorge N. Valero‐Gil
  • Magali Valero

Abstract

We 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 15.95%, 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.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:agecon:v:39:y:2008:i:s1:p:485-496
    DOI: 10.1111/j.1574-0862.2008.00354.x
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    Cited by:

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    2. Cuesta, José & Htenas, Aira & Tiwari, Sailesh, 2014. "Monitoring global and national food price crises," Food Policy, Elsevier, vol. 49(P1), pages 84-94.
    3. Estrades, Carmen & Terra, María Inés, 2012. "Commodity prices, trade, and poverty in Uruguay," Food Policy, Elsevier, vol. 37(1), pages 58-66.
    4. Wood, Benjamin D.K. & Nelson, Carl H. & Nogueira, Lia, 2012. "Poverty effects of food price escalation: The importance of substitution effects in Mexican households," Food Policy, Elsevier, vol. 37(1), pages 77-85.
    5. Moncarz, Pedro & Barone, Sergio & Descalzi, Ricardo, 2018. "Shocks to the international prices of agricultural commodities and the effects on welfare and poverty. A simulation of the ex ante long-run effects for Uruguay," International Economics, Elsevier, vol. 156(C), pages 136-155.
    6. Sean Field, 2016. "The financialization of food and the 2008–2011 food price spikes," Environment and Planning A, , vol. 48(11), pages 2272-2290, November.
    7. Pham Van Ha & Hoa Thi Minh Nguyen & Tom Kompas & Tuong Nhu Che & Bui Trinh, 2015. "Rice Production, Trade and the Poor: Regional Effects of Rice Export Policy on Households in Vietnam," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(2), pages 280-307, June.
    8. Countryman, Amanda & Ufer, Danielle, 2016. "Potential Poverty Effects of the Special Safeguard Mechanism: the Case of Wheat," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236023, Agricultural and Applied Economics Association.
    9. Rita Motzigkeit Gonzalez, 2016. "Welfare effects of changed prices The “Tortilla Crisis" revisited," Working Papers 167, Bavarian Graduate Program in Economics (BGPE).
    10. Derek Headey & Marie Ruel, 2023. "Food inflation and child undernutrition in low and middle income countries," Nature Communications, Nature, vol. 14(1), pages 1-10, December.
    11. Mohsin, Asma & Zaman, Khalid, 2012. "Distributional effects of rising food prices in Pakistan: Evidence from HIES 2001–02 and 2005–06 survey," Economic Modelling, Elsevier, vol. 29(5), pages 1986-1995.
    12. Miranda, Mario J. & Farrin, Kathleen M. & Larson, Donald F. & Chen, Shu-Ling, 2013. "Differential Effects of Food Security Policies on Subsistence Farmers and the Urban Poor," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149736, Agricultural and Applied Economics Association.
    13. Naoko Uchiyama, 2016. "Consumption Smoothing, Risk Sharing and Household Vulnerability in Rural Mexico," Discussion Paper Series DP2016-06, Research Institute for Economics & Business Administration, Kobe University.
    14. Xiangjun Wu & Juan Xu, 2021. "Drivers of food price in China: A heterogeneous panel SVAR approach," Agricultural Economics, International Association of Agricultural Economists, vol. 52(1), pages 67-79, January.
    15. Mai, Nhat Chi, 2013. "Essays on Farm Household Decision-Making: Evidence from Vietnam," OSF Preprints 96azx, Center for Open Science.
    16. José Cuesta & Suzanne Duryea & Fidel Jaramillo & Marcos Robles, 2010. "Distributive impacts of the food price crisis in the Andean region," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(7), pages 846-865.

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    More about this item

    JEL classification:

    • 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; Animal Welfare Policy

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