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The Distributional Consequences of Agricultural Supply News Shocks: Food Prices and Household Welfare

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  • Jo, Jungkeon
  • Adjemian, Michael K.

Abstract

Identifying the causal effect of agricultural production conditions on food prices is challenging because commodity prices respond simultaneously to supply and demand shocks. Exploiting high-frequency field crop futures prices and USDA crop reports, we estimate impacts of agricultural supply news shocks on food markets. A poor harvest news shock that raises field crop prices leads to an increase in food-at-home and food service prices, a decline in food expenditures. Using household-level food price indexes constructed across income quintiles, we find that welfare losses are approximately seven times larger for the lowest-income quintile than for the highest. Counterfactual simulations indicate that, without these shocks, U.S. food inflation during 2021-23 would have peaked up to 1.9 percentage points lower.

Suggested Citation

  • Jo, Jungkeon & Adjemian, Michael K., 2026. "The Distributional Consequences of Agricultural Supply News Shocks: Food Prices and Household Welfare," 3rd ASEAN University Symposium for Sustainable Food Systems, Faculty of Agriculture, Chiang Mai University, Thailand, May 21-22, 2026 404825, Association of Southeast Asian Nations (ASEAN).
    • Handle: RePEc:ags:asea26:404825
    DOI: 10.22004/ag.econ.404825
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    References listed on IDEAS

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    1. Francesco D’Acunto & Ulrike Malmendier & Juan Ospina & Michael Weber, 2021. "Exposure to Grocery Prices and Inflation Expectations," Journal of Political Economy, University of Chicago Press, vol. 129(5), pages 1615-1639.
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    3. An N. Q. Cao & Michel A. Robe, 2022. "Market uncertainty and sentiment around USDA announcements," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(2), pages 250-275, February.
    4. Kuttner, Kenneth N., 2001. "Monetary policy surprises and interest rates: Evidence from the Fed funds futures market," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 523-544, June.
    5. Diego R. Känzig, 2021. "The Macroeconomic Effects of Oil Supply News: Evidence from OPEC Announcements," American Economic Review, American Economic Association, vol. 111(4), pages 1092-1125, April.
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