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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.

Suggested Citation

  • de Janvry, Alain & Sadoulet, Eliisabeth, 2009. "The Impact of Rising Food Prices on Household Welfare in India," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7xj9n1qq, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt7xj9n1qq
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    Cited by:

    1. Jayatilleke S. Bandara, 2013. "What is Driving India’s Food Inflation? A Survey of Recent Evidence," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 127-156, March.
    2. Hanan G. Jacoby, 2016. "Food Prices, Wages, And Welfare In Rural India," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 159-176, January.
    3. Gilles Quentin Kane & Gwladys Laure Mabah Tene & Jean Joël Ambagna & Isabelle Piot-Lepetit & Fondo Sikod, 2015. "The impact of food price volatility on consumer welfare in Cameroon," WIDER Working Paper Series 013, World Institute for Development Economic Research (UNU-WIDER).
    4. Pierre-Emmanuel Darpeix, 2019. "Literature review on the consequences of food price spikes and price volatility," PSE Working Papers hal-02072329, HAL.
    5. Rita Motzigkeit Gonzalez, 2016. "Welfare effects of changed prices The “Tortilla Crisis" revisited," Working Papers 167, Bavarian Graduate Program in Economics (BGPE).
    6. Lubna Naz & Munir Ahmad & G.M Arif, 2018. "Estimating Food Demand System and Rural Household Welfare: A Case study from Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(4), pages 55-82, December.
    7. Hertweck, Matthias & Brey, Bjoern, 2017. "The Persistent Effects of Monsoon Rainfall Shocks in India: A Nonlinear VAR Approach," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168256, Verein für Socialpolitik / German Economic Association.
    8. 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.
    9. Yessi Rahmawati & Andiga Kusuma Nur Ichsan & Annisaa Rizky Dwi Brintanti & Iqram Ramadhan Jamil, 2023. "Geo-spatial analysis: the impact of agriculture productivity, drought, and irrigation on poverty in East Java, Indonesia," Letters in Spatial and Resource Sciences, Springer, vol. 16(1), pages 1-20, December.
    10. Irina Denisova & Nikita Varioshkin, 2022. "The impact of foreign trade shocks on well-being of Russian households: Microsimulation approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 68, pages 73-92.
    11. Talbot, Theodore & Nguyen, Manh Hai, 2013. "The Political Economy of Food Price Policy: The Case of Rice Prices in Vietnam," WIDER Working Paper Series 035, World Institute for Development Economic Research (UNU-WIDER).
    12. Pierre-Emmanuel Darpeix, 2019. "Literature review on the consequences of food price spikes and price volatility," Working Papers hal-02072329, HAL.
    13. Gilles Quentin Kane & Gwladys Laure Mabah Tene & Jean Joël Ambagna & Isabelle Piot-Lepetit & Fondo Sikod, 2015. "The Impact of Food Price Volatility on Consumer Welfare in Cameroon," WIDER Working Paper Series wp-2015-013, World Institute for Development Economic Research (UNU-WIDER).
    14. Manh Hai Nguyen & Theodore Talbot, 2013. "The Political Economy of Food Price Policy: the Case of Rice Prices in Vietnam," WIDER Working Paper Series wp-2013-035, World Institute for Development Economic Research (UNU-WIDER).
    15. Weber, Regine, 2015. "Welfare Impacts of Rising Food Prices: Evidence from India," 2015 Conference, August 9-14, 2015, Milan, Italy 211901, International Association of Agricultural Economists.
    16. Ginn, William & Pourroy, Marc, 2019. "Optimal monetary policy in the presence of food price subsidies," Economic Modelling, Elsevier, vol. 81(C), pages 551-575.
    17. Elleby, Christian & Hansen, Henrik & Yu, Wusheng, 2015. "Domestic Price and Welfare Effects of the 2007-11 Indian Grain Export Restrictions," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205578, Agricultural and Applied Economics Association.
    18. Lindsay Shutes & Marijke Kuiper, 2015. "Expanding the household coverage of global simulation models: an application to Ghana," FOODSECURE Technical papers 3, LEI Wageningen UR.
    19. Sumit Mahajan & Alfonso Sousa-Poza & K. Datta, 2015. "Differential effects of rising food prices on Indian households differing in income," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 7(5), pages 1043-1053, October.
    20. Balié, Jean & Magrini, Emiliano & Morales Opazo, Cristian, 2016. "Cereal price shocks and volatility in Sub-Saharan Africa: What does really matter for farmers' welfare?," DARE Discussion Papers 1607, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    21. Ralitza Dimova, 2015. "The welfare impact of rising food prices," IZA World of Labor, Institute of Labor Economics (IZA), pages 135-135, March.
    22. Ramadas, Sendhil & Palanisamy, Ramasundaram & Kuruvila, Anil & Chandrasekaran, Sundaramoorthy & Singh, Randhir & Sharma, Indu, 2014. "Food Price Volatility in India – Drivers, Impact and Policy Response," MPRA Paper 91131, University Library of Munich, Germany.
    23. Melissa Hidrobo, 2014. "The Effect of Ecuador's 1999 Economic Crisis on Early Childhood Development," Economic Development and Cultural Change, University of Chicago Press, vol. 62(4), pages 633-671.
    24. Shutes, Lindsay & Ganesh-Kumar, Anand & Meijerink, Gerdien W., 2012. "Fluctuating staple prices and household poverty in India," MPRA Paper 40982, University Library of Munich, Germany.

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