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Foods and Fads - The Welfare Impacts of Rising Quinoa Prices in Peru

Author

Listed:
  • Marc F. Bellemare

    () (Department of Applied Economics, University of Minnesota)

  • Johanna Fajardo-Gonzalez

    () (Department of Applied Economics, University of Minnesota)

  • Seth R. Gitter

    () (Department of Economics, Towson University)

Abstract

Riding on a wave of interest in "superfoods" in rich countries, quinoa went in less than a decade from being largely unknown outside of South America to being an upper- class staple in the United States. As a consequence of that rapid rise in the popularity of quinoa, the price of quinoa tripled between 2006 and 2013. We study the impacts of rising quinoa prices on the welfare of Peruvian households. Using 10 years of a large-scale, nationally representative household survey, we combine pseudo- panel and difference-in- differences methods to look at the relationship between (i) the purchase price of quinoa and the value of household consumption, which we use here as a proxy for household welfare, and (ii) household quinoa production and household welfare. We find that increases in the purchase price of quinoa are associated with a significant increase in the welfare of the average household in areas where quinoa is consumed, which suggests that the quinoa price increase has had general equilibrium effects extending to non-producers. We also find that quinoa production is associated with a faster rate of growth of household welfare, but only at the height of the quinoa price boom. Our findings are robust to a number of different specifications.

Suggested Citation

  • Marc F. Bellemare & Johanna Fajardo-Gonzalez & Seth R. Gitter, 2016. "Foods and Fads - The Welfare Impacts of Rising Quinoa Prices in Peru," Working Papers 2016-06, Towson University, Department of Economics, revised Mar 2016.
  • Handle: RePEc:tow:wpaper:2016-06
    as

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    File URL: http://webapps.towson.edu/cbe/economics/workingpapers/2016-06.pdf
    File Function: First version, 2016
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    References listed on IDEAS

    as
    1. Fernando M. Arag?n & Juan Pablo Rud, 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 1-25, May.
    2. Jose Cuesta & Hugo Ñopo & Georgina Pizzolitto, 2011. "Using Pseudo‐Panels To Measure Income Mobility In Latin America," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(2), pages 224-246, June.
    3. Luc J. Christiaensen & Kalanidhi Subbarao, 2005. "Towards an Understanding of Household Vulnerability in Rural Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 14(4), pages 520-558, December.
    4. Jose Galdo, 2013. "The Long-Run Labor-Market Consequences of Civil War: Evidence from the Shining Path in Peru," Economic Development and Cultural Change, University of Chicago Press, vol. 61(4), pages 789-823.
    5. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
    6. Christopher B. Barrett & Paul A. Dorosh, 1996. "Farmers' Welfare and Changing Food Prices: Nonparametric Evidence from Rice in Madagascar," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 656-669.
    7. Alberto Zezza & Benjamin Davis & Carlo Azzarri & Katia Covarrubias & Luca Tasciotti & Gustavo Anriquez, 2008. "The Impact of Rising Food Prices on the Poor," Working Papers 08-07, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    8. McKenzie, D.J.David J., 2004. "Asymptotic theory for heterogeneous dynamic pseudo-panels," Journal of Econometrics, Elsevier, vol. 120(2), pages 235-262, June.
    9. Guillermo Cruces & Peter Lanjouw & Leonardo Lucchetti & Elizaveta Perova & Renos Vakis & Mariana Viollaz, 2015. "Estimating poverty transitions using repeated cross-sections: a three-country validation exercise," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(2), pages 161-179, June.
    10. Quentin Wodon & Hassan Zaman, 2010. "Higher Food Prices in Sub-Saharan Africa: Poverty Impact and Policy Responses," World Bank Research Observer, World Bank Group, vol. 25(1), pages 157-176, February.
    11. Marc F. Bellemare & Christopher B. Barrett & David R. Just, 2013. "The Welfare Impacts of Commodity Price Volatility: Evidence from Rural Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 877-899.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Welfare Impacts of Rising Quinoa Prices: Evidence from Peru
      by Marc F. Bellemare in Marc F. Bellemare on 2016-03-23 15:00:54
    2. Links and quotes for March 28, 2016: Free market quinoa, veterans, and more
      by Sarah Gustafson in AEIdeas on 2016-03-28 22:34:25

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    Cited by:

    1. Raymond B. Frempong & David Stadelmann, 2017. "The Effect of Food Price Changes on Child Labor: Evidence from Uganda," CREMA Working Paper Series 2017-06, Center for Research in Economics, Management and the Arts (CREMA).
    2. repec:fpr:ifpric:9780896292499-01 is not listed on IDEAS

    More about this item

    Keywords

    Quinoa; Commodity Price Shocks; Household Welfare; Peru.;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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