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The impact of commodity price changes on rural households : the case of coffee in Uganda

Author

Listed:
  • Bussolo, Maurizio
  • Godart, Olivier
  • Lay, Jann
  • Thiele, Rainer

Abstract

Policies and external shocks affecting agriculture, the main source of income for rural households, can be expected to have a significant impact on poverty. The authors study the case of Uganda. Throughout the 1990s, more than 90 percent of its poor lived in rural areas and, during the same period, large international price fluctuations as well as an extensive domestic deregulation affected the coffee sector, its main source of export revenues. Using data from three household surveys covering the 1990s, the authors confirm a strong correlation between changes in coffee prices (in a liberalized market) and poverty reduction. This is highlighted by comparing the performance of different households grouped according to their dependence on coffee farming. Regression analysis (based on pooled data from the three surveys) of consumption expenditure on coffee-related variables, other controls, and time-fixed effects corroborates that the mentioned correlation is not spurious. The authors also find that while both poor and rich farmers enter the coffee sector, the price boom benefits the poorer households relatively more, whereas the liberalization seems to create more opportunities for richer farmers. Finally, notwithstanding the importance of the coffee price boom, the agricultural policy framework and the thorough structural reforms in which the coffee market liberalization was embedded have certainly played a role in triggering overall agricultural growth. These factors appear to matter especially in the second half of the 1990s when prices went down but poverty reduction continued.

Suggested Citation

  • Bussolo, Maurizio & Godart, Olivier & Lay, Jann & Thiele, Rainer, 2006. "The impact of commodity price changes on rural households : the case of coffee in Uganda," Policy Research Working Paper Series 4088, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4088
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    References listed on IDEAS

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    1. Dorosh, Paul A. & El-Said, Moataz & Lofgren, Hans, 2003. "Technical Change, Market Incentives And Rural Incomes: A Cge Analysis Of Uganda'S Agriculture," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25846, International Association of Agricultural Economists.
    2. Krivonos, Ekaterina, 2004. "The impact of coffee market reforms on producer prices and price transmission," Policy Research Working Paper Series 3358, The World Bank.
    3. Scott McDonald & Arja & Lindsay Chant, 2004. "The Role of the 1994-95 Coffee Boom in Uganda's Recovery," Working Papers 2004011, The University of Sheffield, Department of Economics, revised Aug 2004.
    4. Ritva Reinikka & Paul Collier, 2001. "Uganda's Recovery : The Role of Farms, Firms, and Government," World Bank Publications, The World Bank, number 13850, July.
    5. Marcel Fafchamps & Ruth Vargas Hill & Aliziki Kaudha & Robert Waggwa Nsibirwa, 2003. "The transmission of international commodity prices to domestic producers," CSAE Working Paper Series 2003-14, Centre for the Study of African Economies, University of Oxford.
    6. repec:zbw:ifwkie:3715 is not listed on IDEAS
    7. Kappel, Robert & Lay, Jann & Steiner, Susan, 2005. "Uganda: No more pro-poor growth?," Open Access Publications from Kiel Institute for the World Economy 3504, Kiel Institute for the World Economy (IfW).
    8. Adam Blake & Andrew McKay & Oliver Morrissey, 2002. "The Impact on Uganda of Agricultural Trade Liberalisation," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 365-381.
    9. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314 World Scientific Publishing Co. Pte. Ltd..
    10. Marcel Fafchamps & Ruth Vargas Hill, 2005. "Selling at the Farmgate or Traveling to Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 717-734.
    11. Belshaw, Deryke & Lawrence, Peter & Hubbard, Michael, 1999. "Agricultural Tradables and Economic Recovery in Uganda: The Limitations of Structural Adjustment in Practice," World Development, Elsevier, vol. 27(4), pages 673-690, April.
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    Citations

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    Cited by:

    1. Aksoy , M. Ataman & Isik-Dikmelik, Aylin, 2008. "Are low food prices pro-poor ? net food buyers and sellers in low-income countries," Policy Research Working Paper Series 4642, The World Bank.
    2. Maurizio Bussolo & Olivier Godart & Jann Lay & Rainer Thiele, 2007. "The impact of coffee price changes on rural households in Uganda," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2-3), pages 293-303, September.
    3. Golan, Jennifer & Lay, Jann, 2008. "More coffee, more cigarettes? Coffee market liberalisation, gender, and bargaining in Uganda," Kiel Working Papers 1402, Kiel Institute for the World Economy (IfW).
    4. Lay, Jann & Golan, Jennifer, 2009. "The Impact of Agricultural Market Liberalisation from a Gender Perspective: Evidence from Uganda," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 20, Verein für Socialpolitik, Research Committee Development Economics.
    5. Esther K. Ishengoma & Robert Kappel, 2008. "Business Constraints and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda," GIGA Working Paper Series 78, GIGA German Institute of Global and Area Studies.
    6. Fjelde, Hanne, 2015. "Farming or Fighting? Agricultural Price Shocks and Civil War in Africa," World Development, Elsevier, vol. 67(C), pages 525-534.
    7. Sasha C. Breger Bush, 2010. "The World Bank’s approach to increasing the vulnerability of small coffee producers," Global Development Institute Working Paper Series 11310, GDI, The University of Manchester.

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    Keywords

    Crops&Crop Management Systems; Markets and Market Access; Rural Poverty Reduction; Access to Markets;

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