Food Price Spikes, Price Insulation, and Poverty

This paper has two purposes. It first considers the impact on world food prices of the changes in restrictions on trade in staple foods during the 2008 world food price crisis. Those changes -- reductions in import protection or increases in export...

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Bibliographic Details
Main Authors:	Anderson, Kym, Ivanic, Maros, Martin, Will
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	AGRICULTURAL COMMODITIES AGRICULTURAL ECONOMICS AGRICULTURAL PRICE AGRICULTURAL WAGES AGRICULTURE BALANCE SHEET BARS BORDER PRICE CASH TRANSFERS CEREALS COMMODITIES COMMODITY COMMODITY PRICE COMMODITY PRICE STABILIZATION COMMODITY PRICES COMMUNICATION TECHNOLOGY CONSUMER PRICE CONSUMER PRICE INDEX DAIRY DATES DEMAND ELASTICITY DEMAND FOR FOOD DEVELOPING COUNTRIES DEVELOPING COUNTRY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ECONOMIC GROWTH EDIBLE OILS EXPENDITURE EXPENDITURES FARM HOUSEHOLDS FARMERS FINANCIAL CRISIS FOOD CONSUMPTION FOOD EXPENDITURE FOOD EXPENDITURES FOOD ITEMS FOOD POLICY FOOD PRICE FOOD PRICES FOOD PRODUCTS FOOD STAPLES FRUITS FUTURE PRICE FUTURES GLOBAL MARKET GLOBAL POVERTY GRAINS GROUNDNUTS HOUSEHOLD INCOME HOUSEHOLD SURVEY IMPORT SUBSIDIES INCOME INCOME EFFECTS INCOME GROUPS INDUSTRIAL COUNTRIES INVENTORY LIBERALIZATION LOCAL CURRENCY LOW-INCOME COUNTRIES MAIZE MARKET PRICES MARKET SHARE MARKETPLACE MEATS MIDDLE-INCOME COUNTRIES OIL PRODUCTS OUTPUT PALM OIL POOR POOR COUNTRIES POOR HOUSEHOLDS POOR PEOPLE POOR POPULATIONS POOR RURAL PEOPLE POVERTY ESTIMATES POVERTY IMPACT POVERTY LINE POVERTY RATES POVERTY REDUCTION POWER PARITY PRICE CHANGE PRICE CHANGES PRICE DISTORTIONS PRICE INCREASE PRICE INCREASES PRICE LEVEL PRICE LEVELS PRICE SERIES PRICE STABILIZATION PRICE VOLATILITY PRICING POLICIES PRODUCER PRICE PRODUCER PRICE INDEX PURCHASING PURCHASING POWER REPUTATION RISK MANAGEMENT RURAL RURAL DEVELOPMENT SAFETY NET MEASURES SALE SALES SHARE OF WORLD OUTPUT SMALL COUNTRIES SOCIAL PROTECTION SOCIAL SAFETY NET SOCIAL SAFETY NETS SOYBEAN SOYBEANS STAPLE FOODS STOCKS SUGAR SUPPLIERS SUPPLY ELASTICITY TAX RATES TRADE TAX TRADE TAXES URBANIZATION VEGETABLES WHEAT WORLD MARKET WORLD TRADE international price transmission loss aversion trade and poverty
Online Access:	http://documents.worldbank.org/curated/en/2013/07/18020399/food-price-spikes-price-insulation-poverty http://hdl.handle.net/10986/15893

Description
Summary:	This paper has two purposes. It first considers the impact on world food prices of the changes in restrictions on trade in staple foods during the 2008 world food price crisis. Those changes -- reductions in import protection or increases in export restraints -- were meant to partially insulate domestic markets from the spike in international prices. The authors find that this insulation added substantially to the spike in international prices for rice, wheat, maize, and oilseeds. As a result, although domestic prices rose less than they would have without insulation in some developing countries, in many other countries they rose more than they would have in the absence of such insulation. The paper's second purpose it to estimate the combined impact of such insulating behavior on poverty in various developing countries and globally. The analysis finds that the actual poverty-reducing impact of insulation is much less than its apparent impact, and that its net effect was to increase global poverty in 2008 by 8 million people, although this increase was not significantly different from zero. Since there are domestic policy instruments, such as conditional cash transfers, that could now provide social protection for the poor far more efficiently and equitably than variations in border restrictions, the authors suggest it is time to seek a multilateral agreement to desist from changing restrictions on trade when international food prices spike.

Food Price Spikes, Price Insulation, and Poverty

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