An assessment of the impacts of rising food prices on consumers: implications for the welfare of the poor and vulnerable
- Autores: Sol García Germán
- Directores de la Tesis: Isabel Bardaji Azcárate (dir. tes.), Alberto Garrido Colmenero (codir. tes.)
- Lectura: En la Universidad Politécnica de Madrid ( España ) en 2017
- Idioma: español
- Tribunal Calificador de la Tesis: José María García Álvarez-Coque (presid.), Eva Iglesias Martínez (secret.), Ana I. Sanjuán (voc.), Ana Iglesias Picazo (voc.), Belén Iráizoz Apezteguía (voc.)
- Programa de doctorado: Programa de Doctorado en Tecnología Agroambiental para una Agricultura Sostenible por la Universidad Politécnica de Madrid
- Materias:
- Enlaces
- Tesis en acceso abierto en: Archivo Digital UPM
- Resumen
The recent developments in world agricultural commodities prices have given rise to serious concerns in relation to their potential impact on the welfare of the poor, not only from the perspective of developing countries but also from that of the most vulnerable in developed countries. Understanding the implications of changes in agricultural commodities prices is key for ensuring food security. This thesis aims at evaluating the potential consequences of rising food prices on the welfare of consumers and households from a global perspective. Specifically, the thesis focuses on the European Union and Tanzania as examples of the developed and the developing world respectively. Even though the impact of rising food prices on the welfare of European Union consumers may seem to be limited, given the inequalities existing between and within member states in terms of consumer food prices, household food budget and household income some segments of the population may find difficulties in their access to food under a scenario of higher food prices. However, the real threat of increased food prices to the welfare of the population lies in low-income countries, where the vast majority of the food insecure population live and the ability to cope with food price related shocks continues to be a challenge.
First, this thesis aims at assessing the effects of changes in world agricultural commodity prices on consumer welfare in the European Union in light of the recent agricultural commodities price crises occurred in 2007-2008 and 2011-2012. As a first step, it is necessary to evaluate price transmission between world agricultural commodity and consumer food prices. To evaluate the extent to and speed at which world agricultural commodity price movements affect consumer food prices in the European Union member states, error correction models are developed taking into consideration three types of world agricultural commodity price indices and supply and demand shifters. The findings reveal a long-term equilibrium relationship between world market and consumer food prices in half of the member states irrespective of the world index used. Despite this, there are differences in both the integration between world and consumer food markets and the extent to and speed at which agricultural commodity price movements impact consumer food prices within integrated markets across member states. When member states are classified into different categories according to eurozone membership, price transmission across member states does not differ so widely. Even though a long-term equilibrium relationship exists for a majority of member states, the extent to and speed at which prices return to equilibrium is insubstantial. The results also suggest that supply and demand shifters play a key role in the process of price transmission between global and consumer prices. This chapter leads to the conclusion that increased food prices may affect the consumption and health of households that spend a large share of their income to food in the face of price shocks in world markets, even if the impact of higher price levels and volatility in global markets on consumer prices is limited and temporary.
Second, empirical analyses at the household level may offer depth in measuring the impact of rising food prices on the welfare of European Union consumers, once shown that global agricultural commodity prices are related to and may have an effect on consumer food prices and on the welfare of some of the most vulnerable European Union households. To this end, the European Union Statistics on Income and Living Conditions are used to test whether increasing food prices —and the deviation of food prices relative to general consumer prices— have an impact on food deprivation in European Union households, particularly on the access of households to an adequate protein intake. The analysis, which is undertaken from 2003 to 2011 and thus coincides with the surge in agricultural commodities prices of 2007-2008, uses population-averaged panel data models. The results show no clear evidence of an increase in food deprivation following the recent food price crisis. Nevertheless the results suggest that there is a significant and negative relationship between food deprivation and the consumer food price index during the analyzed period, period in which the consumer food price index increased around the world following the 2007-2008 world food price increase. The most vulnerable households to food deprivation are those belonging to the lowest income quintile in the member states recently acceded to the European Union. These findings provide evidence to conclude that increased food prices do have an impact on food consumption in the poorest European Union households and may be useful for the evaluation of food assistance programmes that aim to compensate the negative effects of increasing food prices.
Third, Tanzania seems a particularly convenient example in which to assess the short-term consequences of increasing food prices on the welfare of the population in developing countries, as food energy deficiencies and malnutrition continue to be a widespread problem among its population. Furthermore, the rise in overweight and obesity in developing countries is becoming an increasingly severe problem. Considering the multidimensional nature of the welfare impacts of increased food prices, the thesis aims at broadening the focus followed so far and examine the consequences of a price surge on the adult population’s actual nutritional status. By simulating the impact of the main staple’s price increase on the population’s weight outcomes and its incidence in the prevalence of underweight, overweight and obesity, the thesis explores the potential effects of price increases in two of the three dimensions of malnutrition —undernutrition and overnutrition. A food demand model that allows to later undertake a calorie-to-weight simulation is developed. The findings show that undernutrition increases in the face of the price increase, while the overweight and obese population actually improve their nutritional status. This is due to the scarce substitution possibilities which are restricted to other energy-dense foods with a low content in micronutrients. However, the results provide some evidence to support that consumption patterns could be evolving towards the typical patterns that characterize an early stage of the nutrition transition. The shifts in the diet and activity patterns due to economic growth and urbanization amongst others typical of the nutrition transition are driving an increase in obesity around the world. The findings suggest that there will be a need for programmes that address simultaneously the undernutrition and overnutrition facets of malnutrition in the near future as the nutrition transition continues to develop.
The thesis concludes that even if the impact of higher agricultural commodity or food prices is limited and temporary, they may affect the welfare of the most vulnerable households that spend a large share of their income to food, either through their consumption or their food security and nutrition status. The impacts of increased food prices on consumers will depend not only on the country but also on the segment of the population within the country and the time frame studied. This is clearly illustrated by the findings of the European Union analyses in which member states with a large average share of household expenditure on food generally have larger price transmission elasticities from global market prices to consumer food prices and have a higher probability of being food deprived, while this probability increases more in the lowest income quintile in the face of the food price rise. Nonetheless, the effects are in general terms small, although relevant for the most vulnerable segments of society. In developing countries such as Tanzania where the share of household expenditure on food is significantly higher and food consumption is constrained by household income, the impact of a staple price increase can entail a large calorie intake fall. The increase in the price of maize decreases the available budget to substitute to other foods and substitution possibilities cannot be sufficiently used to avoid the calorie fall, with the resulting adverse effects on nutrition outcomes.
