tailieunhanh - Impacts of rising food prices on poverty and welfare in Vietnam

This study examines the impact of rising food prices on welfare in Vietnam. Our results show that, overall, higher food prices raised the average Vietnamese household’s welfare. However, higher food prices made most households worse off. Average welfare was found to increase because the average welfare loss of households whose welfare declined (net purchasers) was smaller than the average welfare gain of those whose welfare increased (net sellers). | Journal of Agricultural and Resource Economics 36(1):14–27 Copyright 2011 Western Agricultural Economics Association Impacts of Rising Food Prices on Poverty and Welfare in Vietnam Linh Vu and Paul Glewwe In 2007 and 2008, international prices of rice and other grains sharply increased, raising fears that poor households in developing countries would become poorer. Yet, these fears often ignored that many of these poor households were food producers. This study examines the impact of rising food prices on welfare in Vietnam. Our results show that, overall, higher food prices raised the average Vietnamese household’s welfare. However, higher food prices made most households worse off. Average welfare was found to increase because the average welfare loss of households whose welfare declined (net purchasers) was smaller than the average welfare gain of those whose welfare increased (net sellers). Key Words: food prices, poverty, rice prices, Vietnam, welfare Introduction In 2008, world food prices rose sharply; the Food and Agriculture Organization (FAO) food price index increased by 24% and the cereal price index increased by 43%. At their peak in the middle of 2008, international prices of wheat and maize were three times higher than in early 2003, and the price of rice was five times higher (von Braun, 2008). This raised fears that the poor in the developing world could fall deeper into poverty and experience increased malnutrition. These fears often overlooked the fact that most poor households in developing countries are in rural areas and are producers, not just consumers, of food. Thus, the impact of rising food prices on poor households in developing countries depends on those households’ characteristics and will vary both across countries and across households within each country. Although food prices fell somewhat since their peak in 2008, food prices in early 2011 are rising and are close to the peak levels of 2008, so there is still an urgent need to .