The short- and medium- term impacts of rises in staple food prices

There is widespread concern about the impact of recent food price rises on the welfare and food security of poor people and about future impacts of high prices. Responses to these concerns are, however, sometimes clouded by lack of clarity about the nature of short and medium term impacts of food price changes for different people. This paper reviews both theory and empirical evidence on these impacts. It finds that theory and empirical evidence are broadly complementary and consistent, with a high degree of variability in impacts. In broad terms staple food price increases have had very serious effects on the poor in national or local economies which have experienced high food price shocks without broad based growth processes. Poor net buyers of food, in both rural and urban communities, have been most negatively affected, with limited second order benefits from high staple food prices tightening labour markets in poor rural economies. Short term impacts can be ameliorated by economic growth and, for international food price increases, by limited price transmission. Economic growth and lower domestic price transmission of high international prices in different countries, notably India and China, have led to lower increases in global poverty, hunger and malnourishment than hunger and poverty simulations have suggested. However these findings should not detract from the very serious impacts high food prices have had for very large numbers of very poor people in poor countries, and the need for policies and action to address this.