During the 2007-2008 global food crisis, the international price of major agricultural commodities such as wheat, rice, maize, and soybeans more than doubled. As floods in Australia decimate the country’s wheat crop and adverse weather in the US cuts corn and soybean harvests, commodities prices across the globe are again seeing drastic increases. Such price spikes spark the memory of the 2007-08 crisis, raising fears that we may be witnessing a return of widespread food insecurity and subsequent political and economic turmoil.

Understanding the effect that a global rise in food prices has on the world’s poor is essential to mitigating the effects of such a rise. As high international prices are transmitted to domestic markets, the purchasing power of urban households, and particularly the poor, is eroded.
The extent to which increases in international commodity prices are transmitted to domestic food prices has major implications for the poor and the overall welfare of developing nations.

IFPRI researchers have studied the impact that the 2007-08 world food crisis and the 2008-09 world financial crisis had on poor households in both Latin America and Asia. Project findings suggest that the transmission of world prices to domestic prices was strong in these regions and particularly affected poor urban households, resulting in widespread unemployment and underemployment, a reduction in the amount and frequency of remittances coming from abroad, and a decrease in the nutritional value of households’ staple foods.

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Price_Transmission-in_LAC_Asia.pdf339.42 KB
Urban_Households_in_Central_America.pdf528.23 KB
Robles_etal_2010_Economía_Reduced_size.pdf5.02 MB
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