World food prices and poverty in Indonesia

Peter Warr and Arief Yusuf

Australian Journal of Agricultural and Resource Economics, 2014, vol. 58, issue 01

Abstract: Spikes in international food prices in 2007–2008 worsened poverty incidence in Indonesia, both rural and urban, but only by small amounts. The paper reaches this conclusion using a multisectoral and multihousehold general equilibrium model of the Indonesian economy. The negative effect on poor consumers, operating through their living costs, outweighed the positive effect on poor farmers, operating through their incomes. Indonesia’s post-2004 rice import restrictions shielded its internal rice market from the temporary world price increases, muting the increase in poverty. But it did this only by imposing large and permanent increases in both domestic rice prices and poverty incidence. Poverty incidence increased more among rural than urban people, even though higher agricultural prices mean higher incomes for many of the rural poor. Gains to poor farmers were outweighed by the losses incurred by the large number of rural poor who are net buyers of food, and the fact that food represents a large share of their total budgets, even larger on average than for the urban poor. The main beneficiaries of higher food prices are not the rural poor, but the owners of agricultural land and capital, many of whom are urban based.

Keywords: Demand and Price Analysis; Food Security and Poverty; International Relations/Trade (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: World food prices and poverty in Indonesia (2014)
Working Paper: World Food Prices and Poverty in Indonesia (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:260064

DOI: 10.22004/ag.econ.260064

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