Increasing food prices present both challenges and opportunities for the developing world. Just as the transmission of global prices to domestic prices can differ by country and commodity, the effects of changes in food prices within a country can differ from household to household. The welfare of urban and rural households may be affected differently, as will the welfare of net consumers compared to that of net producers.
Meeting the challenges and taking advantage of the benefits of higher food prices requires a research-based response. Mitigation policies such as microfinance and conditional cash transfer programs should focus on the extreme poor, as research has shown that these populations are most negatively affected by higher food prices. Focus should also be placed on increasing agricultural investment in order to build the capacity of developing world farmers to benefit from higher food prices.
The Food Security Portal’s Welfare Effects of Higher Food Prices tool can help policymakers and researchers determine how different types of households are affected by changing food prices. This knowledge can then inform the development of appropriate responses.
Learn more about the welfare effects of higher food prices in Latin America
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