The surge in global food prices has impacted developing countries in different ways, depending on whether they are net importers or exporters of food, but the trend has increased poverty across the board, World Bank economists found in a new study.
"Despite certain variation by commodity and by country, the fact is that most poor are net consumers of food and as such tend to be hurt by higher food prices," economists Will Martin and Maros Ivanic said in a study looking at how vulnerable populations have fared under the recent swell in food prices. "Poverty increases are considerably more frequent, and larger, than poverty reductions," they said.
The findings confirm what many officials - and ordinary people queuing up for rice or bread - have suspected for months, as soaring prices for basic staples make it more difficult for poor families to put food on the table.
The record run in commodity markets - with prices from 2005 to 2007 jumping 70 percent for wheat, 80 percent for corn and 90 percent for dairy - has protesters pouring onto the streets from Haiti to Egypt.
Many countries are restricting exports or lowering import tariffs to ease prices and build supplies at home, which experts warn will only aggravate the problem. The trend may be a boon for producers in major farm exporters like Brazil or the United States, but it takes the biggest toll on importer countries and on the poorest people, who spend about three-quarters of their income on staple food.
Given the price surge to 2007, the study's authors found that poverty increased in a sample of developing countries by an average of 3.4 percent in urban households and by 2.1 percent in rural households.
Overall, the study found that poverty increased an average of 2.6 percent across the nine countries for which reliable data was available: Bolivia, Cambodia, Madagascar, Malawi, Nicaragua, Pakistan, Peru, Vietnam and Zambia. The hardest-hit country studied was Nicaragua, where poverty was seen growing in urban households by 10.7 percent, and 7.8 percent across the board, at least in part because urban households spend a huge share of their income on food.
The price surge, which is expected to last at least several years, has been fuelled by a confluence of several trends, including rising production of corn-based ethanol, higher demand for meat in emerging economies and volatile weather.
The crunch has sent policymakers scrambling, with the World Food Program passing around the hat for food aid donations and the World Bank making an urgent call for a "new deal" for global agriculture.
Some are saying the crisis underscores the importance of sealing a new global trade agreement in the World Trade Organization's troubled Doha round. The study's authors found that certain countries, such as Vietnam and Peru, saw poverty levels fall due to higher commodity prices. "In the case of Vietnam, the reductions in rural poverty are large enough to reduce overall poverty, even though urban poverty rates rise slightly," they wrote.
Food preferences were also influential in determining what happens to the poor when crop prices rise. The study's authors found the price of wheat was the most influential in deepening poverty, followed by corn, rice and dairy. For producer households, the authors found, even more important than the crop produced was whether - and how much - farmers are able to get those goods to market.