Economía Agroalimentaria

Impact of domestic and international commodity price volatility on rural household income and welfare in Ghana and Peru

Año: 2008
Autor(es): Rapsomanikis G., A. Sarris
The extent to which commodity price volatility affects the income of producing households and their vulnerability to poverty and food insecurity depends on household diversification patterns and the degree of their exposure to markets. This paper focuses on estimating agricultural income uncertainties for a number of different household types in Ghana, Vietnam and Peru. Following a theoretical framework that leads to explicit formulae for household income variance, we combine information from household data sets and commodity price time series in order to estimate income uncertainty that emanates from price and production volatility under different scenarios of exposure to the international and the domestic markets shocks. Our results indicate that market and non market uncertainties significantly affect the variability of income of households in these countries, and especially households that are specialized in few commodities. However, it turns out that, under current policies, almost all of their income variability is due to domestic factors, with international prices not contributing much at least in the short run. Wider exposure to international markets would increase the income variability of producers that have been subjected to domestic market stabilization policies in Ghana and Vietnam, while it would decrease it in the case of Peru.
ISBN: 30717