Edward Carr has an arresting thought on the impact of high food prices in developing countries (which hit yet another new record on yesterday’s monthly FAO food price index data, by the way): it may be richer consumers in poor countries who are most exposed to price volatility, whereas poor people may by contrast enjoy a higher degree of resilience.
This, Carr argues, is because richer people tend to live in urban areas, have diets richer in processed foods, and “typically [have] the most limited options when food prices begin to get unstable”. Poor people, on the other hand, are more concentrated in rural areas, and “have the ability to effect a temporary partial, or even complete, disengagement from the global market”.
So in both Ghana and Ethiopia, he continues, there seems to be evidence that
…temporary deglobalization is a coping strategy that at least some people … use to guard against the vagaries of markets. Ironically, those best positioned to effect such a strategy are the poorest, and therefore they are better able to manage the impact of price instability on food markets
And if you really want a counter-intuitive extrapolation of this argument, try this excerpt that Carr lifts from a recent paper on Ethiopia by Marc Bellemare, Chris Barrett and David Just:
…contrary to conventional wisdom, the welfare gains from eliminating price volatility would be concentrated in the upper 40 percent of the income distribution, making food price stabilization a distributionally regressive policy in this context.
Read the whole post, especially for the excellent synthesis discussion on the role of speculation; see also Carr’s new book. (H/t Geoff Dabelko at New Security Beat.)
