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Impact of Grain Price Hikes on Poverty in Rural Ethiopia

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  • Gelaw, Fekadu
  • Sileshi, Million

Abstract

This paper evaluates the impact of food prices inflation on consumption expenditure and poverty status using panel data of 1,078 rural households collected in 2004 and 2009 from four regional states in Ethiopia. The study revealed that the incidence of poverty was 37% in 2004 and increased to 54% in 2009 while the inflation rate between these two periods was 308.09%. The random effect regression results indicate that the use of fertilizer, livestock holding, participation in off-farm activities, family size and land size significantly determine poverty status. Controlling these factors, the level of poverty was also found to increase with the rise in prices of grains. The study also predicts that a one-per-cent rise in grain prices is expected to increase the incidence of poverty, the poverty gap and the severity of poverty by 0.25%, 0.13% and 0.08%, respectively. Also controlling for production related shocks, it was found that the rapid rise in the price of grains was responsible for the observed increase in poverty between the two periods. The policy implication is that the country’s overriding objective of reducing poverty cannot be achieved without reducing the negative impact of rapidly rising grain prices.

Suggested Citation

  • Gelaw, Fekadu & Sileshi, Million, 2013. "Impact of Grain Price Hikes on Poverty in Rural Ethiopia," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(2), pages 1-21, August.
    • Handle: RePEc:ags:afjare:160628
    DOI: 10.22004/ag.econ.160628
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    References listed on IDEAS

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    Cited by:

    1. Million Sileshi & Reuben Kadigi & Khamaldin Mutabazi & Stefan Sieber, 2019. "Impact of soil and water conservation practices on household vulnerability to food insecurity in eastern Ethiopia: endogenous switching regression and propensity score matching approach," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(4), pages 797-815, August.
    2. Mottaleb, K. & Erenstein, O., 2018. "Gender Differentiated Impacts of Commodity Price Shocks on Households’ Consumption Behavior: A Natural Experiment," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275915, International Association of Agricultural Economists.
    3. Million Sileshi & Reuben Kadigi & Khamaldin Mutabazi & Stefan Sieber, 2019. "Analysis of households’ vulnerability to food insecurity and its influencing factors in East Hararghe, Ethiopia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-17, December.

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