Poverty Impact Of The Food Crisis On Poverty In Cambodia

This paper has examined the impacts of recent food price increases, especially cereal price increases, on Cambodian households. A large percentage of Cambodian households are net food consumers even in rural areas, where 80 percent are net food consumers and 61 percent are net cereal consumers. These households will have lower levels of welfare from increases in food prices. Estimates based on household survey data indicates that, when food prices increase uniformly by 10 percent, the welfare of the average household (as measured by consumption expenditure) falls by 2.3 percent and the national poverty rate rises by 1.4 percentage points. When cereal prices increase (uniformly) by 10 percent, the average household’s welfare increases by 0.67 percent and national poverty rate falls by 0.34 percentage points. Using actual price changes that occurred in 2008, this paper finds that, holding all else constant, those price increases reduced average household welfare by 0.89 percentage points. In addition, those price increases raised the poverty headcount rate by 3.2 percentage points. On the other hand, holding other prices constant, the actual increases in cereal price alone raised average household welfare by 3.7 percent in 2008, and reduced the poverty headcount rate by 0.2 percentage points during the same period. Thus, it is the increases in prices of non-cereal foods that led to major negative impacts on household welfare and poverty in Cambodia. This is the case because most of Cambodians are net consumers of non-cereal foods.