Rice Prices And Poverty In Liberia

Abstract

When assessing the impact of changes in food prices on poverty, it is important to consider food producers (who may benefit from an increase in prices) as well as consumers (who loose out when the price increases), with a focus on poor consumers and producers. In the case of rice in Liberia however, the impact of a change in price is not ambiguous because a large share of the rice consumed is imported, while the rice locally produced is used mostly for auto-consumption. An increase in the price of rice will result in higher poverty in the country as a whole (even if some local producers will gain from this increase), while a reduction in price will reduce poverty. Furthermore, because rice represents a large share of food consumption, any change in its price is likely to have a large impact on poverty. Using data from the 2007 CWIQ survey, the paper finds that an increase or decrease of 20 percent in the price of rice could lead to an increase or decrease of three to four percentage points in the share of the population in poverty.