Monday, 7 February 2011

Poor countries produce different foods

Over the last few weeks, I've heard (read) an lot of highly intelligent people, people I respect a lot questioning whether high food prices are bad for the poor or, more specifically, for poor countries. Statistically, on average, it is possible this is correct but averaging over all 'poor countries' (even if one assumes agreement on what constitutes a 'poor country') hides too much variation to be be particularly illustrative.

High prices of wheat may be helpful to countries that produce wheat. High sugar prices may help those who produce sugar. Not particularly helpful to a country that has a bumper maize crop in a high-wheat-price year. Poor countries may be net exporters of food but they don't gain from high food prices unless the food they produce happens to coincide with the particular high price at the time. In fact, if the food they export doesn't happen to be attracting a high price and the foods they import are more expensive, they're worse off. That's how high food prices are bad for poor countries. Just a though.

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