The Impact of Food Price Shocks in Uganda: First-Order versus Long-Run Effects

Type Working Paper - IFPRI Discussion Paper
Title The Impact of Food Price Shocks in Uganda: First-Order versus Long-Run Effects
Author(s)
Issue 01284
Publication (Day/Month/Year) 2013
URL http://dspace.africaportal.org/jspui/bitstream/123456789/34798/1/ifpridp01284.pdf?1
Abstract
In developing countries, all too often policies formulated in response to high food prices are inspired by
ideology instead of evidence-based policy research. We look at the immediate effects of these shocks
faced by households in Uganda on their poverty and well-being. In addition, we look at the economywide
impact in the long run when all markets have settled at a new equilibrium. We find that in the short run,
poverty has increased substantially. However, in the longer run, we find welfare levels of rural farm
households in particular to rise sharply, primarily as a result of increased returns to farm labor and
agricultural land coupled with improved market prices for output sold. These results call for policies that
aim to protect the most vulnerable against high food prices and extreme volatility in the short run, without
eliminating the incentives of steadily rising commodity prices for longer-run structural agricultural
development.

Related studies

»