Rising food prices and poverty in Pakistan

Abstract

An upsurge in global food prices in 2008 led to significantly higher food prices across the developing world. Global commodity prices have since declined but still remain volatile, but at the same time local food prices remain high in many countries. This study examines the potential impacts of the rise in food prices on poverty—income based poverty and calorie-based poverty- focusing on Pakistan, and its rural and urban areas. For this purpose, we used HIES data collected in three waves 2005–06, 2007–08 and 2010–11. Price elasticities are computed using binary Logistic regression method. The study results show that price of wheat, rice, milk, meat, fruit, pulses appear to distinguish the status of a household. Price elasticities shows that urban households are hit harder than rural households in calorie-poverty model. Overall, rising food prices are likely to lead higher poverty in Pakistan, as the negative impact on net consumers outweighs the benefits to producers. Therefore, effective strategy for eliminating poverty is far more concerned with price increases. Safety net programs can be more effective, but geographic targeting and other investments to strengthen safety nets are necessary to ensure that fewer people are affected by future crises. Government policies oriented towards relieving the food price pressure on the Pakistani poor should aim at lowering the prices of wheat, rice, eggs, oil, milk, and chicken.