CHAPTER 3 Consequences of the Crisis S


everal factors suggest that the recent surge in food prices had—and may still be having—a severe impact on the poorer populations of the world. The large number of food riots in diverse locations around the developing world, beggar-thy-neighbor policies that not only increase prices but also restrict physical access to food, increased dependence of many poor countries on food imports, and expectations that both food and oil prices will stay high for many years to come are all factors that seem to justify the utmost concern for the food security and broader well-being of the poor. Moreover, the evidence of large household surveys since the 1970s generally indicates that food prices will have a negative impact on the welfare of not just urban areas, because many rural poor in developing countries are also net food consumers (World Bank 2008b). These facts have prompted some development agencies to suggest that rising food prices plunge millions more into poverty and deepen poverty still further for those already struggling (World Bank 2008a).


However, all these assumptions and predictions require much closer exami- nation and often significant qualification. The group most vulnerable to rising food prices is still the urban poor, but this group is also the most vociferous (Bezemer and Headey 2008). Thus protests may be evidence of suffering, but not of “net suffering”: price changes always create winners and losers. More- over, judging who is negatively affected requires accurate data and careful analysis of food dependency, poverty/vulnerability, and price changes at both the micro and macro levels. A great deal of progress has already been made in these endeavors, especially in microsimulation work, but a large gap still exists between micro- and macroassessments of the consequences of the crisis. A further distinction must also be made between the short and long terms. In the short term the adjustment costs of responding to rapid price changes may be prohibitively high and painfully slow. But even in the long term the ability of the poor to make adjustments depends on their access to productive assets and on national and international policies aimed at raising agricultural output or successfully pursuing other strategies to increase food


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