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56 CHAPTER 3


Figure 3.1 Transmission from international markets to households and individual welfare


Are fuel, fertilizer, and transport costs also a burden?


1. Size of


food and fuel import bills


8. Levels of income and nutrition


Are many households vulnerable? Is there social protection? Who is most vulnerable in households?


Have U.S.


dollars become cheaper?


2. Exchange rate


movements


7. Distribution of net food buyers and sellers


Is the country highly urbanized? Do the rural poor have access to land and other inputs?


Does the country have adequate export earnings?


3. Foreign exchange reserves


6. Pattern of food


consumption


Are diets diverse? Are there domestic substitutes to which people can switch?


Does the country have scope to mitigate price effects through policy reforms?


4. Trade and marketing policies


Source: Constructed by the authors.


5. Substitution effects on local food prices


Are import prices driving up domestic food prices?


commodities. The Food and Agriculture Organization of the United Nations (FAO) classifies 82 developing countries as low-income, food-deficit countries based on four criteria. The two main criteria are (1) the country must be a low- or middle-income country according to the World Bank’s classification and (2) the country must have an aggregate calorie-based food deficit in the sense that national food demand exceeds its production. It would appear that many developing countries are dependent on food imports and that the impacts of rising food prices will indeed be almost pervasively severe. More- over it has been widely noted that dependency on imports appears to have increased in recent decades.


Yet the conclusion that poor countries have become heavily dependent on food imports needs significant qualification. For example, Gürkan, Balcombe, and Prakash (2003) calculate food-import bills from 1970 to 2001 for net food- importing developing countries and for LDCs. On average, they find that developing countries have become more dependent on food imports for con-


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