Welfare implications of rising imported food costs in the Caribbean
Vulnerability to external shocks such as supply shortages, price increases, disasters and political discord has severe implications for Caribbean food and nutrition security and the scale of economic losses. There is a need to understand how food price shocks impact Caribbean consumers, who are part...
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Elsevier
2024-12-01
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| Series: | Journal of Agriculture and Food Research |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S266615432400526X |
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| author | David Forgenie Sharon D. Hutchinson Andrew Muhammad |
| author_facet | David Forgenie Sharon D. Hutchinson Andrew Muhammad |
| author_sort | David Forgenie |
| collection | DOAJ |
| description | Vulnerability to external shocks such as supply shortages, price increases, disasters and political discord has severe implications for Caribbean food and nutrition security and the scale of economic losses. There is a need to understand how food price shocks impact Caribbean consumers, who are particularly vulnerable due to their heavy reliance on imported food. This study assessed the welfare impacts of rising imported food prices on Caribbean consumers using the linear approximated almost ideal demand system (LA-AIDS) model and compensating variation. The welfare implications of rising prices were assessed using three price shocks in: 2006–2008, 2010–2011, and 2020–2021. Hicksian price elasticities revealed that most imported food categories in the Caribbean region have inelastic demand, except for imported meat and seafood which was found to be elastic. Imported cereals and staples and fats and oils were the least responsive to price changes, while imported meat and seafood was highly responsive. The results of the compensating variation revealed that there were significant welfare losses in 2006–2008 and 2010–2011, when food prices drastically increased, as well as during the first year of the COVID-19 pandemic (2020–2021). Between 2006-2008 and 2010–2011, welfare losses were approximately US$1.54 billion and US$692.52 million, respectively, while food price inflation during the first year of the COVID-19 pandemic resulted in losses estimated at US$1.09 billion. This research highlights the need for regional policies to minimize welfare losses from rising food prices, including social safety nets for vulnerable households and investments in domestic agriculture and supply chain resilience. |
| format | Article |
| id | doaj-art-93bbfd8b8e3a41208896b74e8f7254c1 |
| institution | Kabale University |
| issn | 2666-1543 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Elsevier |
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| series | Journal of Agriculture and Food Research |
| spelling | doaj-art-93bbfd8b8e3a41208896b74e8f7254c12024-12-16T05:38:04ZengElsevierJournal of Agriculture and Food Research2666-15432024-12-0118101489Welfare implications of rising imported food costs in the CaribbeanDavid Forgenie0Sharon D. Hutchinson1Andrew Muhammad2Department of Agricultural Economics and Extension, Faculty of Food and Agriculture, The University of the West Indies, St Augustine Campus, Trinidad and Tobago; Corresponding author.Department of Agricultural Economics and Extension, Faculty of Food and Agriculture, The University of the West Indies, St Augustine Campus, Trinidad and TobagoDepartment of Agricultural and Resource Economics, University of Tennessee Institute of Agriculture, USAVulnerability to external shocks such as supply shortages, price increases, disasters and political discord has severe implications for Caribbean food and nutrition security and the scale of economic losses. There is a need to understand how food price shocks impact Caribbean consumers, who are particularly vulnerable due to their heavy reliance on imported food. This study assessed the welfare impacts of rising imported food prices on Caribbean consumers using the linear approximated almost ideal demand system (LA-AIDS) model and compensating variation. The welfare implications of rising prices were assessed using three price shocks in: 2006–2008, 2010–2011, and 2020–2021. Hicksian price elasticities revealed that most imported food categories in the Caribbean region have inelastic demand, except for imported meat and seafood which was found to be elastic. Imported cereals and staples and fats and oils were the least responsive to price changes, while imported meat and seafood was highly responsive. The results of the compensating variation revealed that there were significant welfare losses in 2006–2008 and 2010–2011, when food prices drastically increased, as well as during the first year of the COVID-19 pandemic (2020–2021). Between 2006-2008 and 2010–2011, welfare losses were approximately US$1.54 billion and US$692.52 million, respectively, while food price inflation during the first year of the COVID-19 pandemic resulted in losses estimated at US$1.09 billion. This research highlights the need for regional policies to minimize welfare losses from rising food prices, including social safety nets for vulnerable households and investments in domestic agriculture and supply chain resilience.http://www.sciencedirect.com/science/article/pii/S266615432400526XCompensating variationElasticitiesCOVID-19Linear-approximate almost ideal demand systemFood price crises |
| spellingShingle | David Forgenie Sharon D. Hutchinson Andrew Muhammad Welfare implications of rising imported food costs in the Caribbean Journal of Agriculture and Food Research Compensating variation Elasticities COVID-19 Linear-approximate almost ideal demand system Food price crises |
| title | Welfare implications of rising imported food costs in the Caribbean |
| title_full | Welfare implications of rising imported food costs in the Caribbean |
| title_fullStr | Welfare implications of rising imported food costs in the Caribbean |
| title_full_unstemmed | Welfare implications of rising imported food costs in the Caribbean |
| title_short | Welfare implications of rising imported food costs in the Caribbean |
| title_sort | welfare implications of rising imported food costs in the caribbean |
| topic | Compensating variation Elasticities COVID-19 Linear-approximate almost ideal demand system Food price crises |
| url | http://www.sciencedirect.com/science/article/pii/S266615432400526X |
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