Global agricultural, food and energy price spikes

Impacts on low income households in the United Kingdom and policy options

Tetsuji Tanaka (Corresponding Author), Jennie I Macdiarmid, Graham Horgan, Paul Haggarty

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Abstract

Governmental reports and academic papers argue that the recent agricultural, food and energy price rises in 2008 disproportionately affected the welfare of low income people in the United Kingdom(UK). Nevertheless, in food security research, greater attention has been given to developing countries than industrialized countries although the existence of food insecurity in high income countries including the UK is also well acknowledged. To ensure food security the Department for Environment, Food and Rural Affairs (Defra) highlights the importance of considering other countries and non-agricultural or non-food industries such as energy. We constructed a UK multi-household general equilibrium model to analyze the welfare impacts of agricultural, food and energy price hikes that occurred in 2008 on households of different incomes in the UK. It was found that agricultural, food and energy price spikes have the greatest impact on the lowest income group. Energy price impacts on households were significantly larger than food price impacts across all income groups. High cereal prices only had a marginal effect on livestock and raw milk and high energy prices only had a marginal effect on agricultural prices. Finally, direct income compensation policy was found to be more efficient than import liberalization policy on food and energy goods in terms of governmental finance, especially when the policy beneficiary is the lowest income households alone.
Original languageEnglish
Pages (from-to)246-264
Number of pages19
JournalInternational Journal of Agricultural Policy and Research
Volume3
Issue number3
DOIs
Publication statusPublished - Mar 2015

Fingerprint

Food prices
Low income
Price impact
Household
Policy options
Agricultural prices
Energy prices
Income
Food security
Energy
Food
Marginal effects
Livestock
General equilibrium model
Liberalization
Industry
Cereals
Compensation policy
Import
Developing countries

Keywords

  • agricultural price
  • agriculture in international trade
  • energy price
  • trade liberalization
  • United Kingdom

Cite this

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title = "Global agricultural, food and energy price spikes: Impacts on low income households in the United Kingdom and policy options",
abstract = "Governmental reports and academic papers argue that the recent agricultural, food and energy price rises in 2008 disproportionately affected the welfare of low income people in the United Kingdom(UK). Nevertheless, in food security research, greater attention has been given to developing countries than industrialized countries although the existence of food insecurity in high income countries including the UK is also well acknowledged. To ensure food security the Department for Environment, Food and Rural Affairs (Defra) highlights the importance of considering other countries and non-agricultural or non-food industries such as energy. We constructed a UK multi-household general equilibrium model to analyze the welfare impacts of agricultural, food and energy price hikes that occurred in 2008 on households of different incomes in the UK. It was found that agricultural, food and energy price spikes have the greatest impact on the lowest income group. Energy price impacts on households were significantly larger than food price impacts across all income groups. High cereal prices only had a marginal effect on livestock and raw milk and high energy prices only had a marginal effect on agricultural prices. Finally, direct income compensation policy was found to be more efficient than import liberalization policy on food and energy goods in terms of governmental finance, especially when the policy beneficiary is the lowest income households alone.",
keywords = "agricultural price, agriculture in international trade, energy price, trade liberalization, United Kingdom",
author = "Tetsuji Tanaka and Macdiarmid, {Jennie I} and Graham Horgan and Paul Haggarty",
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AU - Tanaka, Tetsuji

AU - Macdiarmid, Jennie I

AU - Horgan, Graham

AU - Haggarty, Paul

N1 - The authors acknowledge the support of Scottish Government ClimateXChange Centre and the Rural and Environment Science and Analytical Services Division.

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N2 - Governmental reports and academic papers argue that the recent agricultural, food and energy price rises in 2008 disproportionately affected the welfare of low income people in the United Kingdom(UK). Nevertheless, in food security research, greater attention has been given to developing countries than industrialized countries although the existence of food insecurity in high income countries including the UK is also well acknowledged. To ensure food security the Department for Environment, Food and Rural Affairs (Defra) highlights the importance of considering other countries and non-agricultural or non-food industries such as energy. We constructed a UK multi-household general equilibrium model to analyze the welfare impacts of agricultural, food and energy price hikes that occurred in 2008 on households of different incomes in the UK. It was found that agricultural, food and energy price spikes have the greatest impact on the lowest income group. Energy price impacts on households were significantly larger than food price impacts across all income groups. High cereal prices only had a marginal effect on livestock and raw milk and high energy prices only had a marginal effect on agricultural prices. Finally, direct income compensation policy was found to be more efficient than import liberalization policy on food and energy goods in terms of governmental finance, especially when the policy beneficiary is the lowest income households alone.

AB - Governmental reports and academic papers argue that the recent agricultural, food and energy price rises in 2008 disproportionately affected the welfare of low income people in the United Kingdom(UK). Nevertheless, in food security research, greater attention has been given to developing countries than industrialized countries although the existence of food insecurity in high income countries including the UK is also well acknowledged. To ensure food security the Department for Environment, Food and Rural Affairs (Defra) highlights the importance of considering other countries and non-agricultural or non-food industries such as energy. We constructed a UK multi-household general equilibrium model to analyze the welfare impacts of agricultural, food and energy price hikes that occurred in 2008 on households of different incomes in the UK. It was found that agricultural, food and energy price spikes have the greatest impact on the lowest income group. Energy price impacts on households were significantly larger than food price impacts across all income groups. High cereal prices only had a marginal effect on livestock and raw milk and high energy prices only had a marginal effect on agricultural prices. Finally, direct income compensation policy was found to be more efficient than import liberalization policy on food and energy goods in terms of governmental finance, especially when the policy beneficiary is the lowest income households alone.

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