ISSN 2375-0693
African Journal of Agricultural Economics and Rural Development ISSN 2375-0693 Vol. 6 (6), pp. 650-658, June, 2018. © International Scholars Journals
Full Length Research Paper
Food inflation and households’ welfare: The case of Ethiopia
Asare Eric,1 Segarra Eduardo2 and Agyekum Michael3
1Texas Tech University, Agricultural Sciences 123, Lubbock, TX, 79409.
2Texas Tech University, Agricultural Sciences 205-E, Lubbock, TX, 79409.
3Michigan State University, Legume Innovation Lab & Dept. Ag. Food & Resource, U.S
Corresponding author. Email: eric.asare@ttu.edu; Tel.: 13067134413
Accepted 29 May, 2018
Abstract
Food inflation has been shown to have an adverse impact on the welfare of households, especially net-buyers of food commodities in developing countries. This study investigates the effects of households’ socioeconomic and demographic characteristics on households’ welfare after food inflation. Welfare is the monetary compensation needed to restore a household to its pre-food inflation level of utility. A quadratic almost ideal demand system (QUAIDS) is estimated using five food groups; then the compensated price elasticities derived are used to compute the welfare values for each household. The study uses the Ethiopian household survey data collected jointly by International Maize and Wheat Improvement Center (CIMMYT), Mexico and Ethiopian Institute of Agricultural Research (EIAR) in 2009/2010. The study shows that low dependency ratio and increases in land holdings significantly improves households' welfare after food inflation.
Keywords: Welfare, Dependency Ratio, Landholding, QUAIDS, Ethiopia.