Food security and poverty in Mexico: the impact of higher global food prices

Abstract

During the period 2006–2008, general inflation around the world was pressed upwards by food inflation. An important reason for concern about the impact of high food prices arises from the fact that the poorest people spend approximately three quarters of their income on staple foods. In Mexico, meals are based on maize, with tortillas providing much of the caloric intake in rural areas. Prices of maize along with nearly every agricultural commodity sharply increased creating a global food price bubble. Using the Household Income and Expenditure National Survey (Encuesta Nacional de Ingresos y Gastos de los Hogares ENIGH) conducted in 2006 and 2008, it was found that higher prices for maize affected Mexican household living standards and food security both in urban and rural areas. There is an evident decay in household living standards from year 2006 to year 2008. In regional terms, urban areas are better off than rural areas. The poorest rural and urban households—net buyers of maize—were the most affected as their budget share on maize increased significantly. However, higher prices provided direct benefits to maize producers in rural areas at all levels of living. Another effect of higher maize prices was to redistribute income towards maize producer households in the middle and bottom of the rural income distribution.