Food prices and poverty in Africa

Abstract

Abstract This study investigated the effect of food prices on poverty in 37 sub‐Saharan African economies between 2001 and 2020. The study employed Prais‐Winsten regression, variations of the Fixed Effects model to account for conventional biases in econometric modeling, and the Method of Moment Quantile Regression with Fixed Effects to account for existing poverty levels. The findings revealed that a higher proportion of Africans will fall into poverty due to the increase in food prices. This result is consistent with the presence of endogeneity, cross‐sectional dependence, and unobservable heterogeneity. The study also reveals that the increase in food prices has a greater effect in sub‐Saharan African countries with lower levels of poverty as compared to those with high poverty levels, showing that rising food prices disproportionately hurt countries with low poverty levels, pushing more Africans below the poverty line in those countries. The study recommends the need for the implementation of supply‐side agricultural policies that enhance productivity in the sector, thereby boosting aggregate agricultural supply and precipitating a decline in food prices.