From food inflation to cash transfers and food subsidies: Assessing impacts on households' consumption and welfare in Togo

Abstract

This paper assesses the impacts of food price increase on households' consumption and welfare in Togo and the efficiency of policy measures, such as cash transfers and food subsidies, implemented by the Togolese government to dampen the adverse impacts. A computable general equilibrium (CGE) model is used given its appropriateness in handling economy-wide and the welfare effect of specific policies. Simulation results show that an increase in food prices has adversely affected the consumption and welfare of all categories of households. The most affected households are self-employed in the agriculture and other sectors, seasonal workers, trainees, and housekeepers. However, the study reveals that these adverse effects are mitigated by the government's policy responses, notably through cash transfers and food subsidies. Furthermore, the cash transfer policy seems to have a slightly greater positive effect on household consumption and welfare in response to rising food prices in Togo compared to food subsidies. This indicates that cash transfers mitigated the negative impact of food price increases on the population more effectively than food subsidies policies. These findings offer valuable insights for policymakers in optimizing public interventions and striking a balance between various policy options to address hunger and malnutrition within targeted households in Togo.