Policies and external shocks affecting agriculture, the main source of income for rural households, can be expected to have a significant impact on poverty. The authors study the case of Uganda. Throughout the 1990s, more than 90 percent of its poor lived in rural areas and, during the same period, large international price fluctuations as well as an extensive domestic deregulation affected the coffee sector, its main source of export revenues. Using data from three household surveys covering the 1990s, the authors confirm a strong correlation between changes in coffee prices (in a liberalized market) and poverty reduction. This is highlighted by comparing the performance of different households grouped according to their dependence on coffee farming. Regression analysis (based on pooled data from the three surveys) of consumption expenditure on coffee-related variables, other controls, and time-fixed effects corroborates that the mentioned correlation is not spurious. The authors also find that while both poor and rich farmers enter the coffee sector, the price boom benefits the poorer households relatively more, whereas the liberalization seems to create more opportunities for richer farmers. Finally, notwithstanding the importance of the coffee price boom, the agricultural policy framework and the thorough structural reforms in which the coffee market liberalization was embedded have certainly played a role in triggering overall agricultural growth. These factors appear to matter especially in the second half of the 1990s when prices went down but poverty reduction continued.
Details
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Author
Bussolo,Maurizio, Godart, Olivier, Lay,Jann, Thiele, Rainer
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Document Date
2006/12/01
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Document Type
Policy Research Working Paper
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Report Number
WPS4088
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2010/07/01
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Disclosure Status
Disclosed
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Doc Name
The impact of commodity price changes on rural households : the case of coffee in Uganda
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Keywords
coffee farmer;coffee price;per capita consumption level;real exchange rate depreciation;per capita consumption growth;world market price;coffee sector;source of income;reduction in poverty;impact on poverty;source income;Agricultural Trade;international coffee price;household survey data;general equilibrium model;structural adjustment program;movement of export;share of income;foreign direct investment;shock poverty;correlation between poverty;official poverty line;returns to capital;high growth rate;types of asset;commodity price change;years of schooling;adult equivalent consumption;agricultural trade liberalization;per capita income;increase in remittance;average exchange rate;per capita expenditure;multivariate regression analysis;coffee production;coffee market;coffee farming;survey design;land size;income growth;incidence curve;standard error;supply response;confidence interval;urban household;world price;household groups;multiplier effect;
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Citation
Bussolo,Maurizio Godart, Olivier Lay,Jann Thiele, Rainer
The impact of commodity price changes on rural households : the case of coffee in Uganda (English). Policy, Research working paper ; no. WPS 4088 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/666031468310727166/The-impact-of-commodity-price-changes-on-rural-households-the-case-of-coffee-in-Uganda