THE IMPACT OF FOOD PRICE VOLATILITY ON CONSUMER WELFARE IN CAMEROON Kane Gilles Quentin University of Yaoundé II – Cameroon 27th November, 2015

Outline of presentation Introduction and background Objectives of the research Methodology Results Conclusion

Food prices hikes between and continue to rise Introduction and background Increase in poverty and undernourishment rates in developing countries such as Cameroon Raises the concern about the effect of food prices on households welfare

Price increases by 41.5% for cereals, 103% for chicken, 44.5% for beef, 30% for fish… Most of the poor households are both producers and consumers of food commodities Adjustments in the distribution of households expenditure Rising agricultural prices can be an opportunity or a calamity for households There is a need to assess the impact of rising food prices on households’ welfare

Objectives of the research ANALYSE THE WELFARE EFFECTS OF FOOD PRICE VOLATILITY ON CAMEROONIAN CONSUMERS

the 2007 Cameroonian household consumption survey (ECAM III) Data Food groups Methodology

Welfare impact of changing prices The effect of food price volatility on consumer welfare is evaluated using the compensating variation (CV) framework  The CV is :  Using second-order Taylor-series expansion and Shephard’s lemma:  the short-run impact of a changing :

The demand model The QUAIDS  Generalisation of the AIDS model  Maintains the theory consistency and the desirable demand properties of the AIDS model  Allowing symmetry and homogeneity

Expenditure patterns for food demand in Cameroon Results Area Poverty status Entire sample urbanruralpoornon-poor Cereals Animal products Roots and tubers Vegetables

Expenditure elasticities Commodity groupsExpenditure elasticities Cereals.9230 Animal products1.192 Roots and tubers.9961 Vegetables.7164

Demand elasticities Compensated / Hicksian elasticity UrbanRural CERANPROTVEGCER ANP ROTVEG CER ANP ROT VEG

Compensating variation implied by 40% change in price CerealsAnimal productRoot and TuberVegetable Rural Non-Poor12.26%11.97%15.96%5.62% Poor13.15%11.10%16.28%5.30% Urban Non-Poor11.33%13.84%14.65%5.94% Poor13.82%11.94%13.90%6.18%

Conclusion The results showed that demand for food commodities in Cameroon is price sensitive. Poor households are on average, the most affected by any hike in prices. Investigate how households are affected by changes in food prices using information on both producers and consumers. For future research