Food price shocks and food security: evidence for brazilian households

Abstract

Brazil has been presenting over the last years a reversal on the downward trend observed over the last decades on food and nutritional insecurity. Moreover, the country has been seeing a rise in food prices since 2007. Since these prices might be important determinants of food security, this paper evaluates the impacts of the food prices on food security and on the ratio of food expenses on processed and ultra processed items in relation to the total food expenses of the households of metropolitan Brazil. In addition, we also explored the possibility of heterogenous effects according to the income per capita of households. As a measure of food security, we use the EBIA provided by POF 2017-2018, which is our data source. We estimate the impact of food prices on different levels of food insecurity by estimating an ordered probit. For the second outcome (the proportion of food expenditure due to processed and ultra processed food items), we run an OLS model. Our results suggest that rises in food prices indeed tend to reduce the chances of achieving better levels of food security in Brazil. We also found that as food prices increase, households tend to reduce their expenditure on processed and ultra processed food items. Poorer households tend to be less sensitive to the variation of food prices in relation to their chances of being on food security, although these prices elevate more their chances of severe food insecurity in relation to the households with higher income per capita. Finally, we also found that the relative expenditure on processed food decreases more for the richer households.