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Abstract
Argentina has benefited greatly from the increase in prices of agricultural commodities. With a large share of its population with low and medium-low incomes; however, a sizable part of households is likely to be adversely affected by the accompanying rise in the price of the consumption basket. An ex-ante analysis suggests that this is the case. Changes through a less obvious channel (that is, in factor incomes) are likely to be more beneficial to middle-income households. In general, all households experience losses, with poorer households being the most affected. When accounting for transfers financed through the collection of export taxes, poorer households benefit. In the absence of compensatory measures, increases in the prices of agricultural commodities could potentially have an important impact in terms of indigence and poverty.
Acknowledgements
Pedro Moncarz is grateful to the IOB at the University of Antwerp in Belgium for providing an ideal setting for research and writing during his residency as a Visiting Scholar. We appreciate comments received at the XVI European Trade Study Group (Munich, 2014), 33rd General Conference of the International Association on Income and Wealth (Rotterdam, 2014), XLVIII Reunión Anual de la Asociación Argentina de Economía Política (Rosario, 2013), XXVIII Jornadas de Economía (Montevideo, 2013) and the Argentinian Chapter of the Research Network on Inequality and Poverty (La Plata, 2013). We would also like to thank two anonymous referees and the editor of the journal for their suggestions. We bear sole responsibility for any remaining errors.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. A large body of literature, to which we do not refer to here, focuses almost exclusively on less-developed countries, where food security is a very important issue, especially for the poorest households.
2. Since 2007, distrust has been increasing with regard to the price statistics generated by the National Institute of Statistics and Census (INDEC). For this reason, the price indices for the period 2007–2011 were obtained using inflation data calculated by the Government of the Province of San Luis.
3. MERCOSUR is a customs union originally signed by Argentina, Brazil, Paraguay and Uruguay. Venezuela recently joined as the fifth full member, while Bolivia and Chile are associate members under a free-trade agreement scheme.
4. de Hoyos & Medvedev (Citation2011) analyse the poverty impact of higher food prices from a global perspective.
5. One of these issues is the relationship between international commodity prices and the exchange rate.
6. The assumption that non-traded goods are produced using only production factors is a simplification, with no impact on the relationships of international prices of commodities with either consumer prices or factor rewards.
7. The constant elasticity of demand follows from the assumption that the consumption of each variety produced by sector m is the result of a Constant Elasticity of Substitution (CES) function.
8. Examples include Porto (Citation2006, Citation2010), Barraud & Calfat (Citation2008), Ivanic & Martin (Citation2008), Nicita (Citation2009), Leyaro, Morrisey & Owens (Citation2010), Borraz, Rossi, & Ferres (Citation2012) and Ferreira, Fruttero, Leite, & Lucchetti (Citation2013).
9. Anderson & Tyers (Citation1992) use an error-correction model to compute elasticities for changes in border prices relative to domestic producer prices.
10. We exclude fuels because the set of policies (taxes, maximum prices, and quantitative restrictions) implemented during the period under consideration implied a complete disconnection between international prices and internal prices. In response to the concerns raised by one referee, we tried to control for the evolution of the prices of imported intermediate goods. We were nevertheless unable to reject the null hypothesis that the prices of intermediate goods share a common trend with the international prices of primary commodities.
11. After Argentina had moved beyond the most turbulent moments of the 2002, and during the period here considered, the annual rate of depreciation of the local currency never exceeded 10 per cent, with the exception of the months following the beginning of the world economic crisis in 2008 and during most of 2009. Moreover, during the times when international commodity prices were at their highest, the government intervened to avoid the appreciation of the local currency.
12. Data sets and software routines are available from the authors upon request.
13. In this exercise, we do not consider the potential indirect effects of changes in agricultural commodity prices on the collection of other taxes.
14. As reported by Lema & Saini (Citation2014) for the period 2000–2010, and for the production of grains and oilseeds (wheat, corn, sunflower and soya), we use a tpf growth rate of 4.74 per cent.
15. We exclude the year 2002, as it represents the peak of Argentina’s economic collapse. We also exclude 2009, because exports fell in response to the world crisis; the years 2004, 2006, 2008 and 2010 are excluded as well, because bad weather conditions impacted on the production of the sector (in varying magnitudes) and thus on the volume of exports.
16. We are grateful to an anonymous referee for suggesting this procedure.
17. The sample size used in the regressions consists of 26,431 observations.
18. In all figures, solid lines represent average effects, with dashed lines representing the 90 per cent confidence bands.
19. We also followed Porto (Citation2006) by attempting to take random samples of households from the ENGHo survey. Although the results were almost identical, our approach demanded much less computation time. Weights are taken from the ENGHo.
20. The fact that we do not consider non-labour income may bias our results against the richer households, as the increase in the international prices of agricultural commodities brought about an important improvement in the rent of land used in agricultural production. In addition, the use of this rent by landowners meant important contributions to others sectors of the economy, especially the building industry.
21. Even though it would ideally be more appropriate to work with changes in the prices of goods that constitute the CBA (data to which we have no access), the correlation of the consumer price index for food and beverages with the indigence and poverty lines is around 0.99 in both cases.
22. Engel coefficients are taken from the INDEC.
23. This result is consistent with the findings of Azevedo et al. (Citation2013), which indicate that transfer programmes of the kind discussed here are more successful in addressing indigence (extreme poverty), although they are subject to limitations with regard to reducing poverty levels.