The impact of food prices on the welfare of households in South Africa
Background and setting: The global food price surge of 2006 to 2008 has negatively impacted South African households. Rising food prices adversely affect food security in South Africa. The ever-increasing prices for food commodities and lack of access to finance make it very difficult to strengthen...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
AOSIS
2018-04-01
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| Series: | South African Journal of Economic and Management Sciences |
| Subjects: | |
| Online Access: | https://sajems.org/index.php/sajems/article/view/1979 |
| _version_ | 1818898176486146048 |
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| author | Roscoe B. van Wyk Cliff S. Dlamini |
| author_facet | Roscoe B. van Wyk Cliff S. Dlamini |
| author_sort | Roscoe B. van Wyk |
| collection | DOAJ |
| description | Background and setting: The global food price surge of 2006 to 2008 has negatively impacted South African households. Rising food prices adversely affect food security in South Africa. The ever-increasing prices for food commodities and lack of access to finance make it very difficult to strengthen food security amongst households in South Africa.
Aim: The aim of the study is to examine the impact of food prices on household welfare in South Africa. Additionally, the study attempts to analyse the short- and long-run relationship between food prices and household welfare in South Africa. This is done by determining how real household welfare responds and/or reacts whenever there is a shock in food prices and its fundamental determinants. Finally, the study attempts to distil recommendations toward a conceptual framework for the mitigation of the impact of high food prices on households in South Africa.
Method: The Vector Error Correction Modelling (VECM) technique is utilised to estimate a regression model.
Results: The results reveal that a 1% increase in food prices would reduce household welfare by 21.3%. The study, therefore, confirms a negative correlation between food prices and welfare.
Conclusion: Short-run policy recommendations include: (1) subsidising staple food baskets for households in South Africa, (2) reducing prices of staple foods through the reduction of food tariffs and (3) reducing household expenditure on basic needs through subsidisation. These policy options could lessen the burden on households when there is a rise in the prices of staple food sources and therefore improve household welfare. Long-run policy recommendations include: (1) improving the unemployment rate in South Africa and (2) improving access to finance and credit for South African households. By addressing the rising unemployment rates and improving access to finance and credit in South Africa through job creation initiatives and improving micro-credit strategies, an environment can be created where households improve their disposable income. |
| first_indexed | 2024-12-19T19:27:55Z |
| format | Article |
| id | doaj.art-fdb3e167d47b4458926e278ab4ce633e |
| institution | Directory Open Access Journal |
| issn | 1015-8812 2222-3436 |
| language | English |
| last_indexed | 2024-12-19T19:27:55Z |
| publishDate | 2018-04-01 |
| publisher | AOSIS |
| record_format | Article |
| series | South African Journal of Economic and Management Sciences |
| spelling | doaj.art-fdb3e167d47b4458926e278ab4ce633e2022-12-21T20:08:43ZengAOSISSouth African Journal of Economic and Management Sciences1015-88122222-34362018-04-01211e1e910.4102/sajems.v21i1.1979641The impact of food prices on the welfare of households in South AfricaRoscoe B. van Wyk0Cliff S. Dlamini1University of Stellenbosch Business School, University of StellenboschUniversity of Stellenbosch Business School, University of StellenboschBackground and setting: The global food price surge of 2006 to 2008 has negatively impacted South African households. Rising food prices adversely affect food security in South Africa. The ever-increasing prices for food commodities and lack of access to finance make it very difficult to strengthen food security amongst households in South Africa. Aim: The aim of the study is to examine the impact of food prices on household welfare in South Africa. Additionally, the study attempts to analyse the short- and long-run relationship between food prices and household welfare in South Africa. This is done by determining how real household welfare responds and/or reacts whenever there is a shock in food prices and its fundamental determinants. Finally, the study attempts to distil recommendations toward a conceptual framework for the mitigation of the impact of high food prices on households in South Africa. Method: The Vector Error Correction Modelling (VECM) technique is utilised to estimate a regression model. Results: The results reveal that a 1% increase in food prices would reduce household welfare by 21.3%. The study, therefore, confirms a negative correlation between food prices and welfare. Conclusion: Short-run policy recommendations include: (1) subsidising staple food baskets for households in South Africa, (2) reducing prices of staple foods through the reduction of food tariffs and (3) reducing household expenditure on basic needs through subsidisation. These policy options could lessen the burden on households when there is a rise in the prices of staple food sources and therefore improve household welfare. Long-run policy recommendations include: (1) improving the unemployment rate in South Africa and (2) improving access to finance and credit for South African households. By addressing the rising unemployment rates and improving access to finance and credit in South Africa through job creation initiatives and improving micro-credit strategies, an environment can be created where households improve their disposable income.https://sajems.org/index.php/sajems/article/view/1979food priceswelfareSouth African households |
| spellingShingle | Roscoe B. van Wyk Cliff S. Dlamini The impact of food prices on the welfare of households in South Africa South African Journal of Economic and Management Sciences food prices welfare South African households |
| title | The impact of food prices on the welfare of households in South Africa |
| title_full | The impact of food prices on the welfare of households in South Africa |
| title_fullStr | The impact of food prices on the welfare of households in South Africa |
| title_full_unstemmed | The impact of food prices on the welfare of households in South Africa |
| title_short | The impact of food prices on the welfare of households in South Africa |
| title_sort | impact of food prices on the welfare of households in south africa |
| topic | food prices welfare South African households |
| url | https://sajems.org/index.php/sajems/article/view/1979 |
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