International Journal of Agricultural Policy and Research
Vol.3 (3), pp. 146-164, March 2015
Available online at https://www.journalissues.org/IJAPR/
Article 15/ID/JPR013/019 pages
Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 4.0 International License.
Original Research Article
Global agricultural food and energy price spikes: Impacts on low income households in the United Kingdom and policy options
Tetsuji Tanaka1*,Jennie I Macdiarmid2, Graham Horgan3,and Paul Haggarty2
1Department of Geographical Sciences, University of Maryland, Room 400, 4321 Hartwick Road, College Park, MD, USA.
2Public Health Nutrition Research Group, Rowett Institute of Nutrition and Health , University of Aberdeen, Polwarth Building, Foresterhill, Aberdeen, AB25 2ZD.
3Biomathematics and Statistics Scotland (BioSS), Aberdeen, AB21 9SB, Scotland, United Kingdom.
* Corresponding Author Email: ttanaka(at)umd.edu
Governmental reports and academic papers argue that the recent agricultural, food and energy price rises in 2008 disproportionately affected the welfare of low income people in the United Kingdom(UK). Nevertheless, in food security research, greater attention has been given to developing countries than industrialized countries although the existence of food insecurity in high income countries including the UK is also well acknowledged. To ensure food security the Department for Environment, Food and Rural Affairs (Defra) highlights the importance of considering other countries and non-agricultural or non-food industries such as energy. We constructed a UK multi-household general equilibrium model to analyze the welfare impacts of agricultural, food and energy price hikes that occurred in 2008 on households of different incomes in the UK. It was found that agricultural, food and energy price spikes have the greatest impact on the lowest income group. Energy price impacts on households were significantly larger than food price impacts across all income groups. High cereal prices only had a marginal effect on livestock and raw milk and high energy prices only had a marginal effect on agricultural prices. Finally, direct income compensation policy was found to be more efficient than import liberalization policy on food and energy goods in terms of governmental finance, especially when the policy beneficiary is the lowest income households alone.
Key words: Agricultural price, agriculture in international trade, energy price, trade liberalization, United Kingdom.