Food Price Shocks and Consumption Patterns
Workshop on the impact of food price shocks on food consumption behavior, highlighting implications for lower-income countries and households. Discusses strategies such as adjusting consumption, seeking discounts, and switching to lower-priced products.
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Food price shocks and food consumption Workshop on the cost of food and food price inflation Brussels, 3 October 2024 C line Bonnet, Toulouse School of Economics, INRAE - National Research Institute for Agriculture, Food and Environment, France 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 1
European context: food price shock European context: food price shock Global price increase in 20 years: +75% The 2008 great recession : financial crisis Increase in food price, stronger relative price-income increase Covid-19 pandemic (2020-2022): disruption in global supply chains Significant food price increase Ukraine War (2022-2023): Russian and Ukraine are major exporters (wheat, maize, sunflower oil), increase in the price of energy (gas and electricity), uncertain financial markets Significant food price increase 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 2
Food expenditures Food expenditures Degree of vulnerability to unexpected food price changes depends on the share of food expenditures in households total budget Spike in food prices are likely to disproportionately affect lower income countries and lower income households 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 3
Heterogenous price shocks within EU Heterogenous price shocks within EU Countries with high share of food expenditure Countries with low share of food expenditure 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 4
What happens to food consumption What happens to food consumption patterns when food prices change? patterns when food prices change? Decrease in Food consumption Most sensitive to changes in prices in low-income countries or low-income households Change in consumption behaviour: Smoothing and adjusting consumption Spending more time shopping and finding lower prices Increase their use of discounts or coupons Switch to generic products Switch to low-price retailers What are the implications for food quality consumption? 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 5
French case study French case study Descriptive analysis of the link between price and food consumption from 2002 to 2019: Food consumption: Food quantities in kgs Positive points Negative points Energy % of fruit and vegetables Food qualities: Nutrient Profile Model (Food Standard Agency score) Saturated fat Proteins Sugar Fiber Sodium 03/10/2024 Presentation for the Committee on Agriculture and Rural Developmnet 6
French case study French case study Heterogeneous quality of food consumption Heterogeneous quality of food consumption Nutrient Profile Model according to the social status and a health status Unhealthy Healthy 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 7
French case study & 2008 great recession French case study & 2008 great recession Increase of nutritional inequalities of price shocks? Increase of nutritional inequalities of price shocks? Quantity variation Low price High price Additional impact of large price variations Poor Middle Rich 0 -0.05 Quality variation Food Standard Agency score -0.1 No additional impact for large price variations -0.15 0.7 -0.2 0.6 -0.25 0.5 -0.3 0.4 -0.35 0.3 -0.4 0.2 Less quantity response of large price shocks -0.45 0.1 0 No additional impact of large variations Poor Middle Rich Low price High price Price increases exacerbate nutritional inequalities between poor and rich French households Similar or lower quantity responses when larger shocks Large price shocks lead to an additional increase in nutritional inequalities Smoothing consumption 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 8
French case study & 2008 great recession French case study & 2008 great recession Increase health inequalities? Increase health inequalities? Lowest deterioration for large price shocks Nutrient profile variation Quantity variations Low price High price 0.6 Normal Overweight Obese 0.5 0 0.4 -0.1 0.3 0.2 -0.2 0.1 -0.3 0 Normal Overweight Obese -0.4 Low price High price -0.5 Higher quality reduction for obese people Lowest quantity reduction for obese peole Price increases exacerbate nutritional/health inequalities between obese and non-obese French households in terms of the food quality Large price shocks do not lead to an additional increase in nutritional/health inequalities 9 9 03/10/2024 Presentation for the Committee on Agriculture and Rural Development
French case study & 2008 great recession French case study & 2008 great recession Future inequalities? Future inequalities? Quantity variation Nutrient Profile Model variation No Child Child 0 1 -0.2 0.8 -0.4 0.6 -0.6 0.4 -0.8 -1 0.2 -1.2 0 -1.4 No Child Child Low price High price Low price High price Price increases affect more households with children Large price shocks make the nutritional quality of households with children even worse 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 10
Thank Thank you you for for you you attention attention Contact celine.bonnet@tse celine.bonnet@tse- -fr.eu fr.eu 03/10/2024 Presentation for the Committee on Agriculture and Rural Development 11
