The Impact of the World Food Price Crisis on Nutrition in China

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In recent years, there has been a well-documented, dramatic increase in world food prices. From 2006 through early 2008, the FAO Food Price Index increased by 73 percent, with across-the-board increases in meat (16 percent), dairy (100 percent), oils and fats (144 percent) and cereals (129 percent).1 Within cereals, the price of rice increased by approximately 117 percent,2 wheat increased by 100 percent and maize by 65 percent.3 There has been considerable concern that such large price increases may lead to increased malnutrition, especially among the poor in the developing world. However, to date little is known about the nutritional consequences the food price crisis has had. A number of factors influence the extent to which nutrition declines when food prices increase. Certainly, the increase in prices leads directly to a decline in real purchasing power that makes households worse-off.4 However, households may be able to respond to this crisis without reducing nutrition by substituting across foods. For example, households may substitute from more expensive sources of calories to less expensive sources. This may involve substitution across broad food categories (for example, from meat to grains), substitution across foods within broad food categories (ex., from rice to less preferred grains such as millet) or substitution in quality within narrow food categories (for example, from higher to lower quality cuts of meat). However, one potential limitation for the poor in particular is that they are likely to already be consuming the lowest cost foods like grains (for example, in our sample of the urban poor in China, the average household gets nearly three-quarters of their calories from cereals like rice or wheat) and the cheapest variety of those foods. This may leave them little room to substitute in an effort to mitigate the nutritional impacts of the price changes. And what raises particular concern with this crisis is not just the magnitude of the price increases, but the fact that they have been across-the-board increases affecting most foods, which further limits the ability to substitute across foods.