Description: Department Seminar: Bernhard Dalheimer (University of Minnesota)

Location: 368A Heady Hall

Contact Person: GianCarlo Moschini

Title: "Global Agricultural Value Chains and Food Prices"

Abstract: This paper investigates the relationship between agricultural global value chains (GAVCs) and consumer food prices. Using panel data for 138 countries from 2000 to 2015, we study how GAVC participation affects consumer food price levels and volatility. We find that, in response to greater GAVC participation, the consumer food price level decreases while its volatility increases, suggesting that GAVC participation links to a trade-off in consumer welfare. We show that the uncertainty increasing effect of GAVCs is likely due to lack of diversification of suppliers which can be expressed as an externality of profit maximization behavior of firms. Decomposing GAVCs, we find that food price volatility is associated more with downstream participation than with upstream participation. This trade-off is more pronounced in low-income countries, predominantly in Sub-Saharan Africa.