Assessing the potential impact of cereal price increase on households’ welfare, poverty and income inequality in Togo

In this study, we investigated the short and long-run potential impacts of higher cereal prices on households’ welfare, poverty and income inequality in Togo using the method of Deaton and its extension in a compensating variation (CV) analysis framework on the 2006 Togolese Living Standard Survey (TLSS) data from the Direction Générale de la Statistique et de la Comptabilité Nationale (DGSCN). The results show that while households are, on average, adversely affected in the short run, higher maize and sorghum prices are associated with poverty reduction for producers and rural households in the long run. However, only rice growers have experienced poverty reduction with respect to higher rice prices in the long run. Moreover, the estimated impacts vary across regions and are sensitive to supply responses. We find higher cereal prices to not significantly affect income inequality in Togo. Our findings suggest that, if the policy responses to global food crises are reinforced and great attention is paid to the rural poor, cereals such as maize and sorghum will play an important role in poverty reduction in Togo and an emphasis on the poorest region in Togo will yield greater results than other regions.