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WELFARE EFFECTS OF MAIZE PRICING POLICY ON RURAL HOUSEHOLDS IN KENYA

By Elliot Wamboka Mghenyi

Abstract

Welfare effects of food pricing are not straightforward when households are both producers and consumers of a main staple. Using 2000 and 2004 panel data, I examine the effects of the twin policy of maize price supports and import tariffs on poverty and the distribution of income in rural Kenya. In chapter 3, I discuss the conceptual framework for measuring changes in income due to the effects of the policy, leading to a second order approximation of income changes. The framework forms the basis for poverty orderings between two income distributions; counterfactual incomes and incomes with the effects of price controls. The results indicate that the policy exacerbates poverty in all regions except the high potential maize zone. In the Western transitional zone, the number of the poor may not have increased but their income shortfalls are increased. In chapter 4, I consider the effects of the policy on the distribution of income. First, I specify a partly linear semi-parametric model to control for the influence of household characteristics, demographics, asset endowments, and infrastructure among other variables. The results indicate that the income distribution effects of the policy are very similar across different agro-climatic settings. Households at the lowest points of the income range lose at least 25 % of their incomes while the wealthiest households either gain some proportion of their incomes or remain unaffected

Year: 2006
OAI identifier: oai:CiteSeerX.psu:10.1.1.188.2662
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