Farmers' Welfare and Changing Food Prices: Nonparametric Evidence from Rice in Madagascar

Abstract

This paper uses nonparametric density estimation and kernel smoothing techniques to examine the instantaneous distributional implications of rice price changes in Madagascar. While many farmers do not participate in product markets as either buyers or sellers, and net sales or marketable surplus are fairly small for many others, the roughly one‐third of rice farmers who fall below the poverty line face significant negative first‐order welfare effects from increases in the mean or variance of rice prices. Conversely, the first‐order gains from rice price increases are highly concentrated among the largest rice farmers and particular regions in Madagascar.