serious taxation of agriculture through lower commodity prices might have contributed to extensive rural poverty (Schiff and Valdes, 1992, World Development Report 1986, WB 1986, and Global Economic Prospects, WB 2004). Furthermore, there is increasing evidence that the core poverty in developing countries is in rural areas and not in the urban centers (World Development Report, 2008, WB 2007). There is also evidence that the net food sellers are very poor as well. Thus, higher food prices might reduce the extensive poverty in rural areas and among the poor food sellers.

There are other studies that emphasize the links between net food buyers and sellers in rural areas. These studies emphasize the higher income multipliers between agricultural and non farm incomes in rural areas. There is a large body of evidence that correlates higher agricultural incomes with higher non farm activity and incomes. (See Haggblade, Hazel and Dorosh, 2007, for an extensive survey). In many low income countries where food production is the dominant rural and agricultural activity, most of the agricultural households could be net food sellers and rural non farm activity households could be net food buyers. Thus, higher incomes for the food producing households might induce higher incomes for non food producing households through multiplier effect while reducing their real incomes through higher prices for food expenditures.<sup>6</sup> From the view of food security, lower food prices help the poor to receive higher food intake. This advantage has to be weighted against lower agricultural and possibly rural incomes which reduce food security, and transfer incomes from poorer rural to richer urban areas. Which of the two effects predominates is an empirical question and it probably will vary across countries and regions and will depend on the income levels and income sources of the net food buying and selling households.

This paper delves into the characteristics of net food buyers and sellers to question the common perception that lower food prices could be pro-poor by examining net food sellers and buyers in nine low income countries. Specifically, it argues the following. First, although there are more poor net food buyers then sellers, about half of net food buying households is marginal net food buyers, and thus price increases will have a small effect on their welfare. However, there are pockets of vulnerable households in three out of nine countries that need to be taken care of if the food price increases are large and longer lasting.

Second, the average incomes of net food buyers are higher than the average incomes of net food sellers in eight of nine countries. Thus, higher food prices will, on average, transfer income from richer to poorer households and be pro poor. If on the other hand the comparison is made only among the poor households, then net food sellers were richer in five countries and poorer in only one country. This is similar for the rural poor as well. So among the poor, net buyers are poorer, and the price increases would hurt the relatively poorer of the two poor groups. However, among the rich, the opposite is true; that is the net food buyers are richer.

> 6 Of course, there is also a negative effect on incomes from higher food prices.

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