Based on household surveys from nine countries, this paper sheds some additional light on this debate. Specifically, it argues the following. First, although there are more poor net food buyers then sellers, about half these households are 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 rich buyers to poorer sellers, and thus 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.

Finally and most crucially, what would happen to the incomes of the net food buyers in rural areas if the incomes of the food producers declined (increased) significantly? If the income sources are fully independent, then the first round effects presented here and other places will hold. If, on the other hand, the income sources of the two groups are interdependent, then the impact of an income change for the net food sellers might have an indirect effect on the incomes of the net food buyers.<sup>32</sup> Half of net food buyers in rural areas in our sample of nine countries are not farmers (their incomes come primarily from wages and business). These household incomes are likely to depend on the expenditures of net food sellers, especially in rural areas where the primary economic activity is food production. Hence, lower food prices could lead to lower incomes of net food sellers, which in turn could lead to reduced demand for labor and services from net food buyer households. If this effect dominates, lower food prices, instead of increasing the real incomes (through consumption) of net food buyers in rural areas, might reduce them.

This study has been a first pass to shed light on some of the characteristics of the net- sellers and net-buyers. These different characteristics point us to the fact that the impact of food prices on the poor (or general households) will be heterogeneous and will depend on the mixture of net seller net buyer households in the income distribution and the relationships between their income sources. More detailed data and more studies that try to measure the distributional impacts of price changes over time are needed. In addition, there are few formal models in the literature that captures the second or third order effects fully; especially taking into account the potential interlinkages between household incomes in rural and to some degree in urban areas. We hope this study raised enough questions to spur more detailed looks into these issues.

Finally, policies that generated lower food prices might help the poor but will also transfer income from the poorer rural areas to relatively better off urban households. With 32 See Porto (2005); using a model that emphasizes second order agricultural wage effects and substitution in consumption, show that poor net food buyers might gain from maize price increases in rural Mexico.

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