produced for auto-consumption is not included in the simulations. For either an increase or a decrease in the price of rice, we then compute poverty with the adjusted consumption level<sup>4</sup> .

This procedure does not take into account potential medium term effects (such as the likely impact of higher food prices on wages for agricultural laborers), but it has the merit of being simple. More sophisticated methods could be used to measure the “general equilibrium” effect of a change in the price of rice, but such simulations require a much larger number of assumptions which are the subject of debate. The estimations given here thus provide “first round” likely poverty effects from lower or higher rice prices paid to producing households or paid by consuming households, assuming that households don’t change their consumption patterns for rice after the change in price.

Key results from the simulations are provided in tables 5 and 6. The headcount index of poverty is the share of the population with a level of consumption per equivalent adult below the poverty line. The poverty gap takes in addition into account the distance separating the poor from the poverty line (while giving a zero distance to the non-poor). The squared poverty gap takes in addition into account the square of that distance (and thus inequality among the poor).

Consider first table 5, which is based only on data on the consumption of rice. At the time of the survey, the share of the population in poverty was 63.8 percent. If the price of rice could be reduced by 20 percent, and if we look only at the impact on the consumer side, poverty would fall to 60.4 percent. If the price of rice were to increase by 20 percent, poverty would increase to 68.0 percent. If we look at the producer prices, the impacts is much lower, since only locally produced rice that is actually sold must be taken into account for the simulations (for rice auto-consumed, changes in producer prices do not affect household welfare of producers). If the price of rice is reduced by 20 percent, and if we look only at the impact on the producer side, poverty would increase only to 63.9 percent, while if the price of rice for producers were to increase by 20 percent, poverty would decrease to 63.4 percent in the overall population.

> 4 A difficult question is whether increases in consumer prices do translate into increases in producer prices.  At least two factors may dilute the impact of rising food prices on the incomes of farmers.  First, production costs for farmers as well as transport costs are likely to be rising due to higher costs for oil-related products.  Second, market intermediaries may be able in some cases to keep a large share of the increase in consumer prices for themselves without paying farmers much more for their crops.  Because it is difficult to assess whether producers will benefit substantially from higher food prices, especially in the short term, we could consider our estimates obtained when considering only the impact on consumers as an upper bound of the impact of the rise in prices on poverty, and interpret the results obtained when factoring in a proportional increase in incomes for net sellers or producers as a lower bound of the impact.  In the case of Liberia however, this issue is less important given that most of the rice that is produced locally is used for auto-consumption.