Consumption effects of agricultural policies, Peru trade policy -- agricultural prices and food consumption : an economy wide perspective

Major findings are: (1) Protectionism during the late 1960"s-1970"s affected real exchange rates, inducing an effective taxation on agriculture which led in turn to a sharp decline in real producer prices and modest increases in food intake. These increases benefited upper-income urban dwellers and some rural dwellers (particularly in the Sierra) at the expense of rural coastal dwellers. (2) Lower exchange rates also tended to reduce agricultural exports and increase food imports. Subsidies paid by marketing parastatals contributed as well to increased imports; when world prices declined, the subsidies were captured in part by domestic rice growers. (3) The changes in relative prices induced by Peru"s trade and agricultural policies caused a major dietary shift away from local foods to imported foodstuffs, a change which has been most marked in the highlands. (4) Trade liberalization during the late 1970"s and the 1980"s has not reduced food intake among the poor.