Urban bias in price risk: The geography of food price distributions in low‐income economies

Abstract

The geography of agricultural marketing has important implications for the stochastic distribution of agricultural commodity prices. This article proposes that objective food price risk differs between rural and urban areas of infrastructure‐poor economies characterised by spatially concentrated patterns of foodgrains storage. This difference implies an urban bias having adverse welfare effects for peasants who seasonally switch between net food seller and net food buyer positions. Empirical analysis of rice price data from Madagascar suggests that price variability and skewness indeed differ between rural and urban areas in ways that adversely influence the relative welfare of rural peasants.