Between August and October 2017 close to 700,000 ethnic minority Rohingyas fled Myanmar and sought refuge in Bangladesh. The authors use this event as a natural experiment to examine the impact of the influx of Rohingyas on food prices in Ukhia sub-district, the main host region in Bangladesh. 80 percent of the refugees settled in Ukhia sub-district, where the population increased by 300 percent due to the arrival of the refugees. The Rohingya do not have freedom of movement or the formal right to work, although some refugees work informally.
The authors analyze 49 food items, looking at their prices 8-12 months before and after the arrival of refugees in the host region, and compare these price movements to those in other similar regions in Bangladesh. The analysis is based on price data collected from sub-district local government offices.
Main findings:
- The arrival of Rohingya refugees led to an increase in food prices in host areas across several food groups such as protein and vegetables and the overall food price index. Overall, food prices increased in Ukhia by 8 percent, and prices of protein and vegetables increased by 7 and 36 percent, respectively, relative to other similar sub-districts.
- Food aid played a role in stemming the increase in food prices. The prices of most food-aid items (low-quality rice, red lentils and packeted soybean oil) declined in Ukhia sub-district relative to other similar sub-districts. Prices of low-quality rice and red lentils in Ukhia fell by 16 percent and 14 percent respectively, while packeted soybean oil prices increased by just by one percent. With food aid items (low-quality rice) included, cereal prices declined by 3 percent.
- No evidence is found for a mitigating effect on food prices through lower agricultural wages in the short-term. The authors suggest that in the long run, wage reductions due to the presence of Rohingya refugees, which increases the supply of agricultural workers, will be reflected in food prices.
The authors conclude that the sudden arrival of large numbers of refugees increased food prices in Ukhia sub-district. Even though food aid mitigated price increases for some food items (low-quality rice and soybeans), there would have been a detrimental impact on the welfare of host communities, at least in the short run. The authors anticipate that decreases in agricultural wages will be reflected in food prices in the long-run.