We investigate the sectoral and the distributional effects of a food subsidy program, where food consumption in the economy is subsidized by taxing the manufacturing good producers. In a two-agent model comprising of farmer and industrialist households, agents consume food to accumulate health. Simulations indicate that while the subsidy program increases food output and agents’ health both in the short run and the long run, manufacturing output and aggregate real GDP appear to fall in the short run and increase only in the long run. The program does not make both agents better off and exhibits social welfare gains for a limited range of subsidies.
Changes in food consumption in Bahrain can be identified particularly in the second half of seventies with the wake of oil boom. The consumption of traditional foods such as fish and dates have declined, while that of processed foods, fat, eggs, meat, poultry and milk products have risen. The daily per capita intake of animal protein and fat have increased at the expense of carbohydrates. Some factors responsible for this change are increasing income and literacy, food price fluctuations, food subsidy policy, the influence of immigrant food habits, influence of mass media and the changing structure of households. The change in dietary intake has associated with change in health and nutritional problems in the country.
Food subsidy programs and the health and nutritional status of disadvantaged families in high income countries: a systematic review