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Estimation of Demand Elasticity for Food Commodities in India

  • Kumar, Praduman
  • Kumar, Anjani
  • Parappurathu, Shinoj
  • Raju, S.S.

The food demand in India has been examined in the context of a structural shift in the dietary pattern of its population. The results have reinforced the hypothesis of a significant diversification in the dietary pattern of households in recent years and has found stark differences in the consumption pattern across different income quartiles. The food demand behaviour has been explained using a set of demand elasticities corresponding to major food commodities. The demand elasticities have been estimated using multi-stage budgeting with QUAIDS model and another alternative model, FCDS. The study has revealed that the estimated income elasticities vary across income classes and are lowest for cereals group and highest for horticultural and livestock products. The analysis of price and income effects based on the estimated demand system has suggested that with increase in food price inflation, the demand for staple food (rice, wheat and sugar) may not be affected adversely but, that of high-value food commodities is likely to be affected negatively. Therefore, the study has cautioned that if inflation in food prices remains unabated for an extended period, there is the possibility of reversal of the trend of diversification and that of consumers returning to cereal-dominated diet, thus accentuating under-nourishment.

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File URL: http://purl.umn.edu/109408
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Article provided by Agricultural Economics Research Association (India) in its journal Agricultural Economics Research Review.

Volume (Year): 24 (2011)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:ags:aerrae:109408
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  1. Bouis, Howarth E., 1995. "A food demand system based on demand for characteristics," FCND discussion papers 7, International Food Policy Research Institute (IFPRI).
  2. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
  3. Meenakshi, J.V. & Ray, R., 1996. "Regional Differences in India's Food Expenditure Pattern: A Complete Demand Systems Approach," Papers 1996-06, Tasmania - Department of Economics.
  4. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  5. Shinoj, P. & Mathur, V.C., 2006. "Analysis of Demand for Major Spices in India," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 19(2).
  6. Madan Mohan Dey & Yolanda T. Garcia & Kumar Praduman & Somying Piumsombun & Muhammad Sirajul Haque & Luping Li & Alias Radam & Athula Senaratne & Nguyen Tri Khiem & Sonny Koeshendrajana, 2008. "Demand for fish in Asia: a cross-country analysis ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 321-338, 09.
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