A Consistent Food Demand Framework for International Food Security Assessment

A parsimonious demand modeling approach has been developed for the annual USDA-ERS International Food Security Assessment to be fully implemented in 2016. The approach incorporates price effects, variation in food quality across income deciles, and consistent aggregation over income deciles and food qualities. The approach is based on a simple PIGLOG demand approach for four food categories: corn, other grains, roots and tubers, and “all other” foods. The framework exhibits desirable characteristics obtained via calibration: food “quality” within a food group increases with income (e.g., from simple wheat flour purchased by poor households to commercial baked goods purchased by higher income groups); price and income responses become less sensitive with increasing income; and increasing income inequality decreases average per capita food consumption. The proposed modeling approach is illustrated for Tanzania. The new calibrated model will be able to identify the unique impacts of income, prices, and exchange rates on food consumption, i.e. potential sources of food insecurity.