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Westernization of the Asian Diet: The Case of Rising Wheat Consumption in Indonesia

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  • Jacinto F. Fabiosa

Abstract

With sustained income growth and fast urbanization, Indonesia will see a major shift in the growth of grain consumption from rice to wheat products. New demand estimates from consumption survey data give a relatively high income elasticity of demand for wheat-based products, in the range of 0.44 to 0.84, with 26% to 34% of this response coming from the impact of income on the probability of consumption for non-consuming households and the remaining impact coming from the response on the level of consumption for households currently consuming wheat products. Urban location of households also contributes an increase of 0.11% to 0.13% to consumption. In contrast, elasticities in rice show a negative impact of income and urbanization on the probability of consumption and a positive but small impact on the unconditional mean. A partial liberalization scenario shows the domestic wheat flour price declining by 13.66%, inducing consumption to increase by 7.06%, which translates into 7.04% growth in imports. This exerts an upward pressure on the world price, increasing it by 0.23%. A faster income growth scenario shows higher consumption (2.60%), imports (2.59%), and prices (0.09%). Countries with a proximity advantage such as Australia, China, and India will benefit from the growth in this market. But, with dependable supply, product quality assurance, and credit availability, North American suppliers may still remain in this market.

Suggested Citation

  • Jacinto F. Fabiosa, 2006. "Westernization of the Asian Diet: The Case of Rising Wheat Consumption in Indonesia," Food and Agricultural Policy Research Institute (FAPRI) Publications 06-wp422, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  • Handle: RePEc:ias:fpaper:06-wp422
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    Cited by:

    1. Varela, Gonzalo J. & Taniguchi, Kiyoshi, 2014. "Asymmetric Price Transmission in Indonesia’s Wheat Flour Market," ADB Economics Working Paper Series 394, Asian Development Bank.
    2. Junfei Bai & Jill J. McCluskey & Hainan Wang & Shi Min, 2014. "Dietary Globalization in Chinese Breakfasts," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(3), pages 325-341, September.

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    Keywords

    double-hurdle demand; trade; Westernization of diet.;

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