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Is rice becoming an inferior good? Food demand in the Philippines

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  • Ingco, Merlinda D.

Abstract

What are the prospects for demand for the main foodstuffs, particularly rice, in the Philippines? Countries which have traditionally consumed rice as the basic staple such as Japan, the Republic of Korea, and Taiwan are eating more wheat and wheat products. There is also a shift towards increased consumption of meats, dairy products, vegetable oils, and fruits and vegetables. A recent study found rice to be an inferior good in Japan, Taiwan, Malaysia, Singapore, Thailand, and Nepal. In this paper, the demand for cereals in the Philippines is analyzed. Instead of assuming separability, an alternative specification of the linear Almost Ideal Demand System (LA/AIDS) which includes rice, wheat, maize, meat, fish, fruits and vegetables, other foods, and non-food commodities for the Philippines is estimated using time-series data from 1961 to 1988. The effects of urbanization and dynamic factors such as habit formation in consumption are also considered in the empirical analysis. Then using the estimated parameters, the demand and income elasticities are estimated over the sample period. The parameters are used to generate baseline projections of cereal demand to 2000. Some policy implications and concluding remarks are given in the final section.

Suggested Citation

  • Ingco, Merlinda D., 1991. "Is rice becoming an inferior good? Food demand in the Philippines," Policy Research Working Paper Series 722, The World Bank.
    • Handle: RePEc:wbk:wbrwps:722
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    References listed on IDEAS

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    1. Meisner, James F., 1979. "The sad fate of the asymptotic Slutsky symmetry test for large systems," Economics Letters, Elsevier, vol. 2(3), pages 231-233.
    2. Shoichi Ito & E. Wesley F. Peterson & Warren R. Grant, 1989. "Rice in Asia: Is It Becoming an Inferior Good?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 32-42.
    3. Chambers, Marcus J., 1990. "Forecasting with demand systems : A comparative study," Journal of Econometrics, Elsevier, vol. 44(3), pages 363-376, June.
    4. Attfield, Clifford L. F., 1985. "Homogeneity and endogeneity in systems of demand equations," Journal of Econometrics, Elsevier, vol. 27(2), pages 197-209, February.
    5. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Levin, Carol E. & Lin, Chin-Zen, 1993. "Philippines: Determinants of Wheat Import Demand," Staff Reports 278694, United States Department of Agriculture, Economic Research Service.
    2. T. Krishna Kumar & Sushanta Mallick & Jayarama Holla, 2009. "Estimating Consumption Deprivation in India Using Survey Data: A State-Level Rural-Urban Analysis Before and During Reform Period," Journal of Development Studies, Taylor & Francis Journals, vol. 45(4), pages 441-470.
    3. Rutherford, A. S., 1999. "Meat and milk self-sufficiency in Asia: forecast trends and implications," Agricultural Economics, Blackwell, vol. 21(1), pages 21-39, August.

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