World Food Demand

Abstract

Long‐term projections of global food demand are heavily dependent on which functional form of the food demand equation is used. Given that real incomes can change substantially over the long‐term, key elements are the dependence of the income elasticity on income, which ensures that the food budget share always lies within the [0, 1] range, and the role of income inequality. This article analyzes these issues, proposes a new functional form that deals with them, and presents estimates of income and price elasticities for food in 138 countries.

Four Laws of Consumption

“…Numerous studies have found η < 1, the classic reference being Houthakker (). Table provides information on incomes and food in a large number of countries in 2005, from Gao (). As per capita income falls (as we go down the table) the food share has a strong tendency to rise, in agreement with Engel’s law; and in all cases, the income elasticity is less than unity.…”

“…14 A partial listing of the major studies on the income and price sensitivity of demand, each dealing with a large number of countries, includes Chen (1999), Gao (2012), Goldberger and Gamaletsos (1970), Houthakker (1957), Liu (2018), Lluch and Powell (1975), Lluch et al (1977), Muhammad et al (2013), Regmi and Seale (2010), Rimmer and Powell (1992), Seale and Regmi (2006), Seale et al (2003), Selvanathan (1993), Selvanathan and Selvanathan (2003), Theil and Clements (1987) and Theil et al (1981Theil et al ( , 1989. 15 Popular demand models are the linear expenditure system (Stone, 1954), the Rotterdam model (Barten, 1964;Theil, 1965), the almost ideal model and its quadratic extension (Deaton & Muellbauer, 1980a;Banks et al, 1997) and the translog model (Christensen et al, 1975).…”

Price Elasticities of Food Demand: Compensated vs Uncompensated

“…We treat the values of the seven income elasticities η 1 , …, η 7 and the income flexibility as unknown. The income elasticities of the food items are a weighted average of the income elasticity of all food ( η F ), available from Gao (): where is the budget share of all food. Equation for i , j = 1, … 7 is a system of 49 equations, which is overdetermined and has no exact unique solution.…”

Factors influencing meat and fish consumption in Serbian households: Evidence from SILC database

“…As incomes rise in lower income countries, their food expenditures grow and consumption patterns appear to seek to catch up to the levels and composition of those of higher income countries (Regmi, Meade, 2013). In low-income countries, expenditure on foods can take up to 62% of income, and in middle-income and high-income countries, people spend on average much less on foods (6-30% of their income) (Gao, 2012). In the middle-income and high-income countries, a similar increase in food prices is likely to have a much smaller impact on consumption.…”