Projecting world food demand using alternative demand systems (original) (raw)
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Projecting World Food Demand: A Comparison of Alternative Demand Systems
Projections of world food demands hinge critically on the underlying functional form used to predict future demands. Simple functional forms can lead to unrealistic projections by failing to capture changes in income elasticities of demand as consumer becomes wealthier. This paper compares several demand systems in the projection of disaggregated food demand across a wide range of countries with different income levels using a global general equilibrium model. We find that the recently introduced AIDADS system represents a substantial improvement over existing demand systems currently in use in CGE modeling. In particular, our projection results show that for relatively poor regions experiencing rapid income growth, the widely used LES and CDE demand systems tend to over-predict growth in consumer demand, and hence import and output requirements for food products and under-predict that for non-food products, compared to the AIDADS system. On the other hand, for high-income regions with modest income growth, the choice of functional form is less critical.
The future of food demand: understanding differences in global economic models
Agricultural Economics, 2014
Understanding the capacity of agricultural systems to feed the world population under climate change requires projecting future food demand. This article reviews demand modeling approaches from 10 global economic models participating in the Agricultural Model Intercomparison and Improvement Project (AgMIP). We compare food demand projections in 2050 for various regions and agricultural products under harmonized scenarios of socioeconomic development, climate change, and bioenergy expansion. In the reference scenario (SSP2), food demand increases by 59-98% between 2005 and 2050, slightly higher than the most recent FAO projection of 54% from 2005/2007. The range of results is large, in particular for animal calories (between 61% and 144%), caused by differences in demand systems specifications, and in income and price elasticities. The results are more sensitive to socioeconomic assumptions than to climate change or bioenergy scenarios. When considering a world with higher population and lower economic growth (SSP3), consumption per capita drops on average by 9% for crops and 18% for livestock. The maximum effect of climate change on calorie availability is −6% at the global level, and the effect of biofuel production on calorie availability is even smaller.
Changes in the Structure of Global Food Demand
American Journal of Agricultural Economics, 1998
A newly developed demand system is used to estimate the response of food and food product demand to per capita expenditure changes. The resulting Engel elasticities are then used to project food and food product demand in 2020 assuming per capita expenditure and population changes. Results suggest that while food expenditure is projected to grow, it accounts for a smaller proportion of total expenditure. Further analysis indicates change in the composition of food demand away from a grain and towards livestock is projected to occur in lower income countries in 2020.
A Consistent Food Demand Framework for International Food Security Assessment
2014
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.
Comparing PE and CGE Supply-Side Specifications in Models of the Global Food System
2013
This paper compares the theoretical and functional specification of production in partial equilibrium (PE) and computable general equilibrium (CGE) models of the global agricultural and food system included in the AgMIP model comparison study. The two modeling approaches differ in the scope of economic activity they capture and how they represent technology and the behavior of supply and demand in markets. This paper compares their theoretical and empirical treatments of technology and supply. The CGE models are “deep” structural models in that they explicitly solve the maximization problem of producers, assuming profit maximization and neoclassical production/cost functions. The PE models divide into two groups on the supply side: (1) “shallow” structural models, which essentially specify supply curves with no explicit maximization behavior, and (2) “deep” structural models that provide a detailed specification of technology and optimizing behavior by producers. While the models di...
A physically-based model of long-term food demand
Global Environmental Change
Reducing hunger while staying within planetary boundaries of pollution, land use and fresh water use is one of the most urgent sustainable development goals. It is imperative to understand future food demand, the agricultural system, and the interactions with other natural and human systems. Studying such interactions in the long-term future is often done with Integrated Assessment Modelling. In this paper we develop a new food demand model to make projections several decades ahead, having 46 detailed food categories and population segmented by income and urban vs rural. The core of our model is a set of relationships between income and dietary patterns, with differences between regions and income inequalities within a region. Hereby we take a different, more long-term-oriented approach than elasticity-based macroeconomic models (Computable General Equilibrium (CGE) and Partial Equilibrium (PE) models). The physical and detailed nature of our model allows for fine-grained scenario exploration. We first apply the model to the newly developed Shared Socioeconomic Pathways (SSP) scenarios, and then to additional sustainable development scenarios of food waste reduction and dietary change. We conclude that total demand for crops and grass could increase roughly 35-165% between 2010 and 2100, that this future demand growth can be tempered more effectively by replacing animal products than by reducing food waste, and that income-based consumption inequality persists and is a contributing factor to our estimate that 270 million people could still be undernourished in 2050.
A food demand framework for International Food Security Assessment
Journal of Policy Modeling, 2017
We present a parsimonious demand modeling approach developed for the annual USDA-ERS International Food Security Assessment, a large-scale prospective assessment focusing on chronic food insecurity in 76 countries. The approach incorporates price effects, food quality variation across income deciles, and consistent aggregation over income deciles and food qualities. The approach is based on a simple demand approach for four food categories. It relies on data on food availability, complemented by own-price and income elasticities and food price data. Beyond consistent aggregation, the framework exhibits desirable characteristics: food quality is increasing with income; price and income responses become less sensitive with income; and increasing income inequality decreases average per capita food consumption. The proposed approach is illustrated for Tanzania. We assess future food insecurity in Tanzania using the calibrated model and evaluate the impact of safety net policies and their budgetary costs. Food-insecure population is estimated as well as the implied food gap expressed in calorie per day per food-insecure person as well as in total annual food volume in grain equivalent. The food gap measure gauges the depth of the chronic food insecurity.
The most suitable system demand model for food analysis is the LA-AIDS model. This study aims to analyze the estimated demand for carbohydrate sources of food, analyze the demand for carbohydrates from rural households, and analyze the food demand for carbohydrates from urban households. This study uses data from the 2016 National SocioEconomic Survey (Susenas). Data were analyzed using the Linear Approximation-Almost Ideal Demand System (LA-AIDS) model. The results of the analysis show that the demand for carbohydrate-sourced food differs between rural and urban households which are influenced by price, income, and number of household members. When viewed from the elasticity of demand, rice and corn are commodities that are inelastic to changes in household expenditure. Wheat is a superior commodity in both rural and urban areas. Meanwhile, sweet potato and cassava are elastic in terms of expenditure for rural households. However, each household allocates higher consumption expenditures for rice compared to other commodities. In line with the analysis of expenditure elasticity, rice has the most inelastic price elasticity compared to other commodities. In addition, the effect of changes in rice consumption on changes in prices of other commodities is lower than the effect of changes in rice prices on the consumption of other commodities. This condition explains that among other commodities, the demand for rice to meet the needs of carbohydrates in the body is the highest. So that efforts are needed from the government to maintain the stability of rice commodity prices in the market.
Demand side drivers of global food security
Global Food Security, 2013
Drawing upon a series of cross-country demand analyses conducted using International Comparison Program (ICP) data from 1980, 1996 and 2005, this paper highlights how consumer preferences for food evolve over time. Income and price elasticities were estimated for an increasing number of countries, reaching 144 in the 2005 ICP analysis. Consumers in lower income countries spend a higher share of income on food, are most responsive to income and price changes, and are increasingly diversifying their diets toward more protein and fat containing foods such as meats and fish. Consumers, in general, also make larger adjustments to non-food expenditures when food prices change than they do to food expenditures when the price of non-food items change.