Caloric consumption efficiency and import dependency: Evidence from Sri Lanka

Abstract

Using the stochastic cost frontier, we estimated the determinants of cost inefficiency of total caloric and cereal and pulses-based caloric consumption in Sri Lanka at the household level. We specifically tested whether high reliance on imported food helps poor, food- poor, and urban households to be cost-efficient. We estimated the cost frontiers employing half normal and truncated normal distribution assumptions. We found that truncated normal specifications are more appropriate. Our results show that food-poor households with higher reliance on imported calories are more cost-efficient in total and cereal and pulses-based caloric consumption. Urban households with a high import dependency on cereal and pulses-based consumption are found to be more cost-efficient. Our results call for prudent trade policies that do not deprive food-poor and urban households of imported food as the policy biases favouring domestic food production will disproportionately affect the food-poor and urban households.