Food demand and the food security challenge with rapid economic growth in the emerging economies of India and China

Abstract

China and India, with their huge populations (37% of the world total), have been experiencing high economic growth rates of 7 to 12% in the last two decades. This has led to major changes in the levels and patterns of their food consumption and food buying behavior. This paper examines the rise and transformation of food demand in these two large emerging economies and the possible implications for the food security challenge. Data from the latest consumer surveys of the Government of India covering about 100,000 households and similar data from China are used. Tabulation and econometric analysis indicate that food demand is undergoing a huge transformation and will undergo further change. Consumers are rapidly increasing their consumption of animal products, vegetables and fruits, and reducing their consumption of cereals. Results show high income elasticities of demand for many food products such as animal products, processed foods, and also eating-out-of-home in both rural and urban areas. In India, given the vegetarian diets, the biggest component emerges to be dairy products, but the consumption of vegetables, meat and eggs is also growing rapidly. Supply is frequently unable to keep pace with the demand, resulting in high food price inflation. In China, the demand for foods of higher value, such as meats, dairy products and aquatic products is growing strongly. Urbanization is also having a significant impact. The numerous challenges include not only managing the supply but also the food supply chain, marketing, food safety and food processing. The changes pose an opportunity as well as a new food security challenge for these countries and the world.