Food Demand in Pakistan

Abstract

This study analyzes the household food demand followed by projecting the future level of demand of selected food commodity groups in Pakistan. It uses Pakistan Panel Household Survey (PPHS) for the year 2010, conducted by Pakistan Institute of Development Economics (PIDE). The linear approximation/almost ideal demand system (LA/AIDS) model is used to estimate the demand elasticities, while a simple growth model is used for food demand projections. The empirical results reveal that food grains, pulses, ghee, sugar and vegetables are necessities, while milk and meat are luxuries. Pulses and vegetables, ghee and meat, milk and sugar are identified as gross complements on the basis of uncompensated cross-price elasticities. The uncompensated cross-price elasticities of food grains indicate the substitutive relationship between different food items, such as pulses, meat and vegetables. An increase in the household income will induce a substantial expansion in household demand for milk and meat products, but the consumption of these foods will decline if household size grew, ceteris paribus.