The demand for wheat under non-linear pricing in Pakistan

Agricultural Economics Research Review, 2011

The food demand in India has been examined in the context of a structural shift in the dietary pattern of its population. The results have reinforced the hypothesis of a significant diversification in the dietary pattern of households in recent years and has found stark differences in the consumption pattern across different income quartiles. The food demand behaviour has been explained using a set of demand elasticities corresponding to major food commodities. The demand elasticities have been estimated using multi-stage budgeting with QUAIDS model and another alternative model, FCDS. The study has revealed that the estimated income elasticities vary across income classes and are lowest for cereals group and highest for horticultural and livestock products. The analysis of price and income effects based on the estimated demand system has suggested that with increase in food price inflation, the demand for staple food (rice, wheat and sugar) may not be affected adversely but, that o...

The domestic prices of traded goods in an open economy are a function of international prices and the levied tariff rates. The key question arising here is whether the domestic prices can be “estimated” from the information on international prices and the tariff rates given that the later two independent variables are determined out of the system? Some authors have “estimated” domestic prices from international prices and the tariff rates. However the estimation of domestic prices in such way has presented inaccurate estimates. Present study is an attempt to correct such failing in case of domestic prices of milk and wheat and strived to calculate instead of estimating the domestic prices in presence of two independently determined variables i.e. tariff rates and international prices.

The Pakistan Development Review, 1988

This paper attempts to analyse the effects of changes in agricultural prices on different segments of the society. Taking the cases of two major crops; namely wheat and rice, and of agricultural inputs in general, it works out the 'own-price effects' and 'cross-price effects' of price changes on producers, consumers, and the government in Pakistan.' In this way the paper provides a broad (multimarket) framework which could be used to evaluate the government's agricultural price policy.2 The paper is divided into three sections. Section I discussesthe methodological framework. The empirical analysis is provided in Section II. Section III deals with some tentative c'onclusionsinferable from this study. I. METHODOLOGICAL FRAMEWORK Assumptions3 The following assumptions have been made about the agricultural marketing arrangements in the country to keep the analysiswithin manageablelimits. (1) Procurement prices of wheat, cotton, and rice are in general less than those prevailingin the domestic (open) and international markets. (2) The government releases its wheat stock to the open market through mills at prices slightly higher than the procurement price but bears most of the handling charges. Rice and cotton are procured mainly for export purposes. Their local *The authors are respectively, Associate Professor and Professor of Economics at International Institute of Islamic Economics, Islamabad. "Own price effects' (OPE) represent changes in the supply of and demand tor a commodity in response to the changes (made) in its price. 'Cross-price effects' (CPE), on the other hand, are similar changes in supply of and demand for other commodities than the one whose price is changed.

2018

The demand elasticities for food items at household level in Pakistan are estimated using the Quadratic Almost Demand System (QUAIDS) and changes in the consumption pattern in the food baskets over a period of fifteen years are reviewed, including a detailed analysis of demand for mango, chili and tomato. The data came from three rounds of the Household Integrated Expenditure Survey (HIES) from 2000 to 2015. We find that the share of household expenditures on mango and chili declines while it increases in the case of tomatoes. However, the size of the elasticities varies from case to case which has some interesting policy implications.

Asian Journal of Agriculture and Rural Development, 2020

This study determines the causes of consumption, compensated, and uncompensated demand for rice using the Linear Approximate Almost Ideal Demand System (LA-AIDS) model in Bangladesh. The model was used along with the corrected Stone Price Index. The study's findings showed that the income elasticity of demand for rice was only 0.76, indicating that rice is a normal and necessary food item. The own-price elasticity (compensated and uncompensated) showed that all food items were price inelastic. The rice's own-price elasticity demonstrated that if the price falls by 10%, rice demand will rise by 8.21%. This cross-price elasticity showed the weak substitution effects of a price change. Therefore, price interference may not lead to a substantial effect on food demand. Contribution/Originality: The study measured the demand elasticity of rice and other major crops of Bangladesh. The effect of change in income on food demand was measured, as shown by income elasticity. It examined consumers' expenditure pattern and demand for rice, including other food items. Researchers and policymakers may use this study's findings to regulate Bangladeshi rice and major crops' price and demand scenario.

The study has used one of the most promising demand system i.e. Rotterdam Model for the calculation of elasticities for nine major commodities in Pakistan using recent household integrated survey (PIHS 2007-08). SUR Method was applied for the estimation of model parameters. All the elasticites were according to the theoretical expectations. All the expenditure elasticites were positive, reasonable in magnitude and less than one except for Mutton. The own-price elasticities for all food items were negative as per theoretical expectation and their absolute amounts were lower than unity. According to the values of the cross-price elasticities substitution and complementary relationships were observed. The described elasticities examined the structure of food consumption and expenditure patterns in Pakistan.

Asian Economic and Financial Review, 2014

This study evaluates the household food demand patterns among different income sorts in urban and rural areas of Pakistan and estimation of food expenditure and household size elasticities. The

2011

The production of main crops in developing countries is an important factor concerning farmers, population revenues and economic development. To contribute to better knowledge on the synthetic parameters describing supply response, this article exploits annual data set following Pakistan and India over 42 years (1966 - 2008) to develop two classic translog models estimating the responses of areas for wheat, cotton, rice, maize, sugarcane, dry beans, rapeseed, soybeans, sorghum and millet to changes in their gross product per hectare. The coefficients of each crop’s equation in the system are estimated with the Full Information Maximum Likelihood. The own and cross gross product elasticities for each crop are calculated and compared to the data existing in literature, showing two results: firstly, the major crops areas are found to be weakly gross product-responsive as compared to minor crops, as well as to developed countries and secondly, Pakistani producers have responded weakly t...

2012

art me n t o f Eco no mi cs, Go ver n me nt S ad iq E ger to n Co l le g e, B a h a wa l p ur, P a k i st a n

1992

Pakistan, like many LDCs, derives most of government revenue from indirect taxation. However, the system of taxes and subsidies has grown up piecemeal over the years, and it is unlikely that it cannot be improved. Any tax reform proposal must deal with the basic issues of equity and efficiency. Changes in taxes benefit or hurt people according to their demand and supply patterns, while the effects on government revenue depend on the way in which supply and demand respond to prices. Empirical demand analysis can inform the debate by delineating consumption patterns, and by estimating the responsiveness of demand to price. Previous exercises in price reform for Pakistan have been forced to make very restrictive assumptions about consumer preferences, and have typically used demand systems that prejudge what are the desirable directions of price reform.

2012

Demand estimation is considered as one of the most important element for decision making of the firm. Without estimating it, any manager can't make appropriate decisions. To have an econometric analysis of demand, we have selected a commodity that is "Soap". The Cross sectional primary data of 370 respondents has been collected through stratified random sampling technique from urban areas of Multan city in 2012. Multiple regression analysis technique is opted for having reliable estimates. The study follows Semi-log model to have price elasticity of demand and income elasticity of demand only.The estimates of the study show that the Price, income, family size and advertisement are directly correlated with the demand. On the other side, Age is found to be inversely related to demand of soap. Price Elasticity of demand is calculated as 0.1994 and income elasticity of demand is examined as 0.1722.

2006

This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on overall price levels. Partial equilibrium analysis of wheat markets suggests that

Bangladesh Journal of Agricultural Economics, 2007

The study was conducted to examine the income and price elasticities of demand for different types of rice in Bangladesh. Both time series and cross-section data were used to estimate a complete demand system equation. The equation was estimated in three stages to obtain income and price elasticies of demand for rice. The stages were the allocation of household total income on food and non-food items, the allocation of household total food expenditure for cereal, and the allocation of household total cereal expenditure on different types of rice and wheat, respectively. The total budget for cereal food allocated to aromatic, fine, coarse rice, and wheat was 4.0%, 23.3'70, 65.2%, and 7.5%, respectively. The estimated expenditure elasticities of demand for those types of cereals Here 0.85. 0.79. 0?9, and 0.55. respectively. The expenditure elasticities of demand for aromatic and coarse rice were higher for rural households compared with urban households, while the expenditure elasticities of demand for fine rice and wheat were higher for urban households. Considering all other factors remaining unchanged, the uncompensated and compensated own-price elasticities of demand for coarse rice would fall by 7.7% with a 10% increase in its price. These falls were 7.4%, 11.170, and 4.6% for aromatic, line rice, and wheat, respectively. The estimates of uncompensated cross-price elasticities between coarse-to-fine rice showed that a 10% increase in absolute income associated with a 10% increase in real income due to fall in coarse rice price would increase the actual demand for fine rice by 4.6%. A 10% increase in absolute income accompanied by a l07 increase in real income due to fall in coarse rice price would increase the actual demand for aromatic rice and wheat by 7.4% and 4.6%, respectively.

2011

The main objective of this research is to estimate the different types of demand elasticities for the main fresh vegetables consumed in Jordan. The estimated elasticities can be used to measure the impacts of agricultural policies and can be used to predict future consumption in the context of food security in terms of access, availability, stability, and food quality. The reported demand estimates were obtained through the estimation of a Linear Approximate Almost Ideal Demand Systems (LA/AIDS) for Jordan fresh vegetable crops demand system using the most recent cross-sectional data of household expenditure survey in 2005. A censored regression method for the system of equations was used to analyze fresh vegetables consumption patterns. This method allows for inclusion of a large number of zero consumption for some foods through two-step demand system estimation. All of the own-price demand elasticities have the correct negative signs and statistically significant. According to the expenditure elasticity, tomato, cucumber, and potato are the necessity goods. The mean budget shares indicate that consumers spend 30 percent of their allocated budget to vegetables on tomatoes and potatoes. The green bean elasticity is the highest indicating that demand for beans is highly responsive to any changes in the price. The expenditure elasticities reveal that the demand on all vegetables is expected to grow over the coming few years. High own-price elasticities of all vegetables studied suggests that any changes in the prices of these crops could bring about a significant shift in fruits and vegetable consumption patterns.

Zemědělská ekonomika, 2005

The paper is focused on the quantitative analysis of the price transmission and on its use for the estimations of the direct price elasticity of the vertical-derived demand functions. The price transmissions were examined between the commodity markets for the food grain and the consumer markets for the bakery products and flour. The data (1995-2002) were taken over from the Czech Statistical Office (CSO), the Price Statistics (PS) and the Statistics of Family Budgets (SFB). The intensity of the inter-market price transmission was assessed by means of the coefficients of the price transmission elasticity (EPT). For enumerating of EPT, the regression linear models were developed. The explicit as well as the implicit time-definition in the models was tested. The explicit dynamic construction was carried out on the basis of the stationary process with the parabolic trend. After the determination of trend functions, the seasonal component in used time-series was thoroughly investigated by means of the harmonic analysis (G-tests of the individual extremes of the developed periodograms). The implicit dynamization of the linear models was solved on the basis of the first differences of appropriate commodity prices, respectively price levels on the consumer market. For the quantification of the price transmission elasticities, directly dynamized models there were only used only because the model unambiguously achieved better values of characteristics of the statistic verification (correlation index, F-test, T-test). These models also satisfied the economic assumptions in the sense of the vertical price transmissions between the observed market levels and the preservation of the law of diminishing demand. Based on the linear models of the price transmission with parabolic-trend stationarization, it was found out that within the observed period (1995-2002) EPT between commodity market with the food wheat and consumer market with the bakery products and flour reached the average level of +0.1602%. Within the same period, the value of EPT between commodity market with the rye and consumer market with the bakery products and flour reached the average level of +0.1067%. These coefficients were subsequently used together with coefficients of the own price elasticity of consumer demand for the bakery products and flour (ε) to the estimations of the own price elasticity of the commodity demand for food wheat and rye (e). In accordance with the construction of these estimations: e = ε × EPT, it was found out that the average level of the own price elasticity of the demand for food wheat (respectively rye) is about-0.0659% (respectively-0.0441%). Both observed secondary demand functions are therefore strongly inelastic with respect to the reaction on the direct price changes. The commodity demand for the rye seems to be more inelastic.