Anita Regmi

International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data

In a 2003 report, International Evidence on Food Consumption Patterns, ERS economists estimated income and price elasticities of demand for broad consumption categories and food categories across 114 countries using 1996 International Comparison Program (ICP) data. This report updates that analysis with an estimated two-stage demand system across 144 countries using 2005 ICP data. Advances in ICP data collection since 1996 led to better results and more accurate income and price elasticity estimates. Low-income countries spend a greater portion of their budget on necessities, such as food, while richer countries spend a greater proportion of their income on luxuries, such as recreation. Low-value staples, such as cereals, account for a larger share of the food budget in poorer countries, while high-value food items are a larger share of the food budget in richer countries. Overall, low-income countries are more responsive to changes in income and food prices and, therefore, make larger adjustments to their food consumption pattern when incomes and prices change. However, adjustments to price and income changes are not uniform across all food categories. Staple food consumption changes the least, while consumption of higher-value food items changes the most.

Modeling International Consumption Patterns

This article addresses a number of key problems commonly confronted in the literature on international demand analysis. These include data issues and requirements, multistage budgeting, outliers, group heteroskedasticity, and model selection. A two-stage demand system is fit to International Comparison Programme data for 114 countries for nine aggregate categories and eight food sub-categories of goods. Outliers are identified and omitted from the sample. Parameter estimates for the two stages are obtained with a maximum-likelihood procedure that corrects for group heteroskedasticity. Country-specific income and own-price elasticities are calculated and indicate that poor countries are more responsive to changes in income and prices than rich countries. We also find evidence for the strong version of Engels law; when income doubles, the budget share of food declines by approximately 0.10.

Cross-Price Elasticities of Demand Across 114 Countries

This report presents a simple methodology for calculating cross-price elasticities across countries, using the Frisch own-price elasticity. Cross-price elasticities are calculated for 9 major consumption categories from the 1996 International Comparison Program data across 114 countries. The consumption categories are: food, beverage, and tobacco; clothing and footwear; education; gross rent, fuel, and power; house furnishings and operations; medical care; recreation; transport and communications; and “other” items. Additionally, cross-price elasticities are calculated and reported for a two-good demand system of food and nonfood. The elasticity estimates from this report are the only available consistent cross-country cross-price elasticity estimates across such a large number of countries and consumption categories.

Globalisation and income growth promote the Mediterranean diet

OBJECTIVE To examine global food demand patterns and how changing diets may stimulate demand for and trade of Mediterranean diet products. DESIGN Literature review. Trends in global and US food consumption patterns are examined and trade data are reviewed to evaluate the impact of changing diets on trade of Mediterranean diet products. Market access issues are also addressed briefly to highlight the role of policy in the trade of Mediterranean diet products. RESULTS Diets are shifting towards higher-value products such as meats, fruits and vegetables, and a wider array of packaged food products. Trade in these products has also grown in the past two decades, with several non-traditional importers and exporters becoming increasingly active in the global market. CONCLUSIONS Income-driven demands for quality and variety are likely to increase the demand for Mediterranean diet products globally. While the middle-income countries appear to be the best growth prospects, the USA remains a potential growth market if these products can meet the growing consumer demand for variety, quality and convenience. Although consumer trends globally indicate growth in demand for Mediterranean diet products, the additional demand may not be reflected by a corresponding growth in trade. Trade in Mediterranean diet products continues to be hampered by higher than average trade barriers and high transportation costs for perishables.

Convergence in Global Food Demand and Delivery

Using food expenditures and food sales data over 1990-2004, this report examines whether food consumption and delivery trends are converging across 47 high- and middle-income countries. Middle-income countries, such as China and Mexico, appear to be following trends in high-income countries, measured across several dimensions of food system growth and change. Convergence is apparent in most important food expenditure categories and in indicators of food system modernization such as supermarket and fast-food sales.