Animal Food Demand in Indonesia: A Quadratic Almost Ideal Demand System Approach

Nikmatul KhoiriyahRatya AninditaNuhfil HananiAbdul Wahib Muhaimin

DOI 10.7160/aol.2020.120208
No 2/2020, June
pp. 85-97

Khoiriyah, N., Anindita, R., Hanani, N. and Muhaimin, A. W. (2019) “Animal Food Demand in Indonesia: A Quadratic Almost Ideal Demand System Approach", AGRIS on-line Papers in Economics and Informatics, Vol. 12, No. 2, pp. 85-97. ISSN 1804-1930. DOI 10.7160/aol.2020.120208.

Abstract

This research aims to analyze the impact of the price change, the income, and the household size on the demand for five commodity groups, i.e. eggs, chicken, beef, fish and powder milk. The data utilized in this study is based on the Indonesian National Socio-Economic Survey 2016. There are 291,414 data of households in Indonesia which was analyzed by Quadratic Almost Ideal Demand System. The result shows that all of the price elasticity was negative and the income elasticity was positive. The effect of income causes the demand for animal foods in Indonesia to be more elastic rather than other commodities with the highest demand of elasticity, i.e. beef, powder milk, fish, meat and eggs by 2.19%, 1.96%, 1.53%, 1.43%, and 0.53% respectively. The beef has the most sensitive effect to changes the income. Therefore, the government requires maintaining the stability of beef prices to increase beef consumption in Indonesia.

Keywords

Food demand system, elasticity, price change, Indonesia.

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