Demand for Meat in Indonesia: Censored AIDS Model
No 2/2021, June
Widarjono, A. and Ruchba, S. M. (2021) "Demand for Meat in Indonesia: Censored AIDS Model", AGRIS on-line Papers in Economics and Informatics, Vol. 13, No. 2, pp. 109-119. ISSN 1804-1930. DOI 10.7160/aol.2021.130209.
This study estimates the demand for meat in Indonesian urban households encompassing beef, goat, broiler chicken, and native chicken. We estimate the demand for meat using cross-sectional data from the 2013 Indonesian Socio-Economic Household Survey data, which records food expenditure for a week before the survey. Because of some zero expenditure, the Censored Almost Ideal Demand System (AIDS) using the consistent two-step estimation is applied. The estimated own-price elasticities indicate that all meat products are price-inelastic. Nonetheless, broiler chicken is the most responsive meat product while goat is the least responsive meat product to price changes. All meat products are normal good referring to the estimated income elasticities. However, Native chicken is the most responsive and goat is the most unresponsive to the income change. The estimated cross-price elasticities conclude that broiler chicken and beef are substitute goods. The policy simulation indicates that beef is a meat product that is unresponsive to price and income changes. Native chicken is the most responsive meat product to price and income change, followed by broiler chicken.
Demand for meat, censored AIDS, price and income elasticity, urban Indonesia.
- Ali, M., Lee S., Park, J., Jung, S., Jo, C. and Nam, K (2019) "Comparison of Functional Compounds and Micronutrients of Chicken Breast Meat by Breeds", Food Science of Animal Resources, Vol. 39, No. 4, pp. 632-642. E-ISSN 2636-0780, ISSN 2636-0772. DOI 10.5851/kosfa.2019.e54.
- Alston, J. M., Foster, K. A. and Green, R. D. (1994) "Estimating Elasticities with the Linear Approximate Almost Ideal Demand System: Some Monte Carlo Results", The Review of Economics and Statistics, Vol. 76, No. 2, pp. 351-356. E-ISSN 1530-9142, ISSN 0034-6535. DOI 10.2307/2109891.
- Deaton, A. (1990) "Price Elasticities from Survey Data: Extensions and Indonesian Results", Journal of Econometrics, Vol. 44, pp. 281-309. ISSN 0304-4076. DOI 10.1016/0304-4076(90)90060-7.
- Deaton, A. (1997) "The Analysis of Household Survey: A Microeconometric Approach to Development policy", Baltimore: John Hopkin University Press.
- Deaton, A. and Muellbauer, J. (1980) "An Almost Ideal Demand System", The American Economic Review, Vol. 70, No. 3, pp. 312-326. E-ISSN 1944-7981, ISSN 0002-8282.
- Faharuddin, F., Yunita, Y., Mulyana, A., Yamin, M. and Habito, C. F. (2019) "´Agricultural Households’ Food Demand: Evidence from Indonesia", Asian Journal of Agriculture and Development, Vol. 16, No. 2, pp. 45-60. ISSN 1656-4383. DOI 10.22004/ag.econ.298424.
- Faharuddin, F., Yunita, Y., Mulyana, A., and Yamin, M. (2017) "Nutrient elasticities of food consumption: the case of Indonesia", Journal of Agribusiness in Developing and Emerging Economies, Vol. 7, No. 3, pp. 198-217. ISSN 2044-0839. DOI 10.1108/JADEE-02-2016-0008.
- Heckman, J. J. (1978) "Dummy Endogenous Variables in a Simultaneous Equation System", Econometrica, Vol. 46, No. 4, pp. 931-959. E-ISSN 1468-0262, ISSN 0012-9682. DOI 10.2307/1909757.
- Heien, D. and Wessells, C. R (1990) "Demand Systems Estimation With Microdata: A Censored Regression Approach", Journal of Business and Economic Statistics, Vol. 8, No. 3, pp. 365-371. ISSN 07350015. DOI 10.2307/1391973.
- Heien, D. and Pompelli, G. (1989) "The Demand for Alcoholic Beverages: Economic and Demographic Effects", Southern Economic Journal, Vol. 55, No. 3, pp. 759-770. E-ISSN 2325-8012. DOI 10.2307/1059587.
- Hoang, H. K. (2018) "Analysis of food demand in Vietnam and short-term impacts of market shocks on quantity and calorie consumption", Agricultural Economics, Vol. 49, No. 1, pp. 83-95. E-ISSN 1574-0862. DOI 10.1111/agec.12397.
- Huang, K. S. (1996) "Nutrient Elasticities in a Complete Food Demand System", American Journal of Agricultural Economics, Vol. 78, No. 1, pp. 21-29. E-ISSN 1467-8276. DOI 10.2307/1243775.
- Hutasuhut, M., Chang, H., Griffith, G., O'Donnell, C. and Doran, H. (2002) "The Demand for Beef in Indonesia: Implications for Australian Agribusiness", Australian Agribusiness Review, Vol. 10, pp. 1-10. ISSN 1442-6951.
- Jensen, H. H. and Manrique, J. (1998) "Demand for food commodities by income groups in Indonesia", Applied Economics, Vol. 30, No. 4, pp. 491-501. E-ISSN 1466-4283, ISSN 0003-6846. DOI 10.1080/00036849832575.
- Lippe, R. S., Isvilanonda, S., Seebens, H. and Qaim, M. (2010) "Food Demand Elasticities among Urban Households in Thailand", Thammasat Economic Journal, Vol. 28, No. 2, pp. 1-29. [Online]. Available: https://so05.tci-thaijo.org/index.php/TER/article/view/137355 [Accessed: 10 Oct. 2019].
- Pan, S., Mohanty, S. and Welch, M. (2008) "India Edible Oil Consumption: A Censored Incomplete Demand Approach", Journal of Agricultural and Applied Economics, Vol. 40, No. 3, pp. 821-835. E-ISSN 2056-7405, ISSN 1074-0708. DOI 10.1017/s1074070800002352.
- Sheng, T. Y., Shamsudin, M. N., Mohamed, Z., Abdullah, A. M. and Radam, A. (2008) "Complete demand systems of food in Malaysia", Agricultural Economics (Czech Republic), Vol. 54, No. 10, pp. 467-475. ISSN 0973-2276.
- Sheng, T. Y., Shamsudin, M. N., Mohamed, Z., Abdullah, A. M. and Radam, A. (2010) "Demand analysis of meat in Malaysia", Journal of Food Products Marketing, Vol. 16, No. 2, pp. 199-211. E-ISSN 1540-4102, ISSN 1045-4446. DOI 10.1080/10454440903415105.
- Shonkwiler, J. S. and Yen, S. T. (1999) "Two-Step Estimation of a Censored System of Equations", American Journal of Agricultural Economics, Vol. 81, No. 4, pp. 972-982. E-ISSN 1467-8276. DOI 10.2307/1244339.
- Widarjono, A. and Rucbha, S. M. (2016) "Household Food Demand in Indonesia: a Two-Stage Budgeting Approach", Journal of Indonesian Economy and Business, Vol. 31, No. 2, pp. 163-177. E-ISSN 2338-5847, ISSN 2085-8272. DOI 10.22146/jieb.15287.
- Yen, S. T., Kan, K. and Su, S. J. (2002) "Household demand for fats and oils: Two-step estimation of a censored demand system", Applied Economics, Vol. 34, No. 14, pp. 1799-1806. E-ISSN 1466-4283, ISSN 0003-6846. DOI 10.1080/00036840210125008.
- Zheng, Z., Henneberry S. R., Zhao, Y. and Goa, Y. (2019) "Predicting the changes in the structure of food demand in China", Agribusiness, Vol. 35, No. 3, pp. 301-328. E-ISSN 1520-6297. DOI 10.1002/agr.21592.
- Zheng, Z. and Henneberry, S. R. (2010) "An Analysis of Food Grain Consumption in Urban Jiangsu Province of China", Journal of Agricultural and Applied Economics, Vol. 42, No. 2, pp. 337-355. E-ISSN 2056-7405, ISSN 1074-0708. DOI 10.1017/s1074070800003497.
- Zheng, Z. and Henneberry, S. R. (2012) "Estimating the impacts of rising food prices on nutrient intake in urban China", China Economic Review, Vol. 23, No. 4, pp. 1090-1103. ISSN 1043-951X. DOI 10.1016/j.chieco.2012.07.001.