Article

Analysis of Demand for Major Spices in India

Agricultural Economics Research Review 01/2006; 19(2).
Source: RePEc

ABSTRACT India is the largest producer, consumer, and exporter of spices in the world. The demand scenario for major spices in India has been comprehensively examined in the study. The shift in preferences of domestic consumers for food items, increasing urbanization and rising incomes, altered demographic and social factors and the changes in productivity of spices have brought about changes in the pattern of their consumption and demand. A two-stage budgeting framework, which is a recent development in the theory, of demand with quadratic terms of total expenditure / food expenditure and is an appropriate technique for computing the expenditure elasticities, has been employed to work out the expenditure elasticities for spices in India. The resultant expenditure elasticities range between 0.40 and 0.60 and do not show much disparity across different income classes or regions and over the years. Also, the household consumption demand projections for important spices in the country for the years 2005, 2010 and 2015 show that the domestic demand for spices would increase further in the coming years.

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    ABSTRACT: 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 of high-value food commodities is likely to be affected negatively. Therefore, the study has cautioned that if inflation in food prices remains unabated for an extended period, there is the possibility of reversal of the trend of diversification and that of consumers returning to cereal-dominated diet, thus accentuating under-nourishment.

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