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Food demand in China: income, quality, and nutrient effects

Kuo Huang and Fred Gale

China Agricultural Economic Review, 2009, vol. 1, issue 4, 395-409

Abstract: Purpose - China's remarkable income growth has changed the food landscape in recent years. Chinese consumers are demanding greater food quantity and quality and changing the nutrient content of their diets. Most food demand studies are based on data from earlier time periods before these structural changes had taken hold. The purpose of this paper is to show how the rapid change in food markets and surprisingly slow growth of food imports warrants a new assessment of food demand in China. Design/methodology/approach - Engel equations measuring elasticities of food quantity and quality purchases with respect to household income are estimated. These estimates are then converted to nutrient elasticities to show how the availability of nutrients varies with income based on the Engel demand relationship. Findings - The income elasticities diminish as income rises. Households in the top tier of the income distribution appear to have reached a saturation point in the consumption of most food items. As income rises, most additional spending is on foods with higher unit values that may reflect better cuts of meat or branded items. The pattern of food purchases for households at different income levels suggests that protein, saturated fat, and cholesterol intake rises with increased income. The change in diets prompted by rising income is most pronounced for low-income households. Originality/value - This paper applies a unique approach to measure income, quality, and nutrient elasticities within the same framework of Engel relationship. The finding has important implications for opening new market opportunities of imported foods and understanding dietary change in China.

Keywords: Food industry; Income; Quality; Elasticity; Demand; China (search for similar items in EconPapers)
Date: 2009
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