Why Rice is Still Considered as an Important Food Ingredient in Indonesia? : Overview of the Pattern of Household Food Demand

Rita Yuliana, Harianto ., Sri Hartoyo, Muhammad Firdaus

Abstract


One of the problems of food in Indonesia is the increasing of food prices. Therefore, information on food demand elasticities is important for policymakers. Demand elasticity was derived from the estimated function of demand for food. This research aims to analyse household food demand in Indonesia using Linear Approximation/Almost Ideal Demand System for 12 food groups from The National Socioeconomic Survey of March 2016. The results revealed that factors influencing demand on food are food prices, real expenditures, and socio-demographic variables. All commodities have negative own-price elasticity indicating that as the price of a food group increases the quantity consumed decreases, while the absolute value of own-price elasticity for some food groups in rural areas, poor household, and agricultural household are more than one, which is referring to the high sensitivity of food demand. The role of rice in household consumption remains high or quite dominant.

Keywords


Aids Model, Expenditure Elasticity; Food Groups; Household Groups; Price Elasticity.

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