A Consistent Food Demand Framework for International Food Security Assessment

A parsimonious demand modeling approach has been developed for the annual USDA-ERS International Food Security Assessment. The approach incorporates price effects, food quality variation across income deciles, and consistent aggregation over income deciles and food qualities. The approach is based on a simple PIGLOG demand approach for four food categories. It relies on the existing sparse data available for the assessment, complemented by own-price and income elasticities and available price data. Beyond consistent aggregation, the framework exhibits desirable characteristics: food quality is increasing with income; price and income responses become less sensitive with increasing income; and increasing income inequality decreases average per capita food consumption. The proposed approach is illustrated for Tanzania. We then use the calibrated model to decompose the impact of income, prices, and exchange rates on food consumption. Future food security in Tanzania is assessed using two alternative approaches and the calibrated model.