Structural shifts in food basket composition of rural and urban Philippines: Implications for the food supply system

Abstract

Empirical evidence on the responsiveness and sensitivities of food consumption to its drivers is vital for conducting economic studies. Despite recent attempts to provide such estimates, much empirical work remains to be done considering the prevailing shifts in consumption trends in the Philippines. Price and expenditure elasticities are estimated for seven food categories for rural and urban Filipino households, using Stone-Lewbel (SL) price indices and the quadratic almost-ideal demand system (QUAIDS) model. We used multiple years (2006, 2009, 2012, 2015, and 2018) of the Philippines Family Income and Expenditure Survey (FIES) to estimate the food demand system. The results show that rice is a normal good for most households, particularly for rural consumers. However, it is an inferior good for the top 30% of rural Filipinos and the top 40% of urban Filipinos. As income increases, such wealthy households tend to replace their rice-dominated diet with nutrient-dense food products. Female-headed households, younger households, and households with educated members consume significantly more animal proteins such as meat and dairy products.