Food Consumption Pattern of Cauvery Delta Region of Tamil Nadu-An Application of Quadratic Almost Ideal Demand System (QUAIDS)

Abstract

Changes in food consumption and expenditures of households in developing country have been a topic for research throughout the twentieth century. Consumption expenditure patterns and estimates of expenditure elasticities can give an indication of the potential for demand-led growth in a particular economy and also helps in assessing the food security-related policy issues. This study uses the recent household survey data of NSSO (round 68) to estimate a complete demand system for Cauvery Delta Zone (CDZ) of Tamil Nadu State, with special emphasis on the food commodity group. A Quadratic Almost Ideal Demand System (QUAIDS) specification was employed for this study. The QUAIDS model is an example of the empirical demand systems that have been developed to allow expenditure nonlinearity. Price and expenditure elasticities were computed for seven food aggregates which includes cereals, pulses, milk, edible oil, meat, fruits and vegetables and other foods. The results revealed that the most of food groups considered for this study were demand inelastic implies that they are staple foods and the magnitude of the cross-price elasticities suggesting the limited possibilities of substitution among food groups. The estimated expenditure elasticities suggested that the expenditure share on these food groups would increase with an increase in real income, prices held constant. Overall, the findings of this study suggest that the QUAIDS model which allows for more flexibility is superior to the traditional AIDS model.