Protein and the demand for hard wheats

Abstract

Wheat protein is one of the most important specifications used in domestic and import purchase contracts and is used partly as a proxy for functional quality. The purpose of this article is to analyse the demand for wheat delineated by protein class. A choice-based econometric model is specified and estimated using a novel dataset of pooled wheat shipments to individual importing countries. Buyers are importing countries that make purchase decisions among different protein levels. The model frames the choice in terms of attributes of the choice and of the importing countries. Results indicate that there have been shifts over time, and purchase probabilities are highly price elastic and vary across importing regions. Functional characteristics including wet gluten content and extraction rates have significant impacts on purchase probabilities. These results have implications for breeders as it clearly illustrates the role of protein and functional characteristics on demand. The results also have implications for analysts modelling wheat trade in that there are many factors impacting market segments that would not be captured in conventional demand specifications. © Journal compilation © 2009 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.