Essays on food demand and supply in Bangladesh

Doctor of PhilosophyDepartment of Agricultural EconomicsAleksan ShanoyanThe socio-economic and demographic conditions of Bangladesh have changed dramatically during the last three decades after economic and political reforms in 1991, which lead to change in food preferences both in rural and urban areas. Following the global trend of increasing commodity prices, the price hike in Bangladesh has raised policy concerns regarding the potential shifts in consumption patterns and welfare loss. Furthermore, the agricultural industry and the food supply in Bangladesh is highly susceptible to the effects of climate change and increased frequency of extreme weather events. The accurate and timely insights on food demand patterns in Bangladesh under the changing socio-economic scenarios can have important implications for food and nutritional security, price stability, poverty alleviation and appropriate import-export policy of the country. Policies on these issues cannot produce desired outcome without accurate estimation of consumer demand. However, despite the increasing need for improved understanding of food demand in Bangladesh, the literature in this area is relatively limited. The purpose of this dissertation is to provide insight on food demand and supply in Bangladesh by utilizing recent advancements in demand modeling and the latest and most complete data available on household food consumption in Bangladesh. The first essay examines welfare consequences of rising food prices in Bangladesh utilizing the Exact Affine Stone Index (EASI) demand model. Bangladeshi households experienced a sharp increase in food commodity prices during the last two decades especially in the period of 2007-2008. Inflation moved to two-digit level in 2007-08 and also in 2010-11 reaching 12.28% and 10.89% respectively, mostly driven by inflation in food prices. Estimating welfare impact of rising food price utilizing the prevalent demand models like the Almost Ideal Demand System (AIDS) and its’ family models may lead to biased estimate due to a number of practical limitations of these models. The EASI model has number of advantages over AIDS due to its flexibility in analysis of disaggregated consumer level data. In Essay 1, we utilize EASI model to estimate price and expenditure elasticities of 14 major food items using secondary data extracted from Household Income and Expenditure Survey (HIES) conducted by the Bangladesh Bureau of Statistics. The estimated elasticities are then used to evaluate the welfare consequences of rising food prices in Bangladesh. Welfare analysis based on both actual price change and simulated price change indicates that the welfare loss is the highest for lower income household. Further, the results indicate that the welfare loss of rural households was higher compared to that of urban households. The focus of the Essay 2 is on the analysis of pre-commitments in food demand in Bangladesh. Pre-committed demand is the portion of demand where the quantity demanded is not sensitive to changes in price or income. In the presence of pre-commitments, the demand is almost perfectly inelastic over the pre-committed portion of demand leading to biased estimates if it is not accounted for in modeling. The phenomenon of pre-committed demand for food has been more commonly observed in developing countries. Similar demand patterns are likely in Bangladesh with high proportion of low-income households and strong dependence on a range of staple food items by Bangladeshi households. Thus, in Essay 2, we utilize the generalized EASI (GEASI) demand model to estimate the demand elasticities of 14 major food items in Bangladesh by accounting for potential pre-commitments. The evidence of pre-committed demand is found in case of rice, pulse, vegetables and onion which accounts for 16.20%, 32.04%, 9.73% and 21.82% respectively. The new insights generated by the analysis in Essay 2 have important policy implications and can inform policy initiatives related to social safety net programs and food security of low-income households in Bangladesh. The Essay 3 focusses on forecasting supply and demand of rice in Bangladesh. Rice is not only the main staple food in Bangladesh but is also the single most important agricultural crop in terms of its contribution to national economy and its role in creating income and employment opportunities and ensuring food security. The analysis of rice supply and demand has always been at the center of policy makers attention in Bangladesh since the deficit tends to cause significant increase in price and resulting consumer welfare loss, while the surplus tends to result in price reductions negatively affecting farm profitability and household wellbeing in rural areas where the rice farming is the main source of income. Thus, the objective of this study is to forecast the supply and demand of rice with an aim to improve the understanding of potential deficit or surplus trends in the short- and long-term future. The analysis in Essay 3 utilizes ARIMA, Holt-Winter, and double exponential forecasting models. The findings reveal that both rice production and consumption will gradually increase in the short-run and in the long-run in Bangladesh. The forecasting results by ARIMA and Holt-Winter approaches show that there might be deficit in rice production in Bangladesh both in short-run and long-run with exceptions of rare surplus years. However, the results of double exponential approach indicate potential surplus in rice production both in the short-run and the long-run. Importantly, the deficits and surpluses are not large enough in magnitude to influence the price of the rice. The findings of the study would be useful for policy makers to formulate policies on rice production, distribution, export and import

Freshwater pond fish farming in Bangladesh: A micro level land use analysis

Market-oriented farming has been started in Bangladesh over last two decades. As a consequence, diversified agricultural products are now produced which changing the land use pattern. This study conducted in Trishal upazila of Mymensingh district, a major freshwater pond fish farming area of Bangladesh. Secondary data from different relevant government offices (Upazila Agriculture, Fisheries, and Statistical office) were collected to find out how much cropland has been converted to pond fish farming and what will be the future trend of land use in the afore mentioned area. Total land area of Trishal sub-district is 33876 ha and since last three-decade cropland has been converted to commercial freshwater fish farming. As a consequence, the area under commercial fish farming is now 4542 ha (13.41 per cent total area of Trishal upazila); which was only 1920 ha in the year of 2010. The commercial fish farming land area was converted mostly from cropland area and then a little portion came from Khas (Government owned fallow land) and fallow land area. Within six years (2010-2016), agricultural cropland area had decreased by 6.68 percent (1.11 per cent per year) and pond fish farming area had increased by 7.74 percent (1.29 percent per year). By 2021, following non-linear (quadratic) trend projection model, about 2000 ha more land will be occupied by pond fish farming

Fed Cattle Market Integration in Mandatory Price Reporting Era

Spatial market integration ensures price discovery, market efficiency and market competition. Price integration in fed cattle markets is a significant subject of research due to perishable nature of fed cattle, geographical distance between production and consumptions areas, and considerable transportation cost. This study examines United States fed cattle market integration using weekly price series of live steer and heifer for five major fed cattle markets in the era of Livestock Mandatory Price Reporting Act. Results indicate that all markets are cointegrated with sharing a common stochastic trend suggesting the Law of One Price. Causal relationship was found among most of the regional markets in case of steer prices, while the relationship was absent among most of the markets for heifer prices

IMPACT OF BIRD FLU RUMOUR ON PRODUCTION, MARKETING AND CONSUMPTION OF BROILER IN SELECTED AREAS OF BANGLADESH

The paper compares the profitability, price, marketing and consumption of broiler in bird flu rumour period with that in normal period. Savar upazila and Dhaka city were selected as producing and consuming areas respectively. Twenty farm owners, 25 intermediaries and 40 consumers were interviewed. Farmers earned only Tk 61 in bird flu period compared with Tk 112 in normal period by investing Tk 100 in poultry production. Marketing chain became shorter and marketing cost increased in abnormal period. Marketing margin and profit of traders decreased significantly due to low volume of trade. Consumers did not respond instantaneously to the rumour and average fall in price in bird flu period was three times as much as price fall in normal period. Over one-half of consumers totally stopped consuming broiler due to rumour of bird flu

Demand for Selected Animal Sourced Protein Food Items in United States

Consumers’ preference for food is ever-changing from carbohydrate to protein since protein plays a vital role in the balanced and healthy growth of human being. Among different sources of protein, animal sourced protein foods are getting popularity over time in United States. How demand for animal sourced protein food items are changing, and to be specific which animal food items are preferred by consumers are necessary to know both for producers and suppliers. This study estimates consumer demand for animal sourced food items in U.S. employing linear approximation of AIDS (LA-AIDS) model. Monthly per capita consumption expenditure data on aggregate and disaggregate animal protein items and price indices at national level from 1995 to 2016 have been collected from the Bureau of Economic Analysis of United States. The data consists of monthly per capita consumption expenditure on beef and veal, pork, other meats, poultry, and fish and seafood, and their price indices. The result shows exogenous growth in the budget share of all meat items. Estimated expenditure and cross price elasticities suggest that all goods are normal in nature and substitute to each other. In addition, weak separability test suggests that meat items are separable from non-meat items. The findings of the study would be helpful understanding consumer preferences and behavior for allocating budget among different sources of animal protein

LIVESTOCK MARKET INTEGRATION AND PRICE DYNAMICS IN THE UNITED STATES

This study examines livestock market integration and price dynamics in the United States using weekly price series of five major livestock market from October 2005 to March 2015. Engle-Granger and Gregory-Hansen bivariate co-integration tests and Johansen multivariate co-integration test were employed to measure integration among spatially separated markets. Price dynamics among livestock markets were investigated by the Vector Error Correction model. The result indicates that all markets are co-integrated with sharing a common stochastic trend suggesting the ‘Law of One Price’. The long-run and short-run dynamics of price suggest that the transmission of price changes from one market to another market during the same week is very fast. Livestock markets in the United States are well integrated reflecting satisfactory level of price discovery and market efficiency