ifpri - consumption pattern of pulses and price elasticity, p kumar, aera

Consumption Pattern of Pulses

and Price Elasticity

Praduman kumar

Former Professor, IARI

The study: • The pulses constitute an important

component of Indian diet and there is a big

demand for pulses across country.

• While studying pulses, researchers

normally treat pulses as a single

commodity group, but this study has

recognized pulses as a heterogeneous

commodity because demand for each

major pulses varies widely across different

regions of India based on tastes and

preferences and type of food preparation.

The study is focused on the estimation of

price and income elasticities of demand for

major pulses and dealt with:

• Consumption pattern of different pulses in

India

• Identify drivers of changes in consumption

pattern of pulses

• Expenditure and price elasticity of demand

for pulses (chickpea, pigenpea,

mungbean,urad and others (lentils+))

• Demand-Supply scenarios for pulses

The data

• Various rounds of NSSO’s Consumption

Expenditure Survey(CES) from 1983 to

2011

• Unit household data of rural and urban

pertain to NSS rounds 38, 43, 50, 55, 61,

68.

• Total households sample about 120K in

each round.

Classification of HH data

• Rural and urban

• Expenditure quartiles

• Food habit (vegetarian and non-vegetarian)

• Dietary diversification

• Social groups

Share of pulse nutrient in total nutrient intake

State Intake/cap/day

Pulses share in

total intake, %

1983 2011 1983 2011

Calories (kcl) 2223 2095 3.8 4.5

Protein (gram) 55.8 56.3 10.0 10.9

Annual consumption of pulses

(kg/person)

1988 1999 2004 2011 Change

%

1988-

2011

CGR,

%

India 11.6 10.5 8.93 9.90 -14.6 -0.69

Rural 11.2 10.0 8.62 9.54 -14.8 -0.69

Urban 12.5 14.5 9.54 10.48 -16.2 -0.76

Expenditure quartile

Poor 8.7 7.8 6.57 7.61 -12.53

-0.58

Rich 16.5 18.4 12.29 13.24 -19.8 -0.95

Annual consumption of pulses (kg/person) 2004 2011 Change,%

Food habits

Vegetarian 10.0 10.9 + 9.0

Non-

vegetarian

8.4 9.5 +13.1

% Change +16.0 +13.1

Ration card holder

Yes 8.9 9.9 +11.4

No 9.3 10.1 + 8.6

% change - 4.3 - 2.0

Dietary diversification index

Low (<33%) 7.8 8.2 +5.1

High ( >66%) 10.9 11.9 +9.2

% change +40.1 +44.8

Consumption pattern of different pulses, 2011

Chickpea Pigenpea Mungbean

Black

gram Lentil+ Pulses

Annual per capita consumption of different pulses (kg)

2004 1.62 2.48 1.16 0.99 2.68 8.93

2011 2.38 2.62 1.22 1.05 2.63 9.90

% change 46.9 5.6 5.2 6.1 -1.9 10.9

Per cent share of major pulses in total pulses

2004 16.6 30.3 13.4 10.7 29.0 100

2011 20.2 29.3 14.7 11.1 24.7 100

Share (%) of major pulses in total pulses

consumption, 2004 & 2011

Chickpea Pigeon

pea

Mung

bean

Black

gram

Lentil

Poor households

2004 13.4 35.2 11.9 9.1 30.4

2011 17.7 32.0 11.4 9.0 30.0

Rich households

2004 19.1 26.5 14.2 12.3 27.8

2011 22.0 26.7 16.9 13.5 20.9

Alternative Approaches: to

estimation of demand model

• Demand Analysis

– Single equation (Estimation of Engle

Function)

– Demand System

• Linear expenditure system (LES)

• Almost Ideal Demand System (AIDS)

• Food Characteristic Demand System (FCDS)

• 3 Stage Demand System (3SDS)

Total Expenditure

Non-food commodities Food

Vegetables

Milk Cereals

MFE Pulses

Types of pulses(gram, arhar, moong, urad, lentils+

Multi-Stage Budgeting Framework

Stage 1: Food expenditure for a household

can be expressed as:

)Z,Y,P,P(fM h

t

h

tnftft

h

t

Stage 2: Pulses expenditure can be

expressed as:

)Z,M,P(fF h

t

h

tt

h

t

Stage 3: Aids specification

)F,PF(fS h

tt

h

it

Proposed Analytical…

AIDS/LA restrictions

Adding up

n

i

i

1

1 a

n

i

ij

0

0 g

n

i

i

0

0 b

Homogeneity j

ij 0 g

Symmetry ji ij

g g

Restrictions on stage 3

• The homogenty and symmetry restrictions

were imposed at sample mean. Adding up

restriction was imposed while computing

the parameters of the last equation of the

model, which was not included in set of

estimations

Expenditure and price elasticity for main

food in India

Food Income Price

2004 2011 2004 2011

Pulses 0.70 0.66 -0.71 -0.77

Cereal 0.27 0.19 -0.32 -0.21

Vegetables 0.59 0.54 -1.07 -1.08

Milk 0.58 0.50 -0.70 -0.76

Meat, Fish & Eggs 0.54 0.53 -1.43 -1.39

Cross price elasticity of pulses

India

Food Rural Urban

2004 2011 2004 2011

Cereals -1.13

-0.97

-0.58

-0.51

Vegetables 0.29

0.22

0.23

0.19

Milk 0.04

-0.12

0.02

0.00

Meat, Fish &

Eggs -0.11

-0.13

0.04

0.03

Issues of cross price elasticities • The positive sign of cross-price elasticities indicates

a substitute relationship while a negative sign

indicates a complementary relationship among the

pair of goods.

• Cross-price elasticities of pulses are positive with

vegetables, negative with cereals and highly

inelastic with milk & MFE implies:

• - Pulses and vegetables are substitutes

• - Pulses and cereals are complimentary

• - Pulses and livestock products (milk, mfe) are

independent.

Income elasticities of major pulses by

income quartiles in India

Own price elasticities for pulses, India

Pulses Rural Urban All India

2004 2011 2004 2011 2004 2011

Chick pea -0.89 -0.96 -0.76 -0.84 -0.85 -0.92

Pigeon pea -0.84 -0.85 -0.88 -0.89 -0.85 -0.96

Mung bean -1.05 -1.03 -1.09 -1.08 -1.06 -1.05

Black gram -1.03 -1.03 -0.98 -0.99 -1.02 -1.02

Lentil -1.12 -1.10 -1.14 -1.12 -1.12 -1.10

All pulses -0.80 -0.83 -0.67 -0.76 -0.71 -0.77

Cross price elasticities

Pulses Chickpea Pigeon

pea

Mung

bean

Black

gram

Lentil +

Chickpea +0.078 +0.022 +0.020 -0.192

Pigeon pea +0.062 +0.052 +0.041 -0.282

Mung bean -0.08 -0.097 -0.032 -0.040

Black gram -0.061 -0.080 -0.035 0.192

Lentil + +0.025 +0.050 +0.014 +0.017

Demand elasticities for pulses in India Demographic

area

Income group of households

Poor Middle income Rich All

Income elasticity

Rural 0.499 0.285 0.111 0.248

Urban 0.501 0.260 0.090 0.176

All India 0.500 0.274 0.098 0.206

Own price elasticities

Rural -0.686 -0.507 -0.300 -0.448

Urban -0.723 -0.557 -0.381 -0.462

All India -0.699 -0.530 -0.349 -0.456

Summation of income and price elasticities (Pure price inflation)

Rural -0.187 -0.222 -0.189 -0.200

Urban -0.222 -0.297 -0.291 -0.286

Domestic demand and supply of pulses

India

(Million tonnes)

Year Demand Supply D-S Gap

Pulse grains Pulses Trade of

pulses

2010 18.0 16.2 14.6 -3.5

2015 19.9 18.3 16.4 -3.4

2020 21.9 20.7 18.6 -3.3

2025 24.1 23.3 21.0 -3.1

2030 26.6 26.4 23.7 -2.8

Observations:

• Although per-capita consumption of pulses

has declined over time, the total demand

for pulses is growing continuously in India

driven by rising population, growing

economy, expending urbanization.

• Low productivity of pulses, marginal nature

of pulse farming, and low response of the

pulse crop to input management put on

supply constraints and resulted to about

annual 3 to 4 million tons deficit of pulses.

Observations…..

• Cereals and pulses are complementary to each

other. Higher demand for pulses is expected to

come from low-income households and cereal

based diet and poor comprise bulk of the Indian

population.

Observations…..

• Each type of pulses are equally preferred

by the consumers. To provide nutritional

security and price stability, it is essential to

have equal emphasis on ensuring supply

for each pulse species.

Thank you