Households rice demand in East Kalimantan: A QUAIDS approach

Abstract

As the new capital of Indonesia, East Kalimantan will drive population growth and increase demand for food (rice). Regarding food security, it is necessary to understand the economic and demographic factors that influence the demand for rice. SUSENAS 2021 data from BPS-Statistics Indonesia were used to analyse the impact of economic and demographic variables on rice consumption by including goods considered substitutes for rice as additional variables. The Quadratic Almost Ideal Demand System is employed to estimate the demand function and examine the effects of price, income, and demographic variables on seven food groups, including rice, maize, wheat, cassava, sweet potatoes, potatoes, instant noodles, and processed food. The study finds that increased household income leads to increased demand for all types of food and that rice consumption is more elastic in rural areas than in urban areas. Rice is income elastic for low-income households working in agriculture but is inelastic for other sectors and middle-high income. Maize and potatoes can be substituted for rice according to the cross-price elasticity, and rice is an independent good that is not affected by the prices of other goods. The government can reduce household rice consumption by increasing income and encouraging higher education.