An econometric analysis of rice consumption in the People's Republic of China

Rice is the most important staple food in the People's Republic of China (PRC). In many Asian countries rice appears to have become an inferior good, with income increases leading to declines in per capita consumption as other food products are substituted for rice. In this study, human rice consumption is analyzed with a model that allows income elasticities to vary with income levels. An additional equation accounting for rice disappearance as seed, livestock feed, industrial uses and exports is also estimated. The results of the analysis indicate that rice has become an inferior good in China and per capita consumption is likely to decline in the future. Population growth and the growing use of rice for other purposes means that total rice disappearance will continue to increase although at a rate that is slower than has historically been the case. The predicted changes in rice consumption will create pressures to adjust production and trade patterns for rice as well as other agricultural products.