STRUCTURAL FOOD PREFERENCE CHANGES AND THE EFFECTS THEREOF ON CONSUMER FOOD DEMAND STRUCTURE, SUBSISTENCE CONSUMPTION, AND ENVIRONMENT IN THE US, CHINA, AND RUSSIA

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: NEW
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 1016328
• Project No.: WYO-602-19
• Project Start Date: Oct 1, 2018
• Project End Date: Sep 30, 2023

Project Director
Hovhannisyan, VA.

Recipient Organization
UNIVERSITY OF WYOMING
1000 E UNIVERSITY AVE DEPARTMENT 3434
LARAMIE,WY 82071-2000

Performing Department
Agricultural And Applied Economics

Non Technical Summary
Rising income and population growth in the second half of the 20th century are considered two of the most significant factors contributing to the growth of global food consumption. New evidence also indicates the importance of demographic changes (e.g., rapid urbanization in China), political changes (e.g., the break-up of the Soviet Union), and increasing health concerns (e.g., potential health risks related to dairy and red meat consumption) in shaping consumer food preferences and food consumption dynamics. For example, urbanization in China has been on a steady rise recently, which has contributed to changing consumer food preferences and consumption patterns. This carries significant implications for food security in China and the global food trade, including trade flows with the United States, given the role China plays on global food markets. The major objective of this research project--which will be carried out at UW by Assistant Professor Vardges Hovhannisyan and his graduate research assistants-is to investigate the effects of the above phenomena on food demand structure and consumption dynamics (including subsistence consumption) in the U.S., China, and Russia. This will be done through the development of analytical frameworks that incorporate demographic, health, and other important factors into a consumer demand model for a variety of food commodities. The project will also consider the supply-side effects of these changes such as the urbanization-induced loss of agricultural land, increased pollution and deteriorating soil quality on food supply. Modeling these demand and supply components simultaneously will allow us to account for the major forces determining food prices more accurately. The distinct advantages of our enhanced analytical framework create potential for a wide range of empirical applications such as examining consumer response to changing food structures brought about by various economic and social reforms, as well as major structural changes such as rising urbanization. This makes the current approach useful for researchers and policy makers in a range of disciplines including agricultural economics, international development, health and nutrition, and trade.

Animal Health Component

0%

Research Effort Categories

Basic

(N/A)

Applied

100%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
607	6199	3010	100%

Knowledge Area
607 - Consumer Economics;

Subject Of Investigation
6199 - Economy, general/other;

Field Of Science
3010 - Economics;

Keywords

consumer demand

subsistence consumption

structural preference change

Goals / Objectives
Major Goal: Investigate effects demographic, political, and health concerns on food demand in the US, China, and Russia.Objectives:1.The major objective of the current study is to investigate the effects of various demographic, political, and health concerns on food demand in the US, China, and Russia by addressing the fundamental issues not examined in previous studies.2. To empirically examine these effects on food demand and consumer preferences by applying our framework to the most recent provincial-level panel data on consumer food expenditures provided by the respective state statistics bureaus.3. To construct anempirical framework that will recognize potential food supply and price responses to increased urbanization and other important changes resulting from the loss of agricultural land, increased water scarcity, and deteriorating soil quality.4. To investigate the effects of the above changes on subsistence consumption.

Project Methods
To address our objectives, we will modify an existing demand model to incorporate the effects of urbanization, health concerns, and structural preference changes on food demand and prices. In addition, we will model potential supply-side effects such as loss of agricultural land, increased water scarcity, and deteriorating soil quality on food supply and prices. This approach corrects for certain regression issues that could result in inaccurate empirical findings thus leading to unintended policy conclusions.Our study will use a provincial-level panel dataset collected by the NBSC, which contains household food expenditure surveys over the period 2005-2012. The data include unit prices and annual average household expenditures for seven widely consumed food commodity aggregates across 30 provinces/administrative divisions/cities, and consumer demographics. The seven food commodity aggregates include meats, seafood, vegetables, fruit, grains, eggs, and fats/oils. Further, we will supplement the household food expenditure panel information with annual data on land area under urban construction across provinces and time; chemical oxygen demand emission in water; amount of groundwater used as a proxy for water scarcity; agricultural land affected by flood, drought, wind and hail; and number of major productive fixed assets per 100 rural households. This latter set of variables account for the supply-side effects on food prices, and offer a promise of more precise estimation of consumer response to changes in their socio-economic environment.The analysis of food demand in Russia will be based on the most recent household food expenditures panel data provided by the Federal State Statistics Service (FSSS) of the Russian Federation. The data provide detailed information on consumption patterns for representative households from across the 79 provincial-level administrative divisions of Russia (such as oblasts, autonomous republics, etc.) over an eight-year period from 2007 to 2014. The data are collected by the FSSS through annual surveys of representative households as part of the Household Income and Food Expenditure Survey.

Progress 10/01/19 to 09/30/20

Outputs
Target Audience:We reachedthe academic community, agricultural and food producers, and policymakers at the annual conferences of the Southern Agricultural Economics Association,Western Agricultural Economics Association, and Agricultural and Applied Economics Association. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest?The results have been presented to the Kansas State Univeristy, as well as at the Southern Agricultural Economics Association's annual meeting. What do you plan to do during the next reporting period to accomplish the goals?We plan to quantifythe structure of demand for honey and other related sweeteners such as molasses and corn syrup. The own and cross-price elasticities estimated in this study have the promise of helping both honey consumers and producers in arriving at more informed decisions while providing the policymakers with the informational base for formulating more accurate and effective domestic and trade policies.

Impacts
What was accomplished under these goals? We investigated food preference changes in Russia that may have resulted from political, economic, and other changes. Our empirical framework utilizedadvances in consumer theory and exploitedprovincial-level panel data on food consumption and supply shifters to identify price and income effects. Our findings indicated that consumers had undergonea structural preference change that began in 2007 and continued into 2014. To illustrate the magnitude of this change, we contrasted economic effects for select food commodities across regions. The new insights will be useful in designing timely and effective food and trade policies, as well as informing strategy decisions of agribusiness industry players.

Publications

• Type: Journal Articles Status: Published Year Published: 2020 Citation: Hovhannisyan, V., M. Kondaridze*, C. Bastian, and A. Shanoyan. Empirical Evidence of Changing Food Demand and Consumer Preferences. Journal of Agricultural and Applied Economics

Progress 10/01/18 to 09/30/19

Outputs
Target Audience:Target audiencesfor these project include the academic community, agricultural and food producers, andpolicymakers. Our effortsto reach the target audience included presentations at a number professional meetings (such as the Southern Agricultural Economics Association's and Agricultural and Applied Economics Association's annual meetings) and conferences that were attended by the target audience memebers. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest? Nothing Reported What do you plan to do during the next reporting period to accomplish the goals?During the next reporting period we plan to conduct the analyses of the effects of the demographic, economic, social, cultural and other variables on food consumption, using data collected in the previous reporting period. We plan to submit the research output of these anaIysesto academic peer-reviewed journals, as well as prepare and present a number of papers on the topic at different professional venues.

Impacts
What was accomplished under these goals? To analyze the effects of various demographic, socio-economic, and other variables on food consumption and preferences in Russa and China, two datasets were collected: Provincial-level panel data on food consumption in the Russian Federation over 2006-2016 provided by the Russian Federal State Statistics Service (FSSS, 2018). The FSSS compiles data through household expenditure surveys from 276 cities throughout the autonomous regions, administrative districts, republics, oblasts, etc., that comprise the Russian Federation, based on a representative sample of residents. Information collected includes per capita consumption of a number of food and non-food items, category-specific expenditures, as well as consumer socio-economic and demographic characteristics. Provincial-level panel data on food consumption in China covering the period from 2005 to 2017 which constitutes the most recent and the longest province level panel data on Chinese consumer food expenditures (NBSC, China Statistical Yearbooks 2005-2017). The data were obtained from the National Bureau of Statistics of China (NBSC) and include detailed information on household food expenditures, unit prices, household socio-demographic characteristics, and agricultural commodity supply shifters. The NBSC collects data from representative urban households annually as part of the Chinese Urban Household Income and Expenditure Survey. The survey is conducted using a two-stage stratified systematic random sampling method, where a third of households are dropped each period and replaced with a fresh sample of equal size based on a rotating-sample design. The collected data are then aggregated by the NBSC to province level.

Publications

• Type: Conference Papers and Presentations Status: Other Year Published: 2019 Citation: Hovhannisyan, V. Effects of Urbanization on Subsistence Consumption in China. Selected Poster Presented at the Annual Meeting of Agricultural and Applied Economics Association, Atlanta, GA, 2019.
• Type: Conference Papers and Presentations Status: Other Year Published: 2019 Citation: Kondaridze, M. and V. Hovhannisyan. Consumer Food Preference Changes in Russia. Selected Paper Presented at the Annual Meeting of Southern Agricultural Economics Association, Birmingham, AL 2019.
• Type: Conference Papers and Presentations Status: Other Year Published: 2019 Citation: Kondaridze, M. and V. Hovhannisyan. Welfare Consequences of Food Price Increase in Russia. Selected Poster Presented at the Annual Meeting of Southern Agricultural Economics Association, Birmingham, AL 2019.
• Type: Conference Papers and Presentations Status: Other Year Published: 2018 Citation: Hovhannisyan, V., and A. Shanoyan. An Empirical Analysis of Welfare Consequences of Rising Food Prices in Urban China: The EASI Approach. Selected Paper Presented at the Annual Meeting of Agricultural and Applied Economics Association, Washington, DC 2018
• Type: Conference Papers and Presentations Status: Other Year Published: 2018 Citation: Hovhannisyan, V., and A. Shanoyan. Addressing Pre-Commitment Bias with Generalized EASI Model: An Application to Food Demand in Russia. Selected Paper Presented at the Annual Meeting of Southern Agricultural Economics Association, Jacksonville, FL 2018.
• Type: Conference Papers and Presentations Status: Other Year Published: 2018 Citation: Hovhannisyan, V., and M. Kondaridze. Changing Structure of Food Consumption in Russia. Selected Poster to be Presented at the Annual Meeting of Southern Agricultural Economics Association, Jacksonville, FL 2018.
• Type: Journal Articles Status: Under Review Year Published: 2020 Citation: Hovhannisyan, V., M. Kondaridze*, C. Bastian, and A. Shanoyan. Empirical Evidence of Changing Food Demand and Consumer Preferences. Journal of Agricultural and Applied Economics. Revised and resubmitted.