See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/263086114

Demand for pork and other meats: new estimates and implications for
livestock development policy in Vietnam

Conference Paper · February 2010

CITATIONS READS

2 1,058

7 authors, including:

Toan Nguyen Ma. Lucila A. Lapar

Hochiminh National Academy of Politics Consultative Group on International Agricultural Research
14 PUBLICATIONS   76 CITATIONS    57 PUBLICATIONS   1,044 CITATIONS   

SEE PROFILE SEE PROFILE

Mohammad A. Jabbar Clement Allan Tisdell

Freelance Consultant The University of Queensland
294 PUBLICATIONS   2,718 CITATIONS    2,009 PUBLICATIONS   13,921 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Tourism Development and Conservation Presentation View project

Koala Extinction: Inefficient Conservation Strategies Identified and Examined – Moral and Ethical Issues View project

All content following this page was uploaded by Mohammad A. Jabbar on 19 April 2016.

The user has requested enhancement of the downloaded file.

 Demand for pork and other meats: new estimates and
implications for livestock development policy in Vietnam

Nguyen Ngoc Toana, Ma. Lucila A. Laparb, Nguyen Ngoc Quec, Mohammad Jabbard,
Clement Tisdelle, Nick Minotf and Steve Staalg

a
Research Officer, International Livestock Research Institute (ILRI), Hanoi, Vietnam; Email: l.lapar@cgiar.org
b
Scientist, ILRI, Hanoi, Vietnam; Email: n.toan@cgiar.org
c
Vice Director, Center for Agricultural Policy-Institute for Policy and Strategy for Agriculture and Rural
Development, Hanoi, Vietnam
d
Agricultural Economist, ILRI, Dhaka, Bangladesh
e
Professor Emeritus, University of Queensland, Australia
f
Senior Research Fellow, International Food Policy Research Institute, Washington DC, USA
g
Markets Theme Director, ILRI, Nairobi, Kenya

Contributed paper presented at the Australian Agricultural and Resource Economics Society
Conference, Adelaide, Australia. 9-12 February 2010.

Corresponding author: Ma. Lucila. A. Lapar

International Livestock Research Institute (ILRI) – Hanoi Office
3rd floor, No.1, Lot 14A, Trung Yen 3 street,
Yen Hoa ward, Cau Giay district,
Hanoi, Vietnam
Phone number: +84 4 37834645 Ext:32
Email address: l.lapar@cgiar.org
 Abstract

This paper seeks to examine to what extent changes in consumer income and prices of pork and other

meat are likely to influence the demand for pork. We conduct a demand analysis of fresh pork and

other pork (frozen and processed) and a number of other meat items, using the Almost Ideal Demand

System (AIDS). We use data from 1,650 households in consumer surveys in Hanoi and Ho Chi Minh

city and six rural provinces across Vietnam, selected purposely to represent the geographical and

economic diversity of the country. An empirical issue with this type of analysis is the truncated nature

of consumption data that induces bias in the estimates. This is addressed by applying the generalized

Amemiya two-stage procedure, which is asymptotically more efficient than alternative methods, such

as the Heckman correction. We find that fresh pork and other pork are relatively inelastic to own price

and to meat expenditure, indicating that pork is not a luxury good within the Vietnamese context.

Poultry, egg, beef and seafood appear to be more elastic to meat expenditure. We present projected

scenarios of meat demand growth and composition with incremental change in total meat expenditure.

We show that pork demand will increase substantially with income despite the fact that consumers

tend to gradually shift their diet towards higher proportion of poultry, eggs, beef and seafood. Pork

will remain the dominant meat demanded by Vietnamese consumers even if its proportion to total

meat expenditure will diminish minimally as income rises. Implications for production and pro-poor

livestock development strategy are discussed.

Keywords: AIDS Model, Pork Demand, Livestock Policy, Vietnam

Research Highlights (3-5 bullet points, each has maximum 85 characters. This will
constitute a separate file when the paper is submitted)

We examine likely responses of meat demand to changes in price and expenditure.

Fresh pork is a normal good and its demand will rise substantially with income.

Other pork, poultry, eggs and seafood appear as complements of fresh pork.

Pork will remain the dominant meat as income grows.

Smallholder pig producers can exploit the opportunities of growing pork demand
 1. Introduction

Pork is the major source of animal protein in Vietnamese diet and has consistently

accounted for a predominant share of Vietnamese meat consumption in the last several

decades (Tung et al, 2005; Nguyen et al, 2006; Huynh et al, 2007). Along with rapid

economic growth and increasing affluence of Vietnamese population, demand for pork and

other meat has been increasing steadily and at the same time, consumers have become more

demanding with respect to the quality and food safety aspects of meat (Humphrey, 2005;

King and Venturini, 2005; Reardon et al, 2001, Regmi and Gelhar, 2005). In response to the

change in demand, livestock farming has been gradually shifting from dominantly family-

based farms with local breeds and traditional feeding technology to larger, commercial farms

with improved breeds and industrial processed feed (Huynh et al, 2007). Nonetheless,

household-based production still dominate the industry (Huynh et al, 2007; Tisdell, 2008).

The concern is whether they will be able to compete and earn income from pig production in

the context of increasing competition from imported meat and large domestic producers. The

evolution of demand for pork and other meat would to growing consumer income and

changes in meat prices, therefore, have important implications to the development of

Vietnamese pig sector, the majority of which are smallholders, and to livestock development

policy in Vietnam.

This paper seeks to examine to what extent the increase in consumer income and price

likely influence the demand for pork and other types of meat in Vietnam. To this end, we rely

on a flexible analytical framework, first introduced in a seminal paper of Deaton and

Muellbauer (1980), the Almost Ideal Demand System (AIDS). The model is fitted with a

dataset collected from consumer surveys in Hanoi and Ho Chi Minh city and six rural

provinces across Vietnam, selected purposely to represent the geographical and economic

1
diversity of the country. Seven meat items are considered: fresh pork, other pork

(chilled/frozen and processed pork), poultry, eggs, beef/carabeef, fish and seafood.

An issue pointed out in, for instance, Deaton (1990), Cox and Wohlgenant (1986),

Huang and Lin (2000), with this kind of study is that the difference in unit price of a goods

considered might also reflect the difference in its quality, leading to the underestimate of

demand elasticity. To remove potential quality effects, unit prices are corrected by applying

the Cox and Wohlgenant (1986) procedure. Another issue with our model is the truncated

nature of the data, which contains some zero values since certain meat items are not

consumed by some households. The non-negativity of the dependent variable might induce

bias in the estimates. We deal with this problem by employing a two-stage produce à la

Heien and Wessels (1990). In the first state, we model the choice of households to consume

or not consume a particular meat item in a probit framework. Inverse mills ratios (IMRs)

computed from the probit regression are then used as instrumental variables in the second

stage equations, where we relate the share of expenditure for each meat to real total meat

expenditure, prices of all meat considered and a number of demographic variables.

To our knowledge, this study is the first dealing exclusively with disaggregated

demand for various meat categories in Vietnam. Previous studies, such as Niimi (2005), Canh

(2008) and Vu (2009), considered meat as a lumpsum group in a basket of goods. Moreover,

instead of extracting data from the Vietnam Household Living Standards databases as others,

we use a novel dataset collected from a tailored survey, designed specifically to capture

consumers’ behaviors with respect to meat consumption and shopping preferences.

Furthermore, we go beyond simply describing demand patterns to discuss implications to the

development of livestock sector, smallholder inclusion and livestock development strategy.

The remainder of the paper is as follows. In section 2, we briefly describe the

analytical model and data. Section 3 reports estimation results and discuss implications of the
2
findings in the context of Vietnamese livestock sector. The final section, as usual, is

concluding remarks.

2. Model and Data

There are a number of approaches that have been attempted in consumer demand

analysis and estimation of demand elasticity1. One of the early models is the one proposed by

Working (1943) and Leser (1963), which expresses the expenditure share of a goods

consumed as a linear function of the logs of all goods prices and the log of total expenditure.

S
wi   0   i ln( x)    ij ln( p j )   i (1)
j 1

where wi is the expenditure share of good i in total expenditure x of S goods; p j is the price of

goods j;  i is the disturbance term assumed to have zero mean and constant variance.

The Working-Leser model, as any other single-equation model, though based on

economic theory and simple to estimate, fail to generate predictions compatible with the

requirements of demand theory, particularly the budget constraint, since it does not capture

the interdependence in the choice of goods by consumers. One will need a complete demand

system, which considers simultaneously multiple goods in consumers’ consumption basket.

Several of such systems have been proposed in the literature.

The first complete demand system is the Linear Expenditure System (LES), pioneered

by Stone (1954). It is derived by maximizing the Stone – Geary utility function under a

budget constraint. This system, however, cannot be used with inferior goods and implies a

linear Engel function, which is unlikely in reality. There are other competing demand systems,

though not as popular, such as the Rotterdam model developed by Theil (1965, 1976) and

Barten (1969) and the translog model of Christensen et al (1975).

1
A detail account of various models in demand analysis is given in, for example, Sadoulet and Janvry (1995),
chapter 2.

3
 In this paper, we employ a flexible complete demand model, the “Almost Ideal

Demand System” (AIDS), developed by Deaton and Muellbauer (1980). The model has many

desirable properties: it satisfies the axioms of choice; aggregates perfectly over consumers

without resort to linear Engel curve; and linear restrictions of homogeneity and symmetry can

be easily imposed. The AIDS equations, in expenditure share form, look somewhat similar to

the Working-Leser model.

S
w i   i   i ln( x / P )    ij ln( p j )   i (2)
j 1

where P is the price index defined as:

S
1 S S
ln P   0    k ln( pk )    kl ln( pk ) ln( pl ) (3)
k 1 2 k 1 l 1

S
Given that the expenditure shares sum to unity or  wi  1 , the parameters of the
i 1

model must satisfy the following restrictions:

S S S
Adding-up restrictions: 
i 1
i  1;  i  0;   kj  0 (4)
i 1 k 1

S
Homogeneity restrictions: 
k 1
jk  0 (5)

Symmetry restrictions:  ij   ji (6)

for all i, j.

The price index in (3) is, however, non-linear in the parameters. Moreover,  0 is not

estimable and there is no way to ascertain its plausible value. One way to deal with the non-

linearity of the price index is to assign, a priori, a value to  0 and estimate the non-linear

AIDS system by either maximum likelihood or Bayesian Gibbs sampling technique.

Nevertheless, we follow Deaton and Muellbauer (1980) to go around this problem in a

simpler manner by approximating the non-linear price index P by the Stone (1953) price
4
index P* that is defined as P*  P /  and ln( P* )   wi ln( pi ) , where E (ln( ))   0 . The
i

linear approximate AIDS model (LA/AIDS) is thus:

S
w i   i*   i ln( x / P* )    ij ln( p j )   i* (7)
j 1

where i*  i  i ln( ) .

Equation (7) specifies that the share of expenditure on a goods can be explained

exclusively by its price, the prices of other goods and real expenditure. However, it is

observed that not only prices and real expenditure but other factors, such as demographic

characteristics of consumers, also influence their consumption (see, i.e. Heien and Wessels

(1988) and Kinnucan (1986)). To incorporate demographic variables into the LA/AIDS

model, the Pollak and Wales (1978) translating approach is employed to maintain the

linearity of the system2. The model then becomes:

S K
w i   i*  i ln( x / P* )    ij ln( p j )    ik d k  i* (8)
j 1 k 1

where d k (k=1,..,K) is a demographic variable.

The above specification is ready for estimation using conventional methods. A

problem arises, however, in that there are some goods not consumed by some households,

leading to zero values in the dependent variable. The non-negativity of expenditure share

means that the dependent variable is censored. To correct the bias created by this censorship,

Heien and Wessels (1990) suggests applying the generalized Amemiya (1974) two-stage

regression. Lee (1978) proves that this procedure is asymptotically more efficient than similar

estimators by Heckman (1978) and Nelson and Olsen (1978). We follow this approach. In the

2
The other popular method is the scaling approach, which is non-linear. For a comparison of the approaches in
incorporating demographic variables, see Pollak and Wales (1981).

5
first stage, household decision to consume or not consume a particular goods is modeled as a

dichotomous choice problem in a probit regression framework.

yi  fi ( p j , x, dk ) (9)

where yi is unity if household i consumes good j and zero if the household does not;

p j , x and d k are variables defined as above. From the estimates of (9), inverse Mills ratio

(IMRs) for household i is derived.

IMRi   ( fi ) / ( fi ) (10)

where IMRi is the inverse Mills ratio for household i,  and  is the standard normal density

and cumulative density functions, respectively. If household i do not consume good j, the

inverse Mills ratio is computed as

IMRi   ( fi ) / (1  ( fi )) (11)

These ratios are then used as instruments in the second-stage equations (8).

S K
w i   i*   i ln( x / P* )    ij ln( p j )    ik d k i IMRi   i* (12)
j k 1

Note that the variance – covariance matrix of the error terms in (12) will be singular

due to the adding-up property. To address this, the convention is to drop one equation from

the system and derive its parameters from parameters of other equations, using the adding-up

restrictions. Pollak and Wales (1969) proves that estimates are invariant to which equation is

dropped.

The estimates of parameters in AIDS demand model are used to generate price and

expenditure elasticity of the goods. Green and Alston (1990) and Buse (1994) show that

Mashallian uncompensated own and cross price elasticity for an AIDS model can be

computed by taking the derivative of (12) with respect to ln( p j ) . The formulae for own-price

and cross-price elasticity are as follows:

6
  
Own-price elasticity: eiiu  1   ii   i (13)
 wi 

  ij    
Cross-price elasticity: eiju      i  w j (14)
 wi   wi 

where w i is the mean of expenditure share of goods i. Expenditure elasticity of the model is

obtained by taking the derivative of (12) with respect to ln(x).

 
ei  1   i  (15)
 wi 

The Hicksian compensated elasticity are derived as:

 
Own-price elasticity: eiic  1   ii   wi (16)
 wi 

  ij 
Cross-price elasticity: eijc     w j (17)
wj 

The above LA/AIDS model is applied to a dataset of 1650 households in two major

cities of Hanoi and Ho Chi Minh (HCMC) and six rural provinces in Vietnam, selected so as

to represent the geographical and economic diversity of the country. Seven most popular

types of meat in Vietnam are considered in our model: fresh pork, other pork (frozen and

processed), poultry, eggs, beef, fish and seafood. The variables employed are defined in

Table 1. To avoid the singularity of the disturbance variance - covariance matrix, we drop the

last equation for seafood and compute its parameters from parameters in other equations.

It has been argued, however, in Deaton (1990), Cox and Wohlgenant (1986), Huang

and Lin (2000) and others, that unit price data in such a demand system might include quality

effects and changes in income and price might translate into changes in not only quantity but

also quality of the goods, leading to the underestimate of demand elasticity. To correct this,

we remove possible quality effects in unit price using Cox and Wohlgenant (1986) procedure.

Cox and Wohlgenant assumed that the difference between unit price paid by a household and
7
the communal average reflects the difference in quality and that quality effect is influenced

by household income (herein expenditure) and other demographic characteristics. They

define unit price of a goods as:

k
pi  p i  i x   i , j d j  i (18)
j 1

where p i is the communal average price,  i is error term, x and d j are as above. The quality-

free price is obtained by removing the parts explained by household’s characteristics.

p *i  p i  i (19)

The corrected, quality-free price is then used to feed the LA/AIDS model (12). To

capture possible correlations of error terms across equations, Zellner (1962) seemingly

unrelated regression (SUR) is employed to estimate the system.

3. Results and Discussion

The results of the first and second stage estimation are reported in Table 2 and Table 3.

The probit regression shows that the decision to buy a meat item is positively influenced by

the total budget for meat purchase. Regarding the impact of meat prices, purchase decision

depends partially to own price, except for other pork and eggs. Prices of other meat also

matter. Consumers tend to purchase some meat items if prices of alternative meat increases.

For example, pork purchase is more likely when prices of other pork, poultry and eggs prices

increase. On the other hand, consumers might refrain from consumption of some meat items

if their prices rise. The likelihood to purchase other pork and beef is negatively associated

with changes in fresh pork price, for example. Demographic characteristics such as location

(urban or rural), household size and education level and employment of female head/spouse

also affect consumers’ decision to buy a meat item.

The estimates of second stage equations in Table 3 reveal factors that influence the

proportion of total meat expenditure allocated to each meat item, except for seafood, of which
8
the equation is not estimated. These factors include meat prices, total real meat expenditure

and household demographic attributes. Real meat expenditure appears to be the most

influential factor affecting the shares of all meat items. With higher real expenditure,

households tend to consume higher proportion of poultry and beef and lower proportion of

pork and fish. The expenditure share of a meat item is also associated with its own price. An

increase in fresh pork price, for example, will likely increase its share while reducing the

shares of other pork, eggs and fish. Prices of other meat play a role as well. For instance, the

share of fresh pork is negatively affected by the prices of other pork, eggs, fish and seafood.

The share of other pork, however, increases with the prices of poultry and seafood. Similar to

the case of decision to consume, several household characteristics, including household size,

gender of household head, age and education of female head/spouse and geographical

location, affect the composition of meat expenditure

The impact of income and price changes on meat demand is presented in Table 4 and

Table 5, where we show Marshallian and Hicksian elasticities. As the parameters in seafood

equation are derived from other equations, it is not possible to report the degree of statistical

significance associated with elasticities of seafood demand. Estimated own price elasticities

and expenditure elasticities of meat demand all have the correct sign and are statistically

significant, except for own price elasticity of demand for other pork. The estimates indicate

that demand for every meat item is relatively inelastic to own price.

Expenditure elasticities are positive and quite high for all meat items, implying that

the meat items are all normal goods and their consumption will increase with income. Fresh

pork, other pork and fish appear as necessity goods. However, the expenditure elasticity of

fresh pork is close to unity. It is interesting to observe that not only poultry and seafood but

also eggs are luxury goods. Explanation of this might require further investigation. Beef can

9
also be considered as a luxury, given that the upper bound of the 95-percent confidence

interval of the estimated beef demand elasticity is higher than unity.

Cross-price elasticities show substitutability and complementarity among the meat

items. A rise in fresh pork price tends to reduce demand for other pork, poultry, and eggs,

indicating that these items are complements of fresh pork. Fresh pork and fish appear as

complements of other pork. On the contrary, poultry and other pork are substitutes.

Substitutability can also be seen between eggs and fish, seafood and other pork, and seafood

and beef. Complementarity are found between poultry and fish, eggs and beef, beef and

poultry, fish and poultry, and fish and seafood. Demand responses to price changes above are

due to both substitution and income effects. The income-effect free or compensated

elasticicities are reported in Table 5.

The above results allow us to have a vision of how continued income growth and

changes in prices will shape the pattern of meat consumption in the future. Figure 1

demonstrates some projections of the growth and composition of meat consumption under

various scenarios of incremental changes in meat expenditure. It is obvious that the growth of

seafood demand would surpass that of other meat items. It would almost triple when income

doubles. Responses of demand for other items are much less remarkable. Demand for fish,

pork and beef would grow more slowly than expenditure. Demand for poultry would rise

faster than that of expenditure but much more slowly than that of seafood. Figure 2 shows the

projected evolution of meat demand composition with incremental changes of meat

expenditure. The proportion of fresh pork would diminish gradually as income rises, from 39

percent at present to 37 percent if expenditure doubles. Similarly, the share of fish decreases

from 22% to about 21%. On the other hand, the share of poultry increases from 18 to 19%.

Remarkably, the share of seafood would rise 50 percent if income doubles, although starting

from a low base. These projections suggest that while consumers tend to diversify their meat
10
consumption out of pork as they become more affluent, pork demand will still rise

substantially and pork will remain the dominant meat consumed in Vietnam. Consumers tend

not to substitute fresh pork with other meat. Instead, their fresh pork consumption is likely to

increase with the rise of other meat prices.

The above findings have important implications for production and pro-poor livestock

development strategy in Vietnam. While the growing demand for pork and other meat bring

about opportunities for livestock production, there is a concern that domestic production may

not be able to meet market requirements and whether smallholder producers will be squeezed

out of the industry, given their resource and other constraints. The empirical evidence

suggests that as long as economic and income growth can be sustained, demand for pork and

other meat will increase. Smallholder producers currently supply the majority of meat in

Vietnamese markets and will likely remain so in the next decade, despite the emergence of

large commercial farms with support by the Vietnamese government (Minot et al, 2010). An

interesting characteristic of Vietnamese pork market is consumer strong preferences for

freshness and for open wet markets as their channel for daily meat shopping. These outlets

are closely linked to pork supply chains involving smallholders. These preferences provide

domestic production a degree of natural protection against imports and favor continued

smallholder participation in pork supply chains (Lapar et al, 2009; Tisdell et al, 2010). What

remains as a development policy challenge is whether smallholders can compete and reap the

benefits from these market opportunities.

There is evidence that household-based pig producers are competitive in producing

pork that meets the demand requirements of the Vietnamese fresh meat market, as long as

they can exploit their advantages (Lapar and Staal, 2010). Growing demand would, therefore,

potentially translate into growing livestock production from smallholder producers,

generating income and employment for the vast majority of rural poor in Vietnam. Livestock
11
development policy must provide support to address smallholders’ constraints in order

enhance smallholder competitiveness. Interventions must aim at facilitating smallholders’

uptake of appropriate technologies and practices, especially in areas of their comparative

advantage, and improving their access to supporting services.

4. Conclusion

In this paper, we attempt to investigate the likely responses of demand for pork and

other meat to changes in income and meat prices. Particularly, we use a two-stage procedure

to estimate a LA/AIDS model with data collected from a consumer survey in Vietnam. We

show that demand for pork and other meat appears relatively inelastic to own price. Own

price fluctuations, therefore, would not much alter meat demand. We find other pork, poultry,

eggs and seafood are complements of fresh pork rather than substitutes. Thus, a rise in pork

price would not induce higher demand for these items.

Regarding demand response to income change, we demonstrate that the meat items

are normal goods and hence their demand grows with income. Although consumers tend to

diversify their diet towards higher shares of seafood, poultry, egg and beef as their income

rises, pork remains the dominant meat in Vietnamese diet. Our projection scenarios indicate

that the proportion of pork in meat consumption would change minimally with incremental

changes in total meat expenditure.

The findings have important implications on the development of pig sector and

livestock policies in Vietnam. As long as economic and income growth is sustained, there are

opportunities for smallholder pig producers to grasp to supply to growing pork demand,

generate income and utilize family labors. Despite increasing competition from imported

meat and from larger commercial farms, there is evidence that smallholder producers are

competitive and will remain so, provided that they can exploit areas of their advantages.

Consumer preferences for fresh meat and for traditional market outlets provide domestic
12
production a degree of natural protection against import meat and further favor smallholder

continued participation in pork supply chains. Livestock policy must further enhance their

competitiveness by addressing smallholders’ technological and institutional constraints.

13
 Reference

Amemiya, T., 1974. Multivariate Regression and Simultaneous Equation Models When the

Dependent Variables are Truncated Normal. Econometrica. 42, 999-1012.

Barten, A. P., 1969. Maximum Likelihood Estimation of a Complete System of Demand

Equations. European Economic Review. 1, 7-73.

Buse, A., 1994. Evaluating the Linearized Almost Ideal Demand System. American Journal

of Agricultural Economics. 76, 781-793.

Canh, L. Q., 2008. An Empirical Study of Food Demand in Vietnam. ASEAN Economic

Bulletin. December 2008.

Christensen, L. R., Jorgenson, D.W., Lau, L.J., 1975. Transcendental Logarithmic Utility

Functions. American Economic Review. 65, 367 – 83.

Cox, T.L., Wohlgenant, M.K., 1986. Prices and Quality Effects in Cross-sectional Demand

Analysis. American Journal of Agricultural Economics. 68, 908-919.

Deaton, A., 1990. Price Elasticities from Survey Data: Extensions and Indonesian Results.

Journal of Econometrics. 44, 281-309.

Deaton, A., Muellbauer, J., 1980. An Almost Ideal Demand System. American Economic

Review. 70.

Green, R., Alston, J. M., 1990. Elasticities in AIDS models. American Journal of

Agricultural Economics. 72, 442-445.

Heckman, J., 1978. Dummy Endogenous Variables in a Simultaneous Equation System.

Econometrica. 46, 931:959.

Heien, D., Wessells, C., 1988. Demand for Dairy Products: Structure, Prediction and

Decomposition. American Journal of Agricultural Economics. 70, 219-228.

1
Heien, D., Wessells, C., 1990. Demand System Estimation with Microdata: A Censored

Regression Approach. Journal of Business and Economic Statistics. 8(3), 365-371.

Huang, K. S., Lin, B.H., 2000. Estimation of Food Demand and Nutrient Elasticities from

Household Survey Data. Technical Bulletin No. 1887. Food and Rural Division,

Economic Research Service, U.S. Department of Agriculture, Washington DC.

Humphrey, J., 2005. Shaping value chains for development: global value chains in

agribusiness. Paper written for the Deutsche Gessellschaft fur Technische

Zusammenarbeit (GTZ).

Huynh, T., Aarnink, A., Drucker, A., Verstegen, M., 2007. Pig Production in Cambodia, Laos,

Philippines and Vietnam: A Review. Asian Journal of Agriculture and Development.

4(1).

King, R. P., Venturini, L., 2005. Demand for quality drives changes in food supply chain, in:

Regmi, A., Gelhar, M. (Eds.), New Directions in Global Food Markets. U. S. Dept. of

Agriculture Information Bulletin No. 794, Washington, D. C.: USDA Economic

Research Service.

Kinnucan, H. W., 1986. Demographic vs. Media Advertising Effects on Milk Demand: The

Case of the New York City Market. Northeast Journal of Agricultural and Resource

Economics. 15,66-74.

Lapar, L., Staal, S., 2010. Competitiveness of Smallholder Pig Producer in Vietnam. ACIAR

project brief.

Lapar, L., Toan, N., Que, N., Jabbar, M., Tisdell, C., Staal, S., 2009. Market Outlet Choices

in the Context of Changing Demand for Fresh Meat: Implications for Smallholder

Inclusion in Pork Supply Chain in Vietnam. Paper presented at the International

Agricultural Economists Conference, Beijing, China. August 2009.

2
Lee, L. F., 1978. Simultaneous Equations Models with Discrete and Censored Dependent

Variables, in: Manski, P., McFadden, D. (Eds), Structural Analysis of Discrete Data

with Econometric Applications. MIT Press, Cambridge, MA, pp. 346-364.

Leser, C. E., 1963. Forms of Engel Functions. Econometrica. 31, 694-703.

Minot, N., Que, N.N., Phong, N.A., 2010. Future Scenarios for Pig Sector Development in

Vietnam: Results From a Policy Simulation Model. Presentation at ACIAR project

final workshop in Hanoi, 5th October 2010.

Nelson, F. D., Olsen, L., 1978. Specifications and Estimation of a Simultaneous Equation

Model with Limited Dependent Variables. International Economic Review. 19, 695-

710.

Nguyen, T. M., Yutaka, T., Fukuda, S., Kai, S., 2006. The Pork Consumption and

Distribution in Urban Areas of Vietnam before WTO Accession. Journal of the

Faculty of Agriculture, Kyushuu University.

Niimi, Y., 2005. An Analysis of Household Responses to Price Shocks in Vietnam: Can Unit

Value Substitute for Market Prices. PRUS Working paper No. 30, Poverty Research

Unit, Department of Economics, University of Sussex.

Pollak, R., Wales, T., 1969. Estimation of the Linear Expenditure System. Econometrica 49,

1533-1551.

Pollak, R., Wales, T., 1978. Estimation of Complete Demand Systems from Household

Budget Data: The Linear and Quadratic Demand Systems. American Economic

Review. 68, 348-59.

Pollak, R., Wales, T., 1981. Demographic Variables in Demand Analysis. Econometrica. 49,

1533-51.

3
Reardon, T., Codron, J. M., Bush, L., Bingen, J., Harris, C., 2001. Global change in agrifood

grades and standards: agribusiness strategic responses in developing countries.

International Food and Agribusiness Management Review. 2(3/4), 421-435.

Regmi, a. and M. Gelhar., (Eds). 2005. New Directions in Global Food Markets. U. S. Dept.

of Agriculture, Agriculture Information Bulletin No. 794, Washington, D. C.: USDA

Economic Research Service.

Sadoulet, E., Janvry, A., 1995. Quantitative Development Policy Analysis. The Johns

Hopkins University Press, Baltimore and London.

Stone, R., 1953. Measurement of Consumers’ Expenditure and Behavior in the United

Kingdom, 1920-1938. Vol. 1, Cambridge University Press, New York.

Stone, R., 1954. Linear Expenditure Systems and Demand Analysis: An Application to the

Pattern of British Demand. Economic Journal. 64, 511-27.

Theil, H., 1965. The Information Approach to Demand Analysis. Econometrica. 33, 67-87.

Theil, H., 1976. Theory and Measurement of Consumer Demand. Vols 1 and 2. North – Holland,

Amsterdam.

Tisdell, C., 2008. Structural Transformation in the Pig Sector in an Adjusting Vietnam

Market: A Preliminary Investigation of Supply-side Changes. Working Paper No. 50.

Economic Theory Applications and Issues. University of Queensland, Australia.

Tisdell, C., Lapar, L., Staal, S., Que, N., 2010. Natural Protection from International

Competition in the Livestock Industry: Analysis, Examples and Vietnam’s Pork

Market as a Case, in: Lee, T., (Eds), Agricultural Economics: New Research. Nova

Science Publishers, New York.

Tung, D. X., Thuy, N. X., Thang, T.C., 2005. Current Status and Prospects for the Pig Sector

in Vietnam: A Desk Study. Research report of the Pro-poor Livestock Policy

Initiative in Vietnam.
4
Vu, H.L., 2009. Estimation of Food Demand form Household Survey Data in Vietnam.

DEPOCEN Working paper No 2009/12, Hanoi.

Working, H., 1943. Statistical Laws of Family Expenditure. Journal of the American

Statistical Association. 33, 43-56.

Zellner, A., 1962. An Efficient Method of Estimating Seemingly Unrelated Regressions and Test for

Aggregation Bias. Journal of the American Statistical Association. 57, 348-68.

5
 Table 1: Definition of variables used in the model

Variable Definition

P_freshpork Log of fresh pork unit price

Log of the average unit price of other forms of pork (frozen and
P_otherpork
processed)

P_poultry Log of the average unit price of fresh and processed chicken and duck

P_eggs Log of the average unit price of fresh and processed eggs

P_beef Log of the average unit price of fresh and processed beef/carabeef

P_fish Log of the average unit price of fresh and processed fish

P_seafood Log of the average unit price of fresh and processed seafood

Expenditure Total household expenditure on all meat

Real
Total household expenditure on all meat divided by price index P
expenditure

Dummy variable which is unity if the household is in Hanoi or Ho Chi

Urban
Minh city and zero in other provinces.

Hhsize Number of members in a household

Dummy variable which is unity if the head of the household is male

Head_dummy
and zero if female

Woman_age Log of the age of the head or spouse woman in the household

Variable indicating the education level of the head or spouse woman in

Woman_edu
the household.

Variable indicating the professional levels of the head or spouse

Woman_job
woman in the household.

Dummy variable which is zero if the head or spouse woman in the

Employment
household is unemployed or retired and unity otherwise.

1
 Table 2: Result of probit regressions in the first stage

Fresh Other
Variable Poultry Eggs Beef/carabeef Fish Seafood
pork pork
-2.2** -0.9 -0.07 -0.4 -0.7 -0.7 -0.3
P_freshpork
(1) (0.2)*** (0.3) (0.3) (0.2)*** (0.6) (0.2)
0.06 0.2 -0.3 0.2 -0.2 -0.4 -0.1
P_otherpork
(0.6) (0.1) (0.2)* (0.2) (0.1) (0.4) (0.1)
0.2 -0.7 0.1 -0.1 0.3 -0.5
P_poultry 0.2 (0.7)
(0.1) (0.2)*** (0.2) (0.2) (0.3) (0.2)***
0.9 -0.4 -0.9 0.2 0.2 0.6 1.1
P_eggs
(0.8) (0.2)* (0.3)** (0.3) (0.2) (0.5) (0.2)***
1.4 -0.4* -0.1 -0.6 -1.2 1.7 0.4
P_beef
(0.7)** (0.2) (0.3) (0.3)* (0.3)*** (0.4)*** (0.2)
-0.2 -0.1 -0.1 0.2 0.3 -0.4 0.07
P_fish
(0.6) (0.1) (0.1) (0.2) (0.1)** (0.3) (0.1)
0.2 0.3 0.2 -0.2 0.2 -0.5 -0.4
P_seafood
(0.3) (0.07)*** (0.09)** (0.1)** (0.07)*** (0.2)*** (0.07)***
1 0.6 1.3 0.5 1 0.8 0.6
Expenditure
(0.3)*** (0.07)*** (0.1)*** (0.1)*** (0.08)*** (0.2)*** (0.07)***
-0.2 0.5 -1.6 0.06 0.1 -0.2 -1.3
urban
(0.7) (0.1)*** (0.2)*** (0.2) (0.1) (0.4) (0.1)***
-0.1 -0.06 -0.1 -0.03 -0.08 -0.04 -0.02
hhsize
(0.1) (0.02)*** (0.03)*** (0.03) (0.02)*** (0.07) (0.02)
0.5 0.04 -0.06 -0.01 -0.1 0.04 0.1
Head_dummy
(0.4) (0.09) (0.11) (0.1) (0.1) (0.2) (0.1)
0.9 -0.07 -0.09 0.07 -0.4 -0.6 0.05
Woman_age
(0.8) (0.2) (0.2) (0.2) (0.2)** (0.5) (0.2)
0.004 0.08 0.05 0.07 0.1 -0.1 0.009
Woman_edu
(0.2) (0.04)** (0.05) (0.05) (0.04)*** (0.1) (0.04)
-0.03 -0.005 -0.008 0.04 -0.001 0.08 -0.0003
Woman_job
(0.1) (0.02) (0.03) (0.03) (0.02) (0.07) (0.03)
0.4 -0.2 -0.2 0.2 -0.3 -0.03 0.03
Employment
(0.6) (0.1) (0.2) (0.2) (0.2)** (0.3) (0.2)
-6.1 -0.9 -1.4 -0.08 2.8 -0.9 -1.3
Constant
(5.7) (1.2) (1.6) (1.6) (1.2) (3.1) (1.2)
Likelihood -26.7 -844.2 -456.9 -384.7 -709.6 -95.2 -749.9
LR chi2 25.26 306.17 409 52.3 355.7 65.6 564.7
Prob > chi2 0.05 0.000 0.000 0.000 0.000 0.000 0.000
Pseudo R2 0.32 0.15 0.31 0.07 0.20 0.26 0.27

Note: *** - significant at 1% level; ** - significant at 5% level; * - significant at 10% level.

2
 Table 3: AIDS system regression in the second stage (SUR)

Fresh Other
Variable Poultry Eggs Beef/carabeef Fish
pork pork
0.12*** -0.02*** -0.01 -0.04*** -0.007 -0.02*
P_freshpork
(0.02) (0.005) (0.01) (0.007) (0.01) (0.01)
-0.02*** 0.005 0.01*** 0.005 -0.0009 -0.008**
P_otherpork
(0.005) (0.004) (0.004) (0.004) (0.005) (0.003)
-0.01 0.01** 0.04*** 0.006 -0.01 -0.04***
P_poultry
(0.01) (0.004) (0.01) (0.006) (0.007) (0.008)
-0.04*** 0.005 0.006 0.04*** -0.02*** 0.01***
P_eggs
(0.007) (0.004) (0.006) (0.008) (0.007) (0.005)
-0.007 -0.0009 -0.01 -0.02*** 0.03** -0.0005
P_beef
(0.01) (0.005) (0.007) (0.007) (0.01) (0.006)
-0.02* -0.008** -0.04*** 0.01*** -0.0005 0.06***
P_fish
(0.01) (0.003) (0.008) (0.005) (0.006) (0.01)
-0.02*** 0.007*** 0.003 -0.002 0.02*** -0.01***
P_seafood
(0.005) (0.002) (0.004) (0.003) (0.003) (0.004)
Real -0.04*** -0.005*** 0.02*** 0.03*** -0.004 -0.03***
Expenditure (0.007) (0.002) (0.006) (0.003) (0.004) (0.007)
0.09*** 0.008** -0.06*** 0.003 0.02*** -0.009
urban
(0.01) (0.004) (0.009) (0.005) (0.007) (0.01)
0.004* -0.0002 -0.004** -0.005*** -0.0008 0.007***
hhsize
(0.002) (0.0007) (0.002) (0.0009) (0.001) (0.002)
0.02*** -0.002 -0.004 -0.01*** 0.003 -0.01
Head_dummy
(0.009) (0.003) (0.008) (0.004) (0.005) (0.009)
0.02 -0.002 0.02 0.01** -0.03*** -0.02
Woman_age
(0.02) (0.005) (0.01) (0.007) (0.01) (0.02)
0.004 0.002** 0.008** 0.0003 0.01*** -0.03***
Woman_edu
(0.004) (0.001) (0.003) (0.002) (0.002) (0.004)
0.004* -0.0008 -0.003 0.0006 -0.001 -0.0005
Woman_job
(0.002) (0.0007) (0.002) (0.0009) (0.001) (0.002)
0.008 -0.005 -0.02 0.01* -0.02** 0.03*
Employment
(0.01) (0.004) (0.01) (0.005) (0.008) (0.01)
Inverse Mill -0.02 0.03*** -0.02*** -0.01*** -0.03*** -0.01**
Ratio (0.009) (0.002) (0.003) (0.003) (0.003) (0.005)
0.2** 0.03 0.06 0.11*** 0.1** 0.5***
Constant
(0.08) (0.03) (0.07) (0.04) (0.05) (0.08)
LR chi2 198.5 264.9 232 260.9 372.5 185.3
R2 0.09 0.16 0.14 0.16 0.21 0.1

Note: *** - significant at 1% level; ** - significant at 5% level; * - significant at 10% level.

3
 Table 4: Uncompensated Price and Expenditure Elasticity of Meat Demand

Demand
Price/
Fresh
Expenditure Other pork Poultry Eggs Beef Fish Seafood
pork
-0.65*** -0.75*** -0.13** -0.74*** -0.07 -0.03
Fresh pork -1.445
(0.05) (0.24) (0.06) (0.1) (0.11) (0.05)
-0.04*** -0.78 0.06** 0.06 -0.009 -0.03**
Other pork 0.146
(0.01) (0.17) (0.02) (0.05) (0.05) (0.01)
-0.01 0.52*** -0.77*** 0.02 -0.12 -0.16***
Poultry -0.1
(0.03) (0.18) (0.07) (0.08) (0.08) (0.04)
-0.1*** 0.24 0.02 -0.43*** -0.24*** 0.06***
Eggs -0.097
(0.02) (0.18) (0.03) (0.11) (0.08) (0.02)
-0.01 -0.02 -0.08* -0.34*** -0.71** 0.009
Beef 0.43
(0.03) (0.21) (0.04) (0.09) (0.13) (0.03)
-0.02 -0.33** -0.26*** 0.09 0.004 -0.68***
Fish -0.689
(0.03) (0.15) (0.05) (0.06) (0.07) (0.05)
-0.06*** 0.34*** 0.02 -0.03 0.18*** -0.04***
Seafood -0.70
(0.01) (0.09) (0.02) (0.04) (0.04) (0.02)
0.90*** 0.76*** 1.14*** 1.37*** 0.96*** 0.87***
Expenditure 1.98
(0.02) (0.09) (0.03) (0.04) (0.04) (0.03)
Note: *** - significant at 1% level; ** - significant at 5% level; * - significant at 10% level.

Table 5: Compensated Price Elasticity of Meat Demand

Demand
Price Fresh
Other pork Poultry Eggs Beef Fish Seafood
pork
-0.3*** -0.45* 0.32*** -0.2** 0.31*** 0.32***
Fresh pork -0.63
(0.04) (0.24) (0.06) (0.1) (0.11) (0.05)
-0.02* -0.76 0.08*** 0.09* 0.01 -0.02
Other pork 0.191
(0.01) (0.17) (0.02) (0.05) (0.05) (0.02)
0.14*** 0.66*** -0.57*** 0.26*** 0.05 -0.003
Poultry 0.355
(0.03) (0.2) (0.07) (0.08) (0.08) (0.04)
-0.04** 0.3* 0.1*** -0.33*** -0.18** 0.13***
Eggs 0.05
(0.02) (0.18) (0.03) (0.11) (0.08) (0.02)
0.07*** 0.05 0.02 -0.22** -0.62*** 0.09***
Beef 0.608
(0.03) (0.21) (0.04) (0.09) (0.13) (0.03)
0.18*** -0.16 -0.004 0.4*** 0.22*** -0.49***
Fish -0.227
(0.03) (0.15) (0.05) (0.06) (0.07) (0.05)
-0.03** 0.36*** 0.05** 0.004 0.21*** -0.02
Seafood -0.64
(0.01) (0.08) (0.02) (0.04) (0.04) (0.02)
Note: *** - significant at 1% level; ** - significant at 5% level; * - significant at 10% level.

4
 Figure 1: Projection of meat demand growth under different scenarios of incremental
changes in total meat expenditure

Figure 2: Projection of meat composition under different scenarios of incremental changes

in total meat expenditure

View publication stats