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Abstract
Secondary crops are of increasing interest to policymakers and planners in
developing countries because of a desire to diversify economic activities and because
of their proven potential to raise farm incomes and rural employment. To assess this
potential, basic information on the demand characteristics for these crops is required.
But, given the large number of possible crops to be studied, policy analysts require an
estimation procedure that is less data-intensive and time-intensive than standard
econometric estimation procedures. In this paper, a relatively new, low-cost
procedure, based on demand for food characteristics, is applied, illustrating its
usefulness for analysis of demand for potatoes in Bangladesh and Pakistan.
In Asia, the potato should not be regarded as a starchy staple whose
consumption declines as income increases, but rather as a food with a positive income
elasticity. Due to the high calorie cost of potatoes relative to wheat and rice, potatoes
are often valued primarily for the variety they contribute to the diet and their taste,
rather than for the calories they provide. This means that demand for potatoes should
increase with income in the future. However, expansion of demand for potatoes as an
alternative food staple is conditional upon the cost per calorie for potatoes
approaching that for wheat and rice. Results from Bangladesh for more recent years
show that with the rise in potato production, relative prices for potatoes versus wheat
fell and per capita consumption of potatoes increased considerably. These findings are
consistent with demand parameters generated utilizing the new estimation procedure.