Urbanisation and the Demand for Food

Abstract

Is the demand for food influenced by urbanisation, and if so, in what way? This article reviews the relevant literature on this question and conducts an empirical investigation for Indonesia, asking whether the relationship between food demand and the conventional economic variables explaining demand is altered by structural changes in the degree of urbanisation. Urbanisation is associated with changes in levels of both household expenditures and preferences and it is analytically necessary to separate these two effects. Some of the effects commonly attributed to urbanisation occur among rural households whose expenditures increase but who do not move to urban areas. The empirical results for Indonesia show that urbanisation marginally reduces the expenditure share of food in aggregate, along with the responsiveness of this expenditure to changes in total expenditure. More importantly, it shifts the commodity composition of food consumption, but in ways that are more nuanced than earlier literature reveals. Show more