An analysis of the import demand for hard red winter and western white wheat in Asian Pacific rim nations

Abstract

Wheat is a major agricultural product in the Pacific Northwest (PNW). The market class primarily grown in the region is Western White (WW) wheat. An important export market for PNW wheat producers is the Asian Pacific Rim (APR), due to its proximity and economic growth. Agronomic research has been conducted in recent years on developing a higher protein wheat in the PNW, known as Hard Red Winter (HRW). The justification of this research is that PNW wheat producers could perhaps become more competitive by diversifying toward HRW wheat. The higher protein levels of HRW allow it to be used as a meat complement, producing sandwich breads and hamburger buns. The lower protein levels of WW limit its final products to be cereal-based, such as noodles and crackers. Cross-sectional studies have indicated a change in dietary composition as economic development occurs. Countries seek improved and varied diets. They move away from cereal products such as noodles and rice, and consume more livestock products, especially meats. The objective of this research is to ascertain whether or not a higher protein wheat (HRW), which can be used as a meat complement, becomes more income sensitive than wheat with cereal-based end uses (WW) when economic development transpires. Import demand equations were estimated for a selected group of APR countries for the two wheat classes. The estimation was conducted using Ordinary Least Squares and Seemingly Unrelated Regression. The data period was from 1970-1971 to 1985-1986. Only one country, South Korea, produced significant results to permit comparison of the income sensitivities for the two wheats. Both HRW and WW possessed negative income coefficients, this would suggest that South Korean consumers perceived the final products from which the demand for the two wheats are derived as inferior goods. This means that HRW and WW wheat imports would fall as income rose for South Korea. However, the food self-sufficiency policy of the South Korean government was advanced as a probable reason for the negative coefficients rather than a diminishing marginal propensity to consume food items caused by income growth.