Demand for Vegetables in Malaysia

Author: Tey Yeong Sheng, Mad Nasir Shamsudin, Alias Radam, Zainalabidin Mohamed, Jinap Selamat, and Abdul Ghariff Ramin

Keywords: Vegetable, multi-stage demand system, demand elasticity

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Abstract: The Malaysian agro-food industry is increasingly market-driven. A closer look at consumer studies show that consumers are becoming more health-conscious and they are consuming more vegetables. This dynamism requires a scrutiny, particularly on the demand for vegetables at a disaggregated level. By using the Household Expenditure Survey 2004/05 data (one of the most comprehensive and well-designed surveys in Malaysia), demand elasticities for aggregated food, aggregated vegetables, and category-specific vegetables were estimated via a multi-stage demand system. The results suggest that while all of them are normal goods, consumer expenditure on fresh vegetables is poised to increase at a faster pace than processed vegetables, ceteris paribus. This, however, is uncertain because consumers are price elastic to changes in vegetable prices (except podded vegetables) since increasing demand will simply drive up prices if the inherent issues in vegetable production are not solved. Therefore, more investments in high-yielding, low-cost, and green technologies are ultimately needed.

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