Estimating a consumption function for rice in Malaysia / Mohd Nor Hakimi Nordin

This study aims to estimate a consumption function for rice in Malaysia. Several variables namely income, population and consumption of substitute goods (wheat-based product) are chosen as the determinants that influence demand for rice. In order to realize the study objectives, the secondary data are used. The data are taken from the data stream, previous studies in related areas, journal, Bank Negara’s report, and also Department of Statistic. This study is conducted since rice is the staple food for Malaysians, thus understanding its consumption pattern is important. The scope of study is rice consumption among Malaysians. The research method that used in this research is Linear Multiple Regression and the analysis done include Coefficient of Determination, Durbin Watson, T-test, F-test, demand elasticity and forecasting of future rice consumption in 2020. The findings show only one independent variable is significant which is income. Another two independent variables are insignificant which are population and consumption of substitute good. Demand elasticity also has been measured in this study. The value of income elasticity of demand is 1.2 which indicates that consumption of rice is considered as sensitive to change in income. The value of population elasticity is -0.15. The negative sign indicates there is a negative relationship between population and demand for rice. The cross elasticity of demand has a value of -0.06. It means the wheat base product is substitute good for rice but not a close substitute. This study also forecasted the rice consumption in year 2020 is 2876.88 (‘000MT).