Estimation of Rural Household’ Food Demand Function, Using Almost Ideal Demand System (AIDS)

Nutrition and food consumption are of high importance in family budgeting. It’s high share in rural households’ budgetes adds to the importance of estimation of Food demand function for rural households. Economists and politicians are interested in analyzing the allocation of income to goods and services, therefore, estimation of demand for goods and services, to find future needs and preferences, is of great importance. In this paper, using Almost Ideal Demand System (AIDS), and Seemingly Unrelated Regression System(SUR), rural households’food demand function has been estimated. According to the results of the model in most cases rural consumers are entangled in some money illusion, but their tastes have not changed. Price elasticity for bread, rice and grain category is the least, while this elasticity for dairy products and egg category is the most. Furthermore, among different food categories, bread, rice and grain category is considered luxery while dairy products and egg category is considered necessity. Bread, rice and grain category is subsititute for dairy products and egg category, but it is compliment for red and white meat. Red and white meats are substitute for dairy products and egg category.