Demand for soybeans and soybean oil in China—an empirical analysis based on the SDAIDS model
【Abstract】By adopting market data on soybeans and soybean oil in China during 1995–2013 and utilizing the source differentiated AIDS model (the SDAIDS model), this paper carried out a quantitative analysis on the demand for soybeans and soybean oil in China. Results of the study revealed that the soybean market and the soybean oil market were inseparable in China; an incomplete substitutional relationship existed among soybeans and soybean oil from different sources; the expansion of the market of soybeans in China would further spur the aggregate volume of imported soybeans; a competitive relation existed between soybeans produced in China and soybeans from America, Brazil, and Argentina; an increase in the price of soybeans produced in China would restrain the volume of soybeans imported from America, Brazil, and Argentina.
【Keywords】 soybeans; soybean oil; the source differentiated almost ideal demand system (the SDAIDS model); block separability; product aggregation;
(Translated by HE Lin)
. ① Data mentioned above are from the website of COMTRADE (http://comtrade.cn.org/data). [^Back]
. ① As the import volume of bean pulp is much smaller than those of soybeans and soybean oil and it has incomplete data. This paper does not include the demand for bean pulp in the framework of research. [^Back]
. ② A complete substitutional relation exists among soybeans with different sources, which means that soybeans with different sources are identical in quality and market shares of soybeans with different sources are only dependent on their market prices. For example, if the price of soybeans from America is lower than that of soybeans from other sources and America has an infinite supply capacity, then, the soybean market in China will be entirely occupied by American soybeans. [^Back]
. ③ Data source: National Bureau of Statistics of the People's Republic of China (eds.). China Statistical Yearbook (over the years), Beijing: China Statistics Press. [^Back]
. ① The derivation of the SDAIDS model and the corresponding formula for test mainly refers to Yang and Koo (1994) and Hayes et al. (1990). [^Back]
. ① The website of USDA/FAS: http://apps.fas.usda.gov/psdonline/psdDownload.aspX [^Back]
. ② The website of cngrain: http://datacenter.cngrain.com/lndexByClass.aspx?ld=3 [^Back]
. ① It may be because soybean oil from other countries is so little that leads to the abnormality of the estimated value of expenditure elasticity of soybean oil from other countries which is 6.95. Therefore, this kind of expenditure elasticity is not incorporated into the range of discussion below. [^Back]
. ① In the second part of Table 3 and Table 4, cross-price elasticity of soybean oil from other countries shows abnormal values such as 6.95, -17.45, 35.36, -14.67 and 12.26 which are undiscussed in the analysis. It may be because the import volume of soybean oil from other countries is so little that minuscule changes in the price will cause large fluctuations in import volumes of soybean oil from other countries. [^Back]
1. Andino, J.; Mulik, K. and Koo, W. W.: The Impact of Brazil and Argentina’s Currency Devaluation on U. S. Soybean Trade, selected paper presented at the American Agricultural Economics Association Annual Meeting, Long Beach, California, July, 2006.
2. Chen, W.; Marchant, M. A. and Muhammad, A.: China’s Soybean Product Imports: An Analysis of Price Effects Using a Production System Approach, China Agricultural Economic Review, 4(1): 499–513, 2012.
3. Davis, G. C. and Jensen, K. L.: Two-stage Utility Maximization and Import Demand Systems Revisited: Limitations and an Alternative, Journal of Agricultural and Resource Economics, 19(1): 409–424, 1994.
4. Deaton, A. and Muellbauer, J.: An Almost Ideal Demand System, American Economic Review, 70(1): 312–326, 1980.
5. Eales, J. and Unnevehr, L.: Demand for Beef and Chicken Products: Separability and Structural Change, American Journal of Agricultural Economics, 70(1): 521–532, 1988.
6. Mutondo, J. and Henneberry, S.: A Source-differentiated Analysis of U. S. Meat Demand, Journal of Agricultural and Resource Economics, 32(1): 515–533, 2007.
7. Hayes, D.; Wahl, T. and Williams, G.: Testing Restrictions on a Model of Japanese Meat Demand, American Journal of Agricultural Economics, 72(1): 556–566, 1990.
8. LaFrance, J. T.: When Is Expenditure ‘Exogenous’ in Separable Demand Models? Western Journal of Agricultural Economics, 16(1): 49–62, 1991.
9. Taylor, R. D.; Koo, W. W. and Wang, L.: Expected Changes in China’s Grain and Oilseed Industries and Implications for the U. S. and World Agriculture, working paper, Center for Agricultural Policy and Trade Studies, North Dakota State University, 2009.
10. Tuan, F.; Hansen, J.; Somwaru, A.; Marchant, A.; Kalaitzandonakes, N. and Zhong, F.: Hypothetical Commercialization of Biotech Soybeans in China: Impacts on Domestic Markets and International Trade, Journal of Life Science, 4(1): 54–60, 2010.
11. Yang, S. R. and Koo, W. W.: Japanese Meat Import Demand Estimation with the Source Differentiated AIDS Model, Journal of Agricultural and Resource Economics, 19(1): 396–408, 1994.
12. Zhang, Q.; Reed, M. R. and Saghaian, S. H.: The Impact of Multiple Volatilities on Import Demand for U. S. Commodities: The Case of Soybeans, Agribusiness, 26(1): 202–209, 2010.
13. Zheng, Z. and Henneberry, S.: The Impact of Changes in Income Distribution on Current and Future Food Demand in Urban China, Journal of Agricultural and Resource Economics, 35(1): 51–71, 2010.
14. Gao, Y., Zheng, Z. & Lv, M. Journal of Agrotechnical Economics (农业技术经济), (12) (2012).