The effect of rice import on price and domestic consumption using SURE technique in reverse demand system

Rice is one of the most important food items in the consumer basket of households and is one of the most widely consumed food products in Iran after wheat. Population growth, increasing consumption and demand, price fluctuations and welfare effects due to changes in the amount and price of rice require the attention, planning and foresight of policymakers and the country's planning system. In this study, the amounts of consumption and expenditure of urban households for the rice products (foreign rice grade 1 and grade 2 as well as four types of domestic rice) were estimated by seemingly unrelated regression equations (SURE) using related cross-sectional data in 2017 within the framework of inverse demand system and it was found that among the four reverse demand systems including IAIDS, IROT, INBR and ICBS, only Inverse Almost Ideal Demand System (IDIDS) was consistent with the research method data and preferred to the other three models, according to the results of Likelihood Ratio (LR) statistics. The study of substitution elasticity showed that the small number of substitution elasticitities between types of rice had little effect on the demand for one type of rice on the composition of other types of rice consumed. Other types of rice should be considered by planners in implementing protection and food security policies; and since rice is considered as an essential food for households, increasing the supply of this product to meet the demand growth in the future can be used as a favorable policy to increase consumer welfare.