Determination of Structural Change in Iranian Consumers Preference's for Rice Commodity Basket: WARP and K-W tests

Successful presence of Indian and Pakistani rice in Iran’s market due to having similar quality with the domestic rice, extensive advertisement, and good packaging has faced rice production in Iran with a big challenge. Assuming that the attractions of Iranian consumers toward these imported rice varieties are a signal of changes in the preferences of the domestic consumers in favor of the imported rice and a kind of loyalty establishment towards these products, then the continuity of production of rice in Iran might be under serious question. The present study investigates this issue. It tries to test the structural break in preferences of rice consumption in Iran. To this end, the nonparametric WARP approach together with K-W statistical test are applied to time series data over 1990-2007. Results of WARP formation show a sort of structural changes in consumer preference in 1999. However, results of K-W test revealed that this change in the preferences is not a permanent structural change but is a temporary change due to a kind of nonlinear transitory shocks in the rice market in Iran. The stability of Iranian preferences towards domestic rice leads to the conclusion that the Iranian producers can use this opportunity and reestablish the position of the Iranian rice in the market by improving their competitiveness through improving the quality, advancing productivity and reducing the cost of production.