There has been a notable success in the Malaysian economy, with its countrymen getting wealthier and food consumption undergoing transitional changes. This study intends to analyze the complete demand system of food in Malaysia by using the Household Expenditure Survey 2004/2005 via the Linear Approximate Almost Ideal Demand System (LA/AIDS) model. As expected, the estimated own-price elasticities for all foods follow the law of demand. The empirical results show that the demand for all foods in response to the income is relatively positive, with expenditure elasticities of meat (1.110), fruits (1.341), vegetables (1.341), sugar and beverage (1.039) and other foods (1.115) being elastic. This study shows that the Malaysian food consumption pattern is not only moving towards higher value food products (especially meats) but also functional foods (fruits and vegetables) as the per capita income of Malaysians increases.

Since the economic crisis in 1997, there has been a notable success of the Malaysian economy, with its countrymen getting wealthier and food consumption undergoing transitional changes. The most significant change in the food consumption pattern is a strong growth in the demand for wheat based products as substitutes to rice. This decline in the consumption of the staple food, rice, indicates an improvement in the welfare, as laid down by Engel's hypothesis (Mittal, 2006). Another perspective observes an increasing demand for meat products in Malaysia. Kumar (1997) pointed out that such diversification in the food basket will improve the quality of life by adding to the nutritional status and welfare of the population.

Such changes in Malaysia play an important role in the outlook for future in the Malaysian agri-food industry. Understanding of food consumption provides an indication to commodity consumption, which could drive feed grain demand and in turn have a significant impact on the domestic and international feedstuffs market. These brought the policy makers' and industrial players' attention on food demand system in Malaysia. One common means of addressing the system is to build a complete food demand model that can be used to provide information about the prospects for food and related agricultural commodities.