Food demand in Slovenia

Abstract

The objective of this research is to analyse food consumption patterns in Slovenia. Cross-sectional household data from Household budget survey in year 2001 were used. We estimate expenditure and price elasticities for food demand for households segmented by quartile income levels and for Slovenia total. Food items are divided into the following commodity groups: bread and cereals, meat and fish, dairy products, oils and other fats, fruit, vegetables, confectionary. For a complete demand system analysis, we apply linearly approximated Almost Ideal Demand System (LA/AIDS). Empirical results show positive expenditure elasticities being close to one for all food groups. In general, demands for dairy products and vegetables could be regarded as the most sensitive to food expenditures. Further on, all Marshallian (uncompensated) and Hicksian (compensated) own price elasticities are negative and less than one. Own price elasticities for meat and fish are estimated as the lowest and for vegetables as the highest. With cross price elasticities close to zero the studied commodity groups seem to be unrelated. The negative sign of uncompensated cross price elasticities indicates complementary type of food groups, while substitution relationship of aggregate foods is indicated by mostly positive Hicksian cross price elasticities. According to these expenditure and price elasticities inhabitants of Slovenia seem to be losing consumption characteristics typical for countries in transition. However some unique food habits persist.