Abstract
A two-stage Linear Approximate-Almost Ideal Demand Systems model was used to analyze household food demand in semi-urban and rural households in south-west Nigeria based on micro-level data from a multi-stage random sampling survey of one hundred and sixty two households. Aggregate food demand indicates inelastic sensitivity to price changes with the exception of grains. Individual food commodities, in the main, exhibit both price and income elastic behaviour. Expenditure elasticities ranged between o.6670 and 18.2224, were found to be generally higher than price elasticities. There was evidence of strong complementary relationships between individual food items. It is advocated that production of the set of price inelastic food items should be boosted, at least to a level where producers would not be forced to increase prices to the disadvantage of consumers. In like manner, increased supply of the highly price-elastic commodities would benefit both the consumer and the producer in that an accompanying reduction in prices with increased supply would lead to a higher margin of demand than the fall in price. Finally, it is suggested that food demand problems in the study area may be addressed more effectively via income rather than price policies, especially for luxuries such as meat/fish.
Highlights
In the last few decades, food production in Nigeria has not kept pace with national food demand, probably due to low productivity in agriculture, high population growth, a reduction in real incomes of consumers as a result of inflation, in the midst of other factors
3.0 RESULTS AND DISCUSSION we present the results as well as discussion of the derived elasticities based on the estimated budget share equations for both food groups and individual food items
The estimated adjusted coefficients of multiple determination are 0.8453, 0.8018, 0.7869 and 0.6552 for vegetables/fruits, grains, roots/tubers, and meat/fish respectively. This implies that at least 65.52% of the variations in household expenditure allocation to the various food groups are captured by household income, prices and the included socio economic and demographic variables
Summary
In the last few decades, food production in Nigeria has not kept pace with national food demand, probably due to low productivity in agriculture, high population growth, a reduction in real incomes of consumers as a result of inflation, in the midst of other factors. One way of addressing this problem is by understanding the food demand structure of the economy and making use of it in government policy and/or intervention efforts geared at increasing food production in the country. This is necessary as demand elasticities are of considerable interest for policy purposes. Knowledge of households’ food demand is an important step in solving the problem of food shortages through well articulated food and agricultural policies aimed at regulating supply It is useful in projecting the future food needs of the entire populace. Estimation of income elasticities of demand for individual food items and total food is a necessary activity for the development of food and nutritional policies, as the enhancement of income for both the consumer and producers through the use of effective policy instruments is a necessary step under economic development (Kenedal and Johnston, 1961; Abdulai et al, 1999)
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