Impact of price and total expenditure on food demand in South-Western Nigeria

Abstract

This study examined the impact of price and total expenditure on food demand in Edo, Delta and Lagos states of Nigeria. A multistage sampling technique was used to collect cross-sectional data from eight hundred and twelve (812) households for the study. Both descriptive statistics and the Linear Approximate Almost Ideal Demand System (LA/AIDS) model as inferential statistics were used to estimate the responsiveness of demand for food to changes in prices, expenditures and incomes. The study found out that the majority of the household heads were young male, withsmall (1-5 members) to medium (6-10 members) family size and lived in urban centers. Though rice constituted the largest share of the household total food expenditure, in both rural and urban centres, income did not have much weight in its consumption, with less substitutability in response to changes in own-price and has changed from being a luxury to being a necessity. While the low-income and rural households spent more of their income on food, the share of rice and yam in the household’s budgets was higher at higher income levels while that of cassava, a less expensive source of calories, was lower among the high income and relativelyaffluent urban households. The budget share of meat and fish, a more expensive source of calories, being mainly protein sources, was higher among the low-income and less affluent households in the urban centres. The result of the LA/AIDS showed that, in terms of own-price elasticity, the compensated own-price elasticity for rice (-1.0659) was the most elastic, followed by garri (-0.9655), yam (-0.5792), other cereals (-0.5611), and meat/fish (-0.4440). Rice, garri and yam were the main Nigerian staples. The demand for these food items in Nigeria is not so much a matterof price, rather, it is a phenomenon linked with the ease of preparation, household characteristics and urban lifestyles. To meet with the present demand, Nigeria needs to increase the production of these food items.