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 fooddemand in Edo, Delta and Lagos states of Nigeria. A multistage samplingtechnique was used to collect cross-sectional data from eight hundredand twelve (812) households for the study. Both descriptive statisticsand the Linear Approximate Almost Ideal Demand System (LA/AIDS) modelas inferential statistics were used to estimate the responsivenessof demand for food to changes in prices, expenditures and incomes.The study found out that the majority of the household heads wereyoung male, with small (1-5 members) to medium (6-10 members) familysize and lived in urban centers. Though rice constituted the largestshare of the household total food expenditure, in both rural andurban centres, income did not have much weight in its consumption,with less substitutability in response to changes in own-price andhas changed from being a luxury to being a necessity. While the low-incomeand rural households spent more of their income on food, the shareof rice and yam in the household's budgets was higher at higher incomelevels while that of cassava, a less expensive source of calories,was lower among the high income and relatively affluent 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 andless affluent households in the urban centres. The result of theLA/AIDS showed that, in terms of own-price elasticity, the compensatedown-price elasticity for rice (1.0659) was the most elastic, followedby garri (-0.9655), yam (-0.5792), other cereals (-0.5611), and meat/fish(-0.4440). Rice, garri and yam were the main Nigerian staples. Thedemand for these food items in Nigeria is not so much a matter ofprice, rather, it is a phenomenon linked with the ease of preparation,household characteristics and urban lifestyles. To meet with thepresent demand, Nigeria needs to increase the production of thesefood items.