Consumption Patterns of Livestock Products in Ethiopia: Elasticity Estimates Using HICE (2004/05) Survey Data Kibrom Tafer...
Outline of Presentation <ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Consumption Patterns </li></ul></ul><ul><ul><l...
<ul><ul><li>Nationally representative demand elasticity estimates for livestock products in Ethiopia are unavailable. </li...
<ul><li>Livestock products account for 4.4% of total household expenditure and 8.7% of food expenditure. </li></ul><ul><ul...
<ul><li>Expenditure on meat represents the largest expenditure group followed by dairy products  </li></ul><ul><ul><li>Sha...
<ul><li>Per Capita Quantity Consumed (kg) </li></ul><ul><li>Source: Authors’ calculation using HICES (2004/05) </li></ul><...
<ul><ul><li>Individuals in urban areas are likely to consume about three times as much as their rural counterparts. </li><...
<ul><li>Per capita calorie intake </li></ul><ul><ul><li>Source: Authors’ calculation using HICES (2004/05) </li></ul></ul>...
<ul><ul><li>People in the fifth exp. quintile get three times more calorie than those in the first quintile from livestock...
<ul><li>Model -  the QU-AIDS (Banks, Blundell and Lewbel (1997)). </li></ul><ul><li>Restrictions </li></ul>Methodology - M...
<ul><ul><li>Zero expenditures/consumption   </li></ul></ul><ul><ul><ul><li>Problem : Such censoring can produce biased and...
<ul><li>Data </li></ul><ul><ul><li>Nationally representative survey datasets for 2004/05 – Household Income, Consumption, ...
<ul><li>Expenditure Elasticities </li></ul><ul><li>Standard Errors in Brackets; ***,**,* are significance level at 1%, 5% ...
<ul><li>Expenditure elasticities appear to be higher in rural areas than in urban areas. </li></ul><ul><ul><li>The gap bet...
<ul><li>Compensated Price Elasticities </li></ul><ul><li>Standard Errors in Brackets; ***,**,* are significance level at 1...
<ul><li>All own price effects are negative and significant. </li></ul><ul><ul><li>Mutton/goat meat has the highest own pri...
<ul><li>The consumption of livestock products is very low and varies across places of residence (urban/rural) </li></ul><u...
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Consumption Patterns of Livestock Products in Ethiopia

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Consumption Patterns of Livestock Products in Ethiopia

  1. 1. Consumption Patterns of Livestock Products in Ethiopia: Elasticity Estimates Using HICE (2004/05) Survey Data Kibrom Tafere Ibrahim Worku IFPRI ESSP-II Ethiopian Economic Association Conference July 21, 2011 Addis Ababa ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE
  2. 2. Outline of Presentation <ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Consumption Patterns </li></ul></ul><ul><ul><li>Method </li></ul></ul><ul><ul><li>Results </li></ul></ul><ul><ul><li>Conclusions </li></ul></ul>
  3. 3. <ul><ul><li>Nationally representative demand elasticity estimates for livestock products in Ethiopia are unavailable. </li></ul></ul><ul><ul><li>Informs policy design and implementation. </li></ul></ul><ul><ul><ul><li>Useful for Welfare analysis </li></ul></ul></ul><ul><ul><ul><li>Useful for CGE analysis </li></ul></ul></ul>Introduction: Why Demand Elasticities?
  4. 4. <ul><li>Livestock products account for 4.4% of total household expenditure and 8.7% of food expenditure. </li></ul><ul><ul><li>Rural areas: 4.3% of total expenditure and 8% of food expenditure; Urban areas: 5.2% of total expenditure and 12.7% of food expenditure. </li></ul></ul><ul><ul><li>Livestock Expenditure Share of Livestock Products (%) </li></ul></ul><ul><li>Source: Authors’ calculation using HICES (2004/05) </li></ul>Consumption Patterns Beef Mutton & goat meat Chicken Other meat (camel, pork, crocodile...) Fish & fish products Dairy products Egg Honey National 40.9 8.3 7.3 0.5 0.4 39.5 2.6 0.8 Urban 55.8 11.7 9.3 0.5 0.3 17.4 4.7 0.7 Rural 37.9 7.6 6.9 0.5 0.5 44.1 2.2 0.9 Exp. Quintiles Q1 43.0 7.4 7.8 0.5 0.5 38.5 2.0 0.7 Q2 39.9 7.5 7.1 0.5 0.4 42.1 2.0 0.8 Q3 41.0 7.2 7.4 0.5 0.4 41.0 2.2 0.7 Q4 40.5 8.8 7.4 0.4 0.5 39.2 2.7 0.9 Q5 40.4 10.3 6.8 0.4 0.4 37.1 4.0 1.0
  5. 5. <ul><li>Expenditure on meat represents the largest expenditure group followed by dairy products </li></ul><ul><ul><li>Shares of meat, chicken, egg are higher in urban areas while that of dairy products is higher in rural areas </li></ul></ul><ul><li>The Expenditure share of beef & dairy products falls with income/ expenditure. </li></ul><ul><li>Conversely, the share of mutton & goat meat and egg appear to rise with income. </li></ul><ul><li>The expenditure shares of fish & fish products, other meat are negligible. </li></ul><ul><ul><li>Fish - The landlocked status of Ethiopia and/or lack of culture of fish consumption could be the reason. </li></ul></ul>Consumption Patterns (cont’d)
  6. 6. <ul><li>Per Capita Quantity Consumed (kg) </li></ul><ul><li>Source: Authors’ calculation using HICES (2004/05) </li></ul><ul><li>Annual per capita meat consumption in Ethiopia is very low. </li></ul><ul><ul><li>The African and East African average for the same period (2004) stand at about 15 kg and 10 kg respectively (Ethiopian is 8 kg) (FAO, 2010 ). </li></ul></ul>Consumption Patterns (cont’d) Beef Mutton & goat meat Chicken Other meat (camel, pork, crocodile...) Fish & fish products Dairy products Egg Honey Total Meat National 3.1 1.4 0.7 0.1 0.1 16.7 0.2 0.1 4.6 Urban 6.8 3.1 1.6 0.1 0.0 8.5 0.5 0.1 9.9 Rural 2.4 1.1 0.5 0.1 0.1 18.4 0.1 0.1 3.5 Exp. Quintiles Q1 1.6 0.7 0.3 0.0 0.0 10.2 0.0 0.0 2.3 Q2 2.1 1.0 0.4 0.1 0.1 15.2 0.1 0.1 3.1 Q3 2.7 1.2 0.6 0.1 0.0 16.9 0.1 0.1 3.9 Q4 3.5 1.6 0.7 0.1 0.1 19.9 0.2 0.1 5.0 Q5 5.3 2.7 1.3 0.1 0.1 20.6 0.5 0.1 8.0
  7. 7. <ul><ul><li>Individuals in urban areas are likely to consume about three times as much as their rural counterparts. </li></ul></ul><ul><ul><li>People in the richest quintile consume three times more than those in the poorest quintile. </li></ul></ul><ul><li>Urban areas also have substantially higher consumption of chicken, egg </li></ul><ul><li>Dairy products represent the biggest consumption group. </li></ul><ul><ul><li>The quantity consumed is considerably higher in rural areas than in areas </li></ul></ul><ul><ul><li>Though its share appears to fall with income, the level (quantity) of consumption rather rises with income. </li></ul></ul>Consumption Patterns (cont’d)
  8. 8. <ul><li>Per capita calorie intake </li></ul><ul><ul><li>Source: Authors’ calculation using HICES (2004/05) </li></ul></ul><ul><li>Livestock products contribute a very small share of daily calorie intake in Ethiopia (only 2.4%). </li></ul><ul><ul><li>It appears urban households get more energy from livestock products than rural ones (shares – 4.2% Vs 2.1%) </li></ul></ul>Consumption Patterns (cont’d) Beef Mutton & goat meat Chicken Other meat (camel, pork, crocodile...) Fish & fish products Dairy products Egg Honey Total National 17.5 8.8 3.6 0.5 0.4 34.6 1.1 0.7 67.3 Urban 39.2 19.3 8.6 0.7 0.3 23.1 3.5 1.2 95.8 Rural 13.1 6.7 2.6 0.5 0.4 36.9 0.6 0.7 61.4 Exp. Quintiles Q1 9.0 4.0 1.6 0.4 0.1 18.9 0.3 0.3 34.7 Q2 11.4 6.0 2.2 0.5 0.6 32.3 0.4 0.7 53.9 Q3 14.8 7.2 2.9 0.5 0.1 31.7 0.6 0.5 58.3 Q4 19.2 9.3 3.8 0.5 0.7 41.4 1.0 0.7 76.7 Q5 31.3 16.6 7.1 0.6 0.4 46.1 3.0 1.4 106.6
  9. 9. <ul><ul><li>People in the fifth exp. quintile get three times more calorie than those in the first quintile from livestock products. </li></ul></ul><ul><li>For all livestock products, per capita calorie intake rises with income. </li></ul><ul><li>Among livestock products, dairy products are the most important source of calorie (51%) followed by meat. </li></ul><ul><ul><li>Rural households get more calories from dairy products than urban ones (share - 60% Vs 24%). </li></ul></ul><ul><ul><li>The richest 20% percent of households get twice more calorie from dairy products than their poorest counterparts. </li></ul></ul><ul><li>People in urban areas get three times more calorie from meat (beef, mutton & goat meat) than those in rural areas. </li></ul><ul><ul><li>People in the richest quintile get about four times more calorie from meat than their those in the poorest quintile. </li></ul></ul>Consumption Patterns (cont’d)
  10. 10. <ul><li>Model - the QU-AIDS (Banks, Blundell and Lewbel (1997)). </li></ul><ul><li>Restrictions </li></ul>Methodology - Model
  11. 11. <ul><ul><li>Zero expenditures/consumption </li></ul></ul><ul><ul><ul><li>Problem : Such censoring can produce biased and inconsistent parameter estimates; </li></ul></ul></ul><ul><ul><ul><li>Solution : two-step estimation (Shonkwiler and Yen (1999)): </li></ul></ul></ul><ul><li>Expenditure endogeneity </li></ul><ul><li>Use the residual from (8) with in the shares regression </li></ul>Methodology - Issues
  12. 12. <ul><li>Data </li></ul><ul><ul><li>Nationally representative survey datasets for 2004/05 – Household Income, Consumption, and Expenditure Survey (HICES) and Welfare Monitoring Survey (WMS) </li></ul></ul><ul><ul><li>No price data, unit values proved to be problematic. So external price data from CSA’s price survey used. </li></ul></ul><ul><ul><li>Caveat </li></ul></ul><ul><ul><ul><ul><li>The data used in this study excludes all zones of the Gambella region, and three predominantly non-sedentary zones of Afar region and six such zones of Somali region </li></ul></ul></ul></ul><ul><li>Estimated Budget Share Equations </li></ul>Methodology – Data; Specification
  13. 13. <ul><li>Expenditure Elasticities </li></ul><ul><li>Standard Errors in Brackets; ***,**,* are significance level at 1%, 5% & 10% </li></ul><ul><li>All livestock products have positive and significant expenditure elasticity </li></ul><ul><ul><li>Normal goods! </li></ul></ul><ul><li>The expenditure elasticity of beef is close to unity and is the highest, while that of dairy products is the lowest. </li></ul><ul><ul><li>Beef appears superior to all other livestock products. </li></ul></ul>Results Total Urban Rural Beef 0.939*** 0.896*** 0.985*** [0.0178] [0.0198] [0.0423] Mutton & Goat meat 0.671*** 0.304*** 0.917*** [0.1268] [0.1138] [0.1361] Other meat & animal products 0.538*** 0.519*** 1.045*** [0.0455] [0.0551] [0.0757] Dairy products 0.420*** 0.389*** 0.479*** [0.0148] [0.0136] [0.0061]
  14. 14. <ul><li>Expenditure elasticities appear to be higher in rural areas than in urban areas. </li></ul><ul><ul><li>The gap between the two sets of elasticities is particularly high for beef, mutton & goat meat, and other meat & animal products </li></ul></ul><ul><ul><ul><li>Urban areas have higher budget shares for these commodities </li></ul></ul></ul><ul><ul><li>Dairy products: reluctance to change consumption habit… </li></ul></ul>Results (cont’d)
  15. 15. <ul><li>Compensated Price Elasticities </li></ul><ul><li>Standard Errors in Brackets; ***,**,* are significance level at 1%, 5% & 10% </li></ul>Results (cont’d) Beef Mutton & Goat meat Other meat & animal products Dairy products Beef Total -0.733*** 0.391*** 0.083*** 0.259*** [0.0233] [0.0193] [0.0073] [0.0105] Urban -0.665*** 0.382*** 0.136*** 0.147*** [0.0235] [0.0176] [0.0071] [0.0087] Rural -0.793*** 0.378*** 0.031 0.386*** [0.0786] [0.0577] [0.0266] [0.0331] Mutton & Goat meat Total 1.554*** -1.465*** 0.069 -0.158* [0.1003] [0.1144] [0.0426] [0.0846] Urban 1.889*** -1.882*** 0.184*** -0.192*** [0.1103] [0.1144] [0.0378] [0.0613] Rural 2.822*** -2.008*** -0.292 -0.523** [0.6603] [0.4221] [0.2907] [0.2565] Other meat & animal products Total 0.403*** 0.395*** -0.996*** 0.194*** [0.0285] [0.0337] [0.0229] [0.0336] Urban 0.71*** 0.181*** -0.988*** 0.071** [0.0476] [0.0386] [0.0228] [0.0289] Rural -0.056 0.289 -1.039*** 0.806*** [0.233] [0.1926] [0.0698] [0.0989] Dairy products Total 0.405*** -0.249*** 0.28*** -0.669*** [0.0244] [0.0344] [0.0152] [0.0344] Urban 0.06 0.062 0.304*** -0.523** [0.098] [0.0868] [0.0289] [0.2613] Rural 0.134 -0.009 0.247*** -0.151** [0.1256] [0.0618] [0.0577] [0.0746]
  16. 16. <ul><li>All own price effects are negative and significant. </li></ul><ul><ul><li>Mutton/goat meat has the highest own price elasticity </li></ul></ul><ul><li>For beef, mutton/goat meat, and ‘other meat’, rural areas have higher own elasticities, while the opposite is true for dairy products. </li></ul><ul><ul><li>Remember the budget shares? </li></ul></ul><ul><li>There is a strong substitution relationship between beef and mutton/goat meat. </li></ul><ul><li>Dairy products are substitutes for beef and other meat & animal products, but complements for mutton & goat meat. </li></ul><ul><ul><li>Effect is higher in rural areas. </li></ul></ul>Results (cont’d)
  17. 17. <ul><li>The consumption of livestock products is very low and varies across places of residence (urban/rural) </li></ul><ul><li>There is significant expenditure and price response in Ethiopia. </li></ul><ul><ul><li>Tax and subsidies are likely to have significant effect on household consumption of livestock products and hence their intake of nutritious food (protein; micro nutrients-iron, zinc, vitamin A) </li></ul></ul><ul><li>There is considerable difference in price and expenditure responses between urban and rural areas. </li></ul>Conclusion

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