Lucia Vargová
Martin Jamrich
Department of Economic Policy, FEM SUA Nitra, Tr. A. Hlinku 2, 949 76 Nitra, Slovakia
Faculty of Information Technology and Engineering, Serbia

2nd International Scientific Conference on Recent Advances in Information Technology, Tourism, Economics, Management and Agriculture – ITEMA 2018 – Graz, Austria, November 8, 2018, CONFERENCE PROCEEDINGS published by the Association of Economists and Managers of the Balkans, Belgrade, Serbia; ISBN 978-86-80194-13-4

Despite the fact that situation has changed significantly in recent years and the share of milk production in the total agriculture production tends to decline, milk still represents a significant part of the food products in Slovak households. The study presents the important data on dairy sector balances, focuses on prices and income elasticity. Using dataset from the Household Budget Survey of Slovakia, we estimated the price elasticity of demand for skimmed and whole milk. Due to the nature of data, we used the Cragg’s double hurdle model for estimation, in the time period from 2006 to 2012. The results show that the demand for whole milk is elastic (1.42) and for skimmed milk is inelastic (0.53). The rise in prices of whole milk causes an increase in the consumption of skimmed milk by 0.30% and higher prices of skimmed milk leads to increasing of demand for whole milk by 0.37%, therefore they are substitutes. The influence of other dairy products such as a dried milk, yoghurt, cheese is mainly either insignificant (whole milk) or very low (skimmed milk). The income factor positively influences the consumption of milk and leads to a small increase in the consumption of skimmed milk what suggest that both type of milk are normal goods.
Key words
demand for milk, price elasticity, income elasticity, double-hurdle model
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