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
DOI: https://doi.org/10.31410/ITEMA.2018.357
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
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
Abstract
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
References
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[2] Alviola IV, P. A., Capps Jr, O. (2010). Household demand analysis of organic and conventional fluid milk in the United States based on the 2004 Nielsen Homescan panel. Agribusiness, 26(3), 369-388.
[3] Bai, J., Wahl, T. I., McCluskey, J. J. (2008). Fluid milk consumption in urban Qingdao, China. Australian Journal of Agricultural and Resource Economics, 52(2), 133-147.
[4] Bouamra-Mechemache, Z., Réquillart, V., Soregaroli, C., Trévisiol, A. (2008). Demand for dairy products in the EU. Food policy, 33(6), 644-656.
[5] Burton, M., Dorsett, R., Young, T. (1996). Changing preferences for meat: Evidence from UK household data, 1973–93. European Review of Agricultural Economics, 23(3), 357-370.
[6] Cragg, J. G. (1971). Some statistical models for limited dependent variables with application to the demand for durable goods. Econometrica: Journal of the Econometric Society, 829-844.
[7] Cupak, A., Pokrivcak, J.,Rizov, M. (2016). Demand for food away from home in Slovakia. Finance a úvěr: Czech Journal of Economics and Finance, 66(4), 354-369.
[8] Davis, C., Blayney, D., Cooper, J.,Yen, S. (2009, August). An analysis of demand elasticity for fluid milk products in the US. In International Association of Agricultural Economists Meeting, August (pp. 16-22).
[9] De Alwis, A. E. N., Edirisinghe, J. C.,Athauda, A. M. T. P. (2011). Analysis of factors affecting fresh milk consumption among the mid-country consumers. Tropical agricultural research and extension, 12(2).
[10] Denver, S.,Jensen, J. D. (2014). Consumer preferences for organically and locally produced apples. Food Quality and Preference, 31, 129-134.
[11] Dong, D., Chung, C.,Kaiser, H. M. (2004). Modeling milk purchasing behavior with a panel data double-hurdle model. Applied Economics, 36(8), 769-779.
[12] Eakins, J. (2016). An application of the double hurdle model to petrol and diesel household expenditures in Ireland. Transport Policy, 47, 84-93.
[13] Euromonitor (2017). Drinking Milk Products in Slovakia, https://www.euromonitor.com/drinking-milk-products-in-slovakia/report on 16.10. 2018
[14] Eurostat (2017). Agricultural accounts and prices. Available online at: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Agricultural_accounts_and_prices.
[15] Eurostat (2018). Milk and milk product statistics. Available online at: https://ec.europa.eu/eurostat/statistics-explained/index.php/Milk_and_milk_product_statistics#Milk_production
[16] Gao, X. M., Wailes, E. J.,Cramer, G. L. (1995). A microeconometric model analysis of US consumer demand for alcoholic beverages. Applied Economics, 27(1), 59-69.
[17] Garcia-German, S., Garrido, A.,Bardaji, I. (2014, August). Evaluating Transmission Prices between Global Agricultural Markets and Consumers’ Food Price Indices in the EU. In 2014 International Congress, August (pp. 26-29).
[18] Gilbert, C. L.,Morgan, C. W. (2010). Food price volatility. Philosophical Transactions of the Royal Society of London B: Biological Sciences, 365(1554), 3023-3034.
[19] Goktolga, Z. G., Bal, S. G.,Karkacier, O. (2006). Factors effecting primary choice of consumers in food purchasing: The Turkey case. Food Control, 17(11), 884-889.
[20] Gould, B. W. (1996). Factors affecting US demand for reduced-fat fluid milk. Journal of Agricultural and Resource Economics, 68-81.
[21] Hatirli, S. A., Ozkan, B.,Aktas, A. R. (2004). Factors affecting fluid milk purchasing sources in Turkey. Food quality and preference, 15(6), 509-515.
[22] Heien, D. M.,Wessells, C. R. (1988). The demand for dairy products: structure, prediction, and decomposition. American Journal of Agricultural Economics, 70(2), 219-228.
[23] Mabiso, A., Sterns, J., House, L.,Wysocki, A. (2005). Estimating Consumers’ Willingness-to-pay for Country-of-origin Labels in Fresh Apples and Tomatoes: A Double-hurdle Probit Analysis of US Data Using Factor Scores (Doctoral dissertation, University of Florida).Newman, C., Henchion, M.,Matthews, A. (2003). A double-hurdle model of Irish household expenditure on prepared meals. Applied Economics, 35(9), 1053-1061.
[24] Mutlu, S.,Gracia, A. (2006). Spanish food expenditure away from home (FAFH): by type of meal. Applied Economics, 38(9), 1037-1047.
[25] Newman, C., Henchion, M., & Matthews, A. (2003). A double-hurdle model of Irish household expenditure on prepared meals. Applied Economics, 35(9), 1053-1061.
[26] Sharpe, D. L., Abdel-Ghany, M., Kim, H. Y.,Hong, G. S. (2001). Alcohol consumption decisions in Korea. Journal of Family and Economic Issues, 22(1), 7-24.
[27] Sousa, J (2014): Estimation of price elasticity of demand for alcohol in the United Kingdom. HMRC Working Paper 16.
[28] Swinnen, J., Van Berkum, S., Bozik, M., Blaas, G., Pokrivcak, J.,Banka, S. (2006). Market linkages in the Slovak agro-food sector.
[29] Tiryaki, G. Y.,Akbay, C. (2010). Consumers’ fluid milk consumption behaviors in TURKEY: an application of multinomial logit model. QualityQuantity, 44(1), 87.
[30] Wan, W.,Hu, W. (2012, February). At Home Seafood Consumption in Kentucky: A double-hurdle model approach. In Southern Agricultural Economics Association Annual Meeting. Birmingham, AL.
[31] Yen, Steven T., and Andrew M. Jones. “Household consumption of cheese: an inverse hyperbolic sine double-hurdle model with dependent errors.” American journal of agricultural economics 79.1 (1997): 246-251.
[32] Zhang, F., Huang, C. L., Lin, B. H., Epperson, J. E. (2008). Modeling fresh organic produce consumption with scanner data: a generalized double hurdle model approach. Agribusiness: An International Journal, 24(4), 510-522.
