Househood demand for comodities in Zambia: an Emperical assessment in context of food insecurity
It is known that Zambia's population has high food poverty and about 82% of the population in most parts of the country are said to be vulnerable to food insecurity (MoFNP, 2006). The extent of food poverty is particularly more prevalent in rural areas and among the poor people. The high food poverty levels should be a great concern to the policy makers and the government seeking to improve the economy. Addressing this problem requires understanding of the dynamics of this food poverty such as the locality and expenditure pattern on food of the affected people. Little, however, is known on these factors and about how food demand differs across different income groups and across different regions and this household food demand is affected as food prices change. With organized information about responsiveness of heterogeneous consumer households to changes in prices and income,policy makers seeking a mechanism for improving the welfare of households will have relevant information that facilitates the choice between policies that aim at increasing food production or reducing retail food prices and policies that focus directly on affected households. The objective of this research was to investigate the pattern of household food expenditure and examine how the price, income and demographic factors influence demand for food in Zambia using data on 5 food groups. The dissertation address four research questions: First, how do household food expenditure patterns in Zambia differ across different income groups and across different geographical regions? Second, to what extents do demographic factors in Zambia influence consumption decisions and expenditure pattern of household food? Third, how effective are income and price changes in influencing household food demand? And fourth, do households in Zambia diversify in food consumption when income or prices of food change? We used latest Central Statistic Office (CSO) cross sectional data of household expenditure survey of 2006 with a sample of 18,628 households designed to be nationally representative of all Zambian households. We applied Deaton and Muellbauer's (1980) Linear Approximation of the Almost Ideal System (LA/AIDS) model to estimate the demand systems. The demand system was estimated by nonlinear Iterated Seemingly Unrelated Regression (ITSUR) technique using EVIEWS econometric package. The results showed that maize meal, fish/kapenta, fruit/vegetables were inelastic and meat was elastic. The result also showered that meat was a luxury commodity. The main policy implication of the results includes a substantial price decline associated with increased production of maize and fish/kapenta and would benefit the majority of households since the two commodities have high budget shares and low own price elasticities of demand.
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