Is Animal-Protein-Food Consumption Still Sensitive to Price Change?Empirical Evidence from D.I. Yogyakarta Province, Indonesia - repository civitas UGM
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Content
IACSS-232
Is Animal-Protein-Food Consumption Still Sensitive to Price Change?
Empirical Evidence from D.I. Yogyakarta Province, Indonesia
a* b
Mujtahidah Anggriani Ummul Muzayyanah , Eko Priyotomo
a Faculty of Animal Science, Universitas Gadjah Mada, Indonesia. b Researcher on Agricultural Economics, Indonesia.- Corresponding Author:
ABSTRACT
Consumption of animal protein in Indonesia is dominated by livestock products food. Among livestock products, beef, chicken and egg are the main animal-protein food in Indonesia. This study examines the affecting of household`s factors in the consumption of beef, chicken, and egg and the expenditure and quantity analysis of these foods. Household expenditure data in urban and rural area of D.I Yogyakarta Province (here after DIY Province) are used in this study with Engel's theory as basic method. The empirical results show that total expenditure, as proxy of income, and regional factors have significant effect to expenditure and demand of beef, chicken, and egg, while gender of household head was found to have no significant impact on the expenditure and quantity of these foods, and as household-size increases, the expenditure and quantity of chicken, and egg consumed increased. Urban household spend less in chicken and egg, and spend more on beef relative to household in rural. Compare to urban household, rural household was more elastic on beef and chicken consumption based on income and quantity elasticity. Increasing income will be more effective way than decreasing its price to achieve substantial improvements and enhance animal protein consumption.
Keyword: Animal protein food, expenditure elasticity, quantity elasticity, Indonesia
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1. Introduction
Indonesian animal protein food consumption is dominated by livestock products such as meat, egg and milk. Some reference noted that poultry meat, beef and egg are consumer preferences of animal protein consumption (Bond et al, 2007; INSTATE, 2004). Chicken in particular is the meat of choice. DGLS (2007) reported that during 2004-2006, chicken meat is the highest consumption among meat product consumption of Indonesian people (about 3.81 kg/cap/year from 4.8 kg/cap/year of the total fresh meat consumption), and chicken egg is also highest among egg products (about 90 percent from total egg product). It is indicate that chicken and egg consumption is main source of animal protein source which have cheap price and people keep consuming chicken meat and egg.
Livestock products, as high-value-food, in developing country like Indonesia have generally higher responsiveness than do cereals. These foods are responsive to the change of price and or income. Sunarto (2000), for instance, presents animal protein consumption analysis in West Java, Indonesia, that is change in prices of fish and egg effects to the food consumption since these two items high price elasticity. Hutasuhut, et.al (2002) estimated meat consumption parameters. Consumers more adapt their consumption pattern to chicken price changes than they will for beef price changes. Residential locations also appear to be an important determinant of livestock product food consumption. Olivia and Gibson (2003) found that demand for beef is more elastic in price than is the demand for chicken, except in urban Java. Opposite to the beef consumption pattern, the demand for chicken in urban Java is more own-price elastic than it is in rural Java. This could be due to many rural households in Java raising chicken for their own consumption.
The objective of the study is divided into two folds; first, to examine the determinants of household demand for main animal protein such as beef, chicken, and egg and second, to estimate food expenditure and quantity elasticity of demand for beef, chicken, and egg.
2. Material and Methods
This research is using household expenditure data. Household Expenditure Survey (SUSENAS) data were used in this study. The 2011 SUSENAS survey was conducted by Central Bureau of Statistics (CBS) which is involved by sample households in Indonesia. In this study, we used raw household data record from Household expenditure data in urban and rural area of D.I Yogyakarta Province (here after DIY Province). The analyses of household food consumption depend on economic and non- economic factor of the households.
Analysis of food consumption can be measured from its quantity consume and the expenditures. In this study, Engel‘s theory is basic method on this the analysis of beef,
360 chicken, and egg consumption. The expenditure and quantity approach in this study used Deaton (1988) and Deaton (1997) such as e j = f (x,z) and q j = f (x,z) have always assume a log-linear function.
The Engel relationship as ∑ …. (1) ∑ ….. (2) where e ij and q ij are respectively, expenditure on the j-th food items ( j-th food = beef, chicken
and egg ) and quantity of j-th food item purchased by the i-th household; z ik is a set of
household‘s socio-economic variables which includes household size, age and gender of the household head, D is dummy variable which capture location effect on e ij and q ij (D =1 denotes households in urban; 0 denotes households in rural); j , j , and
θ β τ are parameters to be estimated; and are disturbance term. The adding up criterion of Almost Ideal Demand System (AIDS) model (Deaton and Muellbauer, 1980), does not satisfy in equations 1 and 2. But in this case, this is not a serious concern since we did not estimate a complete demand system. Because of non-linear specification of equation 1, the expenditure - income elasticity of the
j-th food item for the i-th household ij is calculated using the relationship below:
θ ̅ …………………….. (3)
Also, the quantity-income elasticity of the j-th food item for the i-th household ij is η calculated using the relationship below
̅ ……………………. (4) where (log x i )is the mean of the logarithm of income x i for the households.
3. Result and Discussion
Expenditure and quantity equations estimated based on equations 1 and 2, respectively for the pooled estimate, is Presented in Table 1. The coefficient of log_total_exp are positive and statistically significant for all the equations while (log_total_exp)2 are negative and
2
statistically significant for all equation. As earlier mentioned, inclusion of (log_total_exp) is a test for non-linearity between the dependent variables and total expenditure. The significant of the coefficient shows that non-linearity exist between the demand for beef, chicken and egg and total expenditure in the study area.
The estimated coefficients of LogHHSIZE is positive and statistically significant for chicken and egg equations. Meaning that, as household size increases, the expenditure on and quantity of chicken, and egg consumed increased. Also, the estimated coefficient of LogAGE is positive only for the expenditure and quantity equations for egg. The implication of this is
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- 11.367**
- 3.796**
- 23.400*
- 12.030*
- 4.938**
- log_total_exp 8.725*** 4.326*** 1.948*** 6.445*** 3.266*** 1.135*** Kuadrat_log_total_ exp_
- .629*** -.301*** -.126*** -.464*** -.229*** -.074 log_HHSIZE -.027* .191*** .250*** .170** .373*** .425*** log_AGE .385 .074* .130*** .272 .076* .079 Dummy regional (1=urban, 0=otherwise)
- .016 .000 .008 -.051 .003 -.015 Note: ***, ** and * significant at 0.01, 0.05 and 0.1 level of significance respectively The estimation result of expenditure and quantity demanded elasticity is presented in Table 2. The result showed that rural household was more elastic on beef and chicken consumption based on income and quantity elasticity than that of urban household. The magnitude of income parameter was bigger than that of price for all food items.
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that the older household head spend and demand more of egg in the study area. The variable GENDER was found to have no significant impact on the expenditure and quantity across all equations. The estimated coefficient of dummy region indicates that households in urban spend less on chicken and egg relative to households in rural area. Households in urban spend more on beef relative to households in rural.
Table 1: Estimated expenditure and quantity equations (pooled estimates) Expenditure estimation Quantity estimation beef chicken egg beef chicken egg
(Constant) -26.52**
.093** -.037*** -.026 .151*** .010 .016 GENDER (1=men, 0=otherwise)
Table 2. Point estimates of the expenditure and quantity elasticities.
Parameters Elasticity from beef equation
Elasticity from chicken equation Elasticity from egg equation rural urban rural urban rural urban
Expenditure 1.012 0.3146 0.593 0.4873 0.453 0.3532 Quantity 0.737 0.23056 0.384 0.3643 0.2385 0.2386
4. Conclusion
07.6, 13th Meeting of the Australia
Total expenditure, as proxy of income, and regional factors have significant effect to expenditure and demand of beef, chicken, and egg, while gender of household head was found to have no significant impact on the expenditure and quantity of these foods. Urban household spend less in chicken and egg than that of beef. Urban household spend more on beef relative to household in rural, and as household-size increases, the expenditure and quantity of chicken, and egg consumed increased. The elasticity result shows that change of income is more responsive to the consumption of beef, chicken and egg than change of price of these food items. Changes in price of the food items have less of an impact on its demand. This study is implying that income policies will be the most effective way to achieve substantial improvements in animal protein consumption.
REFERENCES
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[5] DGLS (Directorate General of Livestock Services), 2007, Livestock Statistical Book, Jakarta, Directorate General of Livestock Services.
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