FOOD DEMAND CHARACTERISTICS IN GHANA: AN APPLICATION OF THE QUADRATIC ALMOST IDEAL DEMAND SYSTEMS

Abstract

In typical developing countries, a one-size-fits-all policies often tend to hurt the poor and vulnerable. Specifically, in food demand studies different social groupings have characteristically heterogeneous demand functions which may require unique attention in terms of food policies. In this paper, we examine the food demand characteristics of three categories of consumers in Ghana based on fourteen selected food commodity groups. We use the sixth round of the Ghana Living Standard Survey in 2012/2013 data collected by the Ghana Statistical Service in collaboration with the World Bank. We apply the Quadratic Almost Ideal Demand System (QUAIDS) to estimate price and expenditure elasticities of demand for food in both rural and urban areas in Ghana. Empirically, we find that fish and cereal products take close to half (about 46%) of the food budget of the average Ghanaian household. We also report heterogeneous food expenditure patterns across the six regions considered in the study. Surprisingly, we find that female-headed households disburse a higher proportion on food budget than their male counterparts. Also, in conformity to theory, we find that the very poor households allocate the highest proportion to food budget than the non-poor. These findings suggest that food policies in Ghana should be discriminately on social and geographical lines to protect the very poor from escalating food prices. Food aid and assistance programmes should target the aged, larger and very poor households and rural dwellers.