ANALYSIS OF URBAN HOUSEHOLD DEMAND FOR POULTRY PRODUCTS IN OGBOMOSO NORTH AND SOUTH LOCAL GOVERNMENT AREA OYO STATE, NIGERIA

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1 Tropcal and Subtropcal Agroecosystems, 15 (2012): ANALYSIS OF URBAN HOUSEHOLD DEMAND FOR POULTRY PRODUCTS IN OGBOMOSO NORTH AND SOUTH LOCAL GOVERNMENT AREA OYO STATE, NIGERIA [ANALISIS DE LA DEMANDA URBANA DE PRODUCTOS AVICOLAS EN OGBOMOSO NORTE Y SUR, OYO, NIGERIA] L.T. Ogunny*, A. Aboye and W.A. Sanus Department of Agrcultural Economcs and Extenson, Ladoke Akntola Unversty of Technology Ogbomoso. E- mal: ttogunny@yahoo.com *Correspondng Author SUMMARY The study analyzed the urban household demand for poultry products n Oyo state, Ngera. Data were drawn from two local governments on 200 households wth the ad of well-structured questonnare n 2010.These were subsequently analyzed usng the Almost Ideal Demand System. The study revealed that there was an nverse relatonshp between the household expendture and the budget share of egg, a drect relatonshp between the prce of egg and ts budget share whle an ncrease n the prce of fsh led to an ncrease n ts budget share n the home. Keywords: AIDS; poultry; elastcty; expendture. RESUMEN El estudo analzó la demanda urbana de productos avícolas en el estado de Oyo, Ngera. Los datos fueron obtendos de dos gobernos locales y 200 casashabtacón a través de un cuestonaro estructurado y aplcado en La nformacón se analzó empleando el Sstema de Demanda Cas Idealzada. El estudo reveló que exstó una relacón nversa entre el gasto de la casa y la proporcón que representa la compra de huevo, una relacón drecta entre el preco del huevo y su nvel de consumo, mentras que un ncremento en el preco del pescado ncrementó su partcpacón el presupuesto del hogar. Se concluyó que a medda que se ncrementa el gasto de la casa, exste un decremento en la partcpacón del huevo y carne de ave en el presupuesto del hogar. Palabras clave: Sstema de demanda cas deal; carne de ave; elastcdad; gasto. INTRODUCTION Snce the 1970s, global producton, consumpton trade of poultry meat has grown faster than that of any other meat. Durng the 1990s, when demand growth slowed for other meats, ncludng fsh, demand growth for poultry meat accelerated and poultry contnue to lead the expanson of meat trade. Although demand for poultry meat was strong relatve to demand for other meats n developed countres durng the 1990s, the rapd global gans n poultry meat supply, demand and trade were led by gans n developng countres. (USDA, 1999). The poultry sector s crucally mportant n the context of agrcultural growth and mprovement of dets of people n Ngera. The subsector s partcularly mportant n that t s a sgnfcant source for the supply of proten and nutrton, n a household s nutrtonal ntake. It s an attractve economc actvty as well, especally to woman and poor populaton. Lvestock farmng has remaned an essental component of the agrcultural sector of the Ngeran economy. Ths s true, because lvestock s a good source of anmal proten whch s needed for proper and balanced det. Adeshnwa et al., (1999) observed that the Food and Agrcultural Organzaton (FAO) recommended that an average of 200 g anmal proten s requred per day for healthy lvng n the developng countres. Ths therefore, means that the general wellbeng of the people s drectly dependent on the amount of anmal proten consumpton avalable to them. Although, FAO (2000) recommended the average proten requrement for healthy lvng and mantaned that the meat proten consumpton n most Afrcan countres s very low, at a level of 25g. Yet n Ngera, the consumpton s even lower especally n the southern and eastern parts of Ngera, where n recent tmes human nutrtonst have observed that the producton of anmal proten has not been hgh enough to meet the demand of the rapd populaton growth (Ob, 2003). He asserted that much of the anmal proten ntake avalable to the southern and eastern parts of Ngera, comes from the north n the form of cattle, rams, dogs and goats. Comparatve Statstcs by Ademosun (2000) puts Ngera's total meat producton at 810,000 ton for a 125

2 Ogunny et al., 2011 populaton of about 110 mllon, resultng n a meat producton ndex of 22 g per caput, per day. Sonaya (1982), had rghtly envsaged that as consumers become more artculate and organzed; ther demand for wholesome anmal proten wll exert a powerful nfluence upon qualty, producton method and strateges. He added that recent ncreases n expendable ncome of urban dwellers have tendences to stmulate greater demand, not only for qualty but also quantty of meat products. Today, the ncreasng human populaton n the face of nelastc producton, strateges appears to have wdened the demand supply gap and accentuates socety of meat products. Regm (2002) supported ths vew and noted that, the unprecedented growth that has occurred n the last half-century has created an addtonal demand for meat and general food n developng countres. Besde the falure of meat producton capacty to match wth the human populaton growth, the dstrbuton of lvestock n Ngera s apparently lopsded. Composte transportaton cost ncurred, coupled wth remote dstance between maor meat producng areas and consumng urban centers together make the value of wholesome beef, mutton, pork, chcken and dog meat often unaffordable (Mdafr and Brorsen, 1993). As poultry ndustry s expandng wth ncreasng number households nvolved n the rasng of domestc fowls, turkey, goose, ducks and all the lkes; the problems of malnutrton perssts. It s very dffcult for an average of Ngera, to consume any of the poultry products ether chcken meat or egg, on the scale of nternatonal nutrtonal requrement. Ths can be traced to the hgh prce of the products whch makes poultry products appear nfrequently on many of our tables, except durng the festve perods. Ths low level of consumpton makes the malnutrton problem to be persstent. Another observaton s the fact that the demand for these products s stll far hgher than the supply, ths arses from hgh prcng and mportaton of both, chcken and eggs from other countres. Ngera has the largest populaton n sub- Saharan Afrca. About 47% resde n the urban areas where the populaton growth rate s estmated at three tmes that n rural areas (World Bank, 2004). Ths suggests a shft n ncreased food demand from the rural to the urban areas. Government polces tend to favor the urban dwellers to the detrment of the rural areas. Over the past three decades, rural households have been sgnfcantly poorer than urban households. However, whle urban poverty has ncreased, rural poverty has decreased, especally after the postadustment perod: 1995 to date (Canagaraah and Thomas, 2001). Urbanzaton s therefore a key nonncome factor explanng the change n demand for anmal proten (Ahmed and Gruhn, 1995). Consumpton of anmal proten has been found to be hgher n urban areas than n rural areas (Hussan, 1990). Rsng ncomes, changng tastes and preferences are lkely to shft the demand for meat and meat products. Dfferences n consumer behavor and demand for meat products, partcularly dary products, exst n Ngera because the country s dverse and characterzed by regonal, physcal, agro clmatc, socoeconomc, and cultural/ethnc dfferences n food habts (Jabbar and D Comenco, 1993). The obectve of ths study s to fll a gap n the lterature by estmatng demand functons for urban households n Ngera. Income and prce elastctes are needed to formulate polces, set prortes, and engender nvestments n the lvestock sector. Hence, an understandng of household consumpton patterns of meat and meat products, especally the effects of ncome and prce on meat demand and the mpact of demographc factors on urban household meat consumpton (Young and Hamdok, 1994) could provde mportant polcy nsghts for Ngera. METHODOLOGY Data was collected from 200 household n two local government areas of the state, usng a multstage method. The two local government area selected n Ogbomoso metropols were, Ogbomoso south and north and these were taken as the samplng unt as the frst stage of samplng. At the second stage, fve wards were randomly selected at each local government, makng a total of ten wards. The last stage nvolved random selecton of twenty household n each ward makng a total of 200 respondents. The study employed the Almost Ideal Demand System (AIDS) developed by Deaton and Muellbauer (1980). The model s flexble enough to allow the assumptons of homogenety and symmetry to be tested or successfully mposed durng emprcal analyss. It s easy to estmate, gves arbtrary frst order estmaton to any demand system, and satsfes the axoms of choce. Many of these good attrbutes have contrbuted tremendously to the applcaton of the model to demand equaton estmaton n many parts of the world. The AIDS model can be specfed as n x w ln P ln( ) e (1) p where w = budget share of th commodty defned by P Q X P = prce of thcommodty =estmated coeffcent of prces =estmated expendture coeffcent X= total expendture on all commodtes n the system P=prce ndex The prce ndex can be further defned as: 126

3 Tropcal and Subtropcal Agroecosystems, 15 (2012): ln P k ln Pk k k k ln P ln P k (2) The prce ndex makes equaton 1 to be non-lnear. In order to lnearze t, the Stone s ndex has been ncorporated. ln p w ln p (3) Homogenety, symmetry, and addng up are respectvely mposed on the system through the followng parameter restrctons: 0; ; a 1; as 0; 0; 0. (4) Followng Chalfant (1984) and Ahmed and Shams (1994), the Marshalan and Hcksan elastctes are computed from the estmated parameters of the Lnear Approxmaton AIDS model (LAAIDS) n equaton 4 as follows; Marshalan (Uncompensated) 1 (own- prce) (5) ( ) w w ( ) ( ) (cross-prce) (6) w w Hcksan (compensated) ( w ) 1 w (own-prce) (7) w (cross-prce) (8) ( w ) The expendture elastcty s derved as E 1 w (9) Substtute for Meat RESULTS AND DISCUSSION The nformaton n table 1 show that 54.5percent, amountng to more than half of the respondents, took only fsh as ther close substtute for chcken, whle the lesser percentages consume ether egg, and cheese as ther substtute. Ths fsh was n all people consulted lke substtute. Ths mght be due for the easy accessblty of fsh, n terms of relatve dstrbuton and cost per unt, n comparson wth the other avalable substtute. The cheese s also an mportant food for people det wth fsh (17.5%). Almost Ideal Demand System Followng Deaton and Muellbauer (1980), the demand equaton for egg and chcken were estmated wthout mposton of any restrctons. The results of the analyss are presented n table 2. From the table, the test for homogenety was carred out. The results of the tests showed that n both, egg and chcken, homogenety condtons s sgnfcantly volated. Ths result s n lne wth the fndngs of Deaton and Muellbauer (1980), Ahmed and Shams (1994) and Awoyem et al., (2006). Table 2 also shows that, all the Durbn-Watson statstcs were wthn the plausble regon. In all one can effectvely say that the dependent and ndependent varables, have effectvely performed ther role. In the frst equaton usng the budget share of egg as the dependent varable, t was clear that, three of the varables were sgnfcant at I percent level of sgnfcance. The sgnfcant varables are the prce of egg, fsh and total food expendture. Expendture has a negatve relatonshp wth budget share for egg. Ths showed that budget share for egg tends to decrease wth ncrease n household expendture. There s also a postve relatonshp between the prce of egg and ts budget share. As the prce of fsh ncreases by 1%, the budget share for egg ncreases by 0.009%. For chcken as the second equaton, four ndependent varables were also sgnfcant, whch are the prces of egg, chcken, fsh and total food expendture respectvely at 1% level. There s a postve relatonshp between the budget share for chcken and the prce of egg, chcken and fsh. Ths shows that a 1% ncrease n prce of fsh, leads to a 0.011% ncrease n budget share for chcken n the home. Marshallan (Uncompensated) Own Prce and Cross Prce Elastctes Table 3 presents the full matrces of the uncompensated (Marshallan), own prce and cross prce elastctes. All the estmates of own prce elastctes conform to the law of demand of negatve sgns. The estmated own prce elastctes of poultry products ranged between (egg) and (chcken). It s noteworthy that the own-prce elastcty for egg ( ) s the least elastc followed by chcken (-0.683).Ths probably ndcates the preferental mportance of chcken n the det of household n Ogbomoso metropols, above egg. Ths study s n lne wth earler fndngs by Ma et al., (2004) who reported a negatve and less than one own prce elastcty for egg and chcken for urban households n Chna. Also from the table, all the estmated values for the cross prce elastctes have a postve sgn, whch mples substtuton effect. Ths mples that all products are n substtute type of relatonshp wth poultry products. 127

4 Ogunny et al., 2011 Table 1. Dstrbuton of Respondents by Substtute for Chcken Substtute Frequency Percent Cumul. percent Fsh Fsh and egg Fsh, egg and cheese Fsh, egg, cheese & others (meat) Fsh, egg & others (meat) Fsh and cheese Meat No substtute Total Source: Feld survey, 2010 Table 2. Unconstrant Parameter Estmates and Test of Homogenety Commodty Constant Chcken Meat Fsh Expendture R 2 DW 0.235*** 0.059*** *** *** (10.756) (20.471) (-0.019) (0.072) (3.461) ( ) Chcken 0.413*** 0.010** 0.046** *** *** (12.849) (2.332) (11.541) (0.807) (2.692) ( ) Source; Feld survey, 2010 Note: Values n parenthess represents t-values, *** represent sgnfcant at 1% level, ** represent sgnfcant at 5% level, Hcksan (Compensated) Own Prce and Cross Prce Elastctes From Table 4, the own prce elastcty for the two products are negatve, whch conform to a pror expectaton. has the most nelastc own- prce elastcty (ε=-0.253) among the two poultry products, consdered n the study. Ths ndcates that households n Ogbomoso metropols, are nsenstve to changes n the prce of egg. That s, f the prce of egg comes down, or there s ncrease n the per capta ncome of the household, consumpton wll not be much affected. Huq and Arshad(2010) calculated compensated own prce elastcty for meat at and hence n lne wth ths study. Hcksan cross prce elastctes are hgher than that of the Marshallan though not up to unty and postve. Ths mples that Hcksan cross prce elastcty for all products are substtutes for each other. Table 3. Marshallan (Uncompensated) Own Prce and Cross Prce Elastctes Commodty Chcken Meat Fsh Chcken Source: Feld Survey, Table 4. Hcksan (Compensated) Own Prce and Cross Prce Elastctes Commodty Chcken Meat Fsh Chcken Source: Feld Survey, Expendture and Income Elastctes The estmates of ncome elastcty are yelded by multplyng the estmated expendture elastctes wth the responsveness of expendture on egg and chcken by ncome change from Engel s curve. The ncome elastctes for egg and chcken were less than one, whch mples that the poultry products are ncome nelastc. In other words, they are normal and necessty goods. Ths fndng s n lne wth prevous work by Seale et al., (2003) who reported less than one ncome elastctes for meat for all categores of ncome groups n Indonesa. Huq and Arshad(2010) calculated expendture elastcty for meat at based on AIDS model and hence could be consdered as a luxury. When the expendture elastcty s less than one, there s weak reference for demand by a partcular household. Ths leads to less consumpton of poultry products by such household. Ths study s n consonance wth the fndngs of Ma et al.,(2004) 128

5 Tropcal and Subtropcal Agroecosystems, 15 (2012): for egg(less than one), whle t s not for chcken (greater than one). Table 5. Estmated Expendture and Income Elastctes Product Expendture elastcty Chcken Source: Feld Survey, 2010 Income elastcty CONCLUSION AND RECOMMENDATION It was concluded that as the household expendture ncreases, there s a decrease n the budget share to egg and chcken. It shows that, the poor people depend n extreme of egg for ther consumpton of proten, ts means that prces of egg s a very mportant varable n the household. The publc polcy should be carefully wth prce, producton and consume of egg. The poverty status of the area should be addressed by the government, ths wll go a long way n ncreasng the lvng standard of the people and change the mentalty that poultry meat belong to the few except on festval days. REFERENCES Ademosun, A.A Structural Adustment and the Ngera Lvestock Industry Stuport n Infancy. Keynote Address delvered at the Ngeran Socety for Anmal Producton. Anmal Conference held at Unversty of Agrculture, Makurd. Adeshnwa, A.O.K., Fammo, O., Ogunmodebe, B.K., Ogunsanm, A.O Weaner Pgs Fed wth Graded Levels of Maze Offal as Replacement for Maze and the Effects on Performance. Tropcal Journal of Anmal Scence. 1: Ahmed, A.U., Shams, Y.S Demand Elastctes n Rural Bangladesh; An Applcaton of AIDS Models. The Bangladesh Development Studes. 22: Ahmed, R., Gruhn, P Selected ssues n the supply and demand for red meat and poultry products n developng countres. In Supply of lvestock products torapdly expandng urban populatons (ed R.T Wlson). Proceedngs of the Jont FAO/WARP/KAAS symposum, Hoam Faculty Club, Seoul Natonal Unversty, Seoul, Korea May, Food and Agrculture Organzaton of the Unted Natons, Rome, Italy. Awoyem T.T., Amao, A.O., Fatogun, O.O Household Expendture Pattern on Food n Ibadan Oyo State, Ngera. Journal of Rural Economcs and Development. 15: Canagaraah, S., Thomas, S Poverty n a Wealthy Economy: The Case of Ngera. Journal of Afrcan Economes. 10: Chalfant, J A Globally Flexble Almost Ideal Demand System. Journal of Busness and Economc Statstcs, 5: Deaton, A., Muellbauer, J An Almost Ideal Demand System. Amerca Economcs Revew. 70: FAO Year Book, Food and Agrcultural Organzaton, Rome. Hussan, M. A Nutrton Polcy and Urban Poor n Developng Countres. Food Polcy. PP June. Huq, A.S.M.A., Arshad, F.M Demand Elastctes for Dfferent Food Items n Bangladesh. Journal of Appled Scences. 10: Jabbar, M. A., D Comenco, C.M Demand for Dary Products among the Indgenous Populaton of Southern Ngera. Indan Journal of Dary Scence 46: Ma, H., Rae, A., Huang, J.,Rozelle, S Chnese Anmal Product Consumpton n the 1990s. The Australan Journal of Agrcultural and Resource Economcs. 48: Mdarf, A., Brorsen, B. W Demand for Red Meat, Poultry and Fsh n Morocco : An Almost Ideal Demand System. Agrcultural Systems. 9: Ob, C.I Game producton. An alternatve to beef cattle producton n southern Ngera. Ngera Academc Forum. 4: Regm, A., Deepak, M.S., James Seale, Jr., Jason, Bernstern,J. 2002: Cross Country Analyss of Food Consumpton Patterns. In: Changng Structure of Food Consumpton and Trade/ WRS Economc Research Servce/USDA

6 Ogunny et al., 2011 vewdoc/download?do= Accessed on the 27 th March,2009 Seale, J., Regm,A., Bernsten, J.A Internatonal Evdence on Food Consumpton Patterns. Techncal Bulletn No. TB1904. Sonaya, E.B Beef Qualty and the Ngeran Consumer. In: Beef Producton, Ngera. Osnowo et al (Ed.), Proceedng of Ngera Natonal Conference of Beef Producton, pp artcle/european.../ html Accessed on the 3rd 0f June, USDA Unted State Department of Agrculture Summary, Layers and Producton. Economc Research Servces/USDA Inda poultry sector- Development and prospect/wrs World Bank external/cpprofle.asp?ptype= CP&CCODE=NGA. Accessed on the 6 th of June, 2010 Young, T., Hamdok, A. A Effects of Household Sze and Composton on the Consumpton n Rural Households n Matabeleland South, Zmbabwe. Agrcultural Economcs. 11: Submtted Aprl 13, 2011 Accepted May 30, 2011 Revsed receved August 10,