Empirical analysis of the determinants of dairy consumption expenditure in the Accra and Kumasi Peri-Urban communities in Ghana

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The main purpose of the study was to examine the level of expenditure on dairy products and to identify the principal factors that influence the level of consumption expenditure on dairy products across households. Structured questionnaire was used to elicit primary information from a total of 303 households in the Accra and Kumasi pen-urban areas through a multi-stage sampling approach. A double logarithmic multiple regression model was used to examine the major determinants of household dairy consumption expenditure level. The principal determinants of the aggregate dairy consumption expenditure level were identified as income level, distance from home to purchase point and the level of urbanization of consumer’s home location. A 10% increase in consumer income was found to result in 4.2% increase in the consumption expenditure on dairy products. This means that the marginal propensity to spend on dairy products is 0.42. Also a 1Km increase in the distance from home to purchase point results in 0.1% increase in aggregate dairy consumption expenditure level. The study revealed that urban consumers spend more on dairy products than their rural counterparts. Regarding the individual dairy products, the study further revealed that the elasticity of consumption expenditure with respect to own price is unity, suggesting a constant marginal expenditure on specific dairy products for successive increases in the levels of product’s own price. However, the elasticity of specific dairy product expenditure with respect to income level and prices of substitutes was found to be less than unity, indicating diminishing marginal expenditure on specific dairy products for each percentage increase in income level and prices of substitute dairy products. It became evident from the study that raw fresh milk is an inferior commodity in Ghana as expenditure on it decreases with increasing level of consumer income. However, yoghurt and evaporated milk were found to be normal commodities. It was also found out that a 100% increase in the distance from consumer’s home to purchase point will warrant a 5% reduction in raw 1iesh milk consumption expenditure. Apart from vigorous consumer education to erase the negative perceptions people have about fresh milk, the study also recommended that marketing agents and producer sellers should explore the possibility of increasing the selling/purchase points of raw fresh milk in urban communities which are dominated b low income earners so as to boost the consumer demand for the product.
A thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the award of Master of Science, 2004