Analysis of households' demand for cereal and cereal products in Ghana

This paper analyses Ghanaian households' demand for cereals and cereal products with the objective of determining consumption patterns across expenditure (income) groups and estimating price and expenditure elasticities. The Linear Approximate Almost Ideal Demand System (LA/AIDS) is employed and applied to two nationwide household surveys which involved 4,523 and 5,998 households. Missing commodity prices and household expenditure in the datasets were imputed using single and multiple imputation techniques respectively. Overall, the findings indicate that the various expenditure items - rice, maize, guinea corn, sorghum and bread - are price and expenditure (income) inelastic, with significant cross price effects. This shows the possibilities of substitutability and complementarity among cereals in Ghana. Furthermore, the elasticities for households in lower expenditure quintiles are generally higher than the estimates for households in higher expenditure quintiles, an indication that income and price stabilization policies on cereals in Ghana could have far-reaching impact on lower-income households.