In the EU dairy sector, given the remaining high protective tariffs and the quota system, the main factor that drives dairy product market prices is the demand. This paper evaluates the development of demand in the EU and presents estimates of consumption trends and forecasts for the future as well as estimates of elasticity with respect to prices and income in two major EU consumer countries: France and Italy. We use two methods to estimate the development of demand for dairy products, one based on a multi-stage demand system and another based on a single trend equation. The two methods generally lead to the same qualitative results but trend projections are larger using the demand system approach which is based on a shorter data period. This difference is thus partly explained by the fact that high trend projections are not sustainable over a long period. The results show a decreasing consumption of butter and fluid milk and an overall growth in protein and fat consumption. Nevertheless, the increase in fat consumption should be more moderate than the consumption of protein. The results also show that the demand for dairy products is relatively price inelastic but is more sensitive to changes in income (especially for butter and cheese categories). As shown by the use of a partial equilibrium model of dairy markets, the likely impact of the CAP reform strongly depends on the development of demand for dairy products in the EU. More research effort on demand analysis is therefore crucial in order to assess the impact of reforms or trade negotiations more accurately and effectively.
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Article provided by Elsevier in its journal Food Policy.
Volume (Year): 33 (2008) Issue (Month): 6 (December) Pages: 644-656 Download reference. The following formats are available: HTML
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Bouamra-Mechemache, Zohra & Réquillart, Vincent & Soregaroli, Claudio & Trévisiol, Audrey, 2007.
"Demand for Dairy Products in the EU,"
IDEI Working Papers
454, Institut d'Économie Industrielle (IDEI), Toulouse.
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Babcock, Bruce A. & Beghin, John C. & Mohanty, Samarendu & Fuller, Frank H. & Fabiosa, Jacinto F. & Kaus, Phillip & Fang, Cheng & Hart, Chad E. & Kovarik, Karen P. & FAPRI Staff, University of Missour, 2004.
"FAPRI 2000 U.S. Agricultural Outlook,"
Staff General Research Papers
11404, Iowa State University, Department of Economics.
Babcock, Bruce A. & Beghin, John C. & Mohanty, Samarendu & Fuller, Frank & Fabiosa, Jay & Kaus, Phillip & Fang, Cheng & Hart, Chad & Kovarik, Karen & Womack, Abner W. & Young, Robert E., II & Suhler, , 2000.
"FAPRI 2000 U.S. Agricultural Outlook,"
Staff Reports
32054, Food and Agricultural Policy Research Institute (FAPRI).
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