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Demand for Dairy Products in the EU

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  • Bouamra-Mechemache, Zohra
  • Réquillart, Vincent
  • Soregaroli, Claudio
  • Trévisiol, Audrey

Abstract

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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Bibliographic Info

Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 454.

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Date of creation: Nov 2007
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Publication status: Published in Food Policy, vol.�33, n°6, décembre 2008, p.�644-656.
Handle: RePEc:ide:wpaper:7135

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References

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Citations

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Cited by:
  1. Rosa, Rui & Mili, Samir & Briz, Julian, 2009. "Consumer and Supply Chain Dynamics in the Portuguese Organic Milk Market," 2009 International European Forum, February 15-20, 2009, Innsbruck-Igls, Austria 59208, International European Forum on System Dynamics and Innovation in Food Networks.
  2. Klerkx, Laurens & Nettle, Ruth, 2013. "Achievements and challenges of innovation co-production support initiatives in the Australian and Dutch dairy sectors: A comparative study," Food Policy, Elsevier, vol. 40(C), pages 74-89.
  3. Widenhorn, Andreas & Salhofer, Klaus, 2012. "Price sensitivity within and across retail formats," Congress Papers 124108, Italian Association of Agricultural and Applied Economics (AIEAA).
  4. Bouamra-Mechemache, Zohra & Jogeneel, Roel & Requillart, Vincent, 2008. "Removing EU milk quotas, soft landing versus hard landing," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43656, European Association of Agricultural Economists.
  5. Bouamra-Mechemache, Zohra & Ali-Kein, Hela Hadj & Requillart, Vincent, 2006. "Impact of WTO reforms on the world dairy sector," 2006 Annual meeting, July 23-26, Long Beach, CA 21149, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Xavier Irz, 2010. "Modeling physical quantities of food and nutrients consumed from aggregate data-with an application to Finland," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3-4), pages 293-304, 05.
  7. Stéphan Marette & Jayson L. Lusk & Jutta Roosen, 2010. "Welfare Impact of Information with Experiments: The Crucial Role of the Price Elasticity of Demand," Economics Bulletin, AccessEcon, vol. 30(2), pages 1585-1593.
  8. Klaus Salhofer & Christoph Tribl & Franz Sinabell, 2012. "Market power in Austrian food retailing: the case of milk products," Empirica, Springer, vol. 39(1), pages 109-122, February.
  9. Bonnet, Céline & Bouamra-Mechemache, Zohra, 2014. "Organic label, bargaining power, and profit sharing in the French fluid milk market," TSE Working Papers 14-493, Toulouse School of Economics (TSE).

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