IMPLICATIONS OF DEMAND ELASTICITY ON HOUSEHOLDS FOOD DEMAND IN SOUTHWEST, NIGERIA

The study examined the implications of rising food prices on households food demand in Southwest, Nigeria. Total of 384 households were selected using a multistage sampling technique. Primary data were collected on household’s food demand and socioeconomic characteristics. Linear approximate almost ideal demand system model (LA/AIDS) was used to estimate the elasticities of households demand based on uncompensated own price elasticity. Results shows that values of own price elasticity of demand for rice and semovita had a negative sign and were > 1 (1.08 and 1.33 respectively); ndicates elastic demand. This implies household’s shifts their demand from rice and semovita to substitute food. Also, yam, beans and garri had own-price elasticity values that were < 1; 0.95, 0.09 and 0.33 respectively indicating an inelastic demand, a relatively low change in quantity demanded; yam, beans and garri is a necessity food. This study recommends that production of yam, beans and garri is worthwhile since there is a readymade market for it. Policy makers in Nigeria should create an enabling environment for its production so that these foods can be made available at affordable prices thereby increasing household welfare and improving the welfare of the economy at large in Southwest, Nigeria.