Meat Demand Structure and Welfare Effects of Price Liberalization: Toward Socio-Demographic Policy Recommendations

Document Type : Original Research

Authors
G. Layani
M. Karami Dehkordi
Department of Management and Rural Development, Faculty of Agriculture, Shahrekord University, Islamic Republic of Iran.
10.22034/JAST.26.6.1227
Abstract
This study attempts to investigate the welfare effects of multiple meat price shocks, due to the price liberalization policy, in different consumers' income- and age-groups. This is achieved by using Compensating Variation welfare index (CV) and Hicksian price elasticities, based on the Almost Ideal Demand System (AIDS) and the cost-income data of 17931 urban households in Iran. The results showed that the difference in meat's own-price elasticity for consumers of different ages decreases with the improvement of consumers' income status. The absolute own-price elasticity of poultry varied between 0.072-0.559%. The highest sensitivity of poultry meat demand to price changes was observed in high-income consumer groups. As well as the red meat demand sensitivity to price changes for all age-groups declines along with the raised income. The fish own-price elasticity for all consumers was more than one, and their differences were more significant for low-income consumers. The CV index of consumers varied between 29% and 78% and confirmed the hypothesis of difference in the consumers' vulnerability in different age and income groups. Separating the welfare effect by consumer groups based on income and age indicated that low-income and younger consumers experienced a higher welfare loss compared to low-income and older consumers. Finally, to accurately target the subsidies, the government can pay a certain amount of subsidy to each person according to the economic and social characteristics to prevent the wastage of resources and reach the desired goal.

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Journal of Agricultural Science and Technology
Volume 26, Issue 6
November and December 2024
Pages 1227-1243