Determinant Factors of Demand in Dairy Food Market - Implications for Milk Production in Bangladesh
Determinant factors of demand in dairy food market - Implications for milk production in Bangladesh
ARIK ROY
Dairy has emerged recently as an important sub-sector in agriculture with profound implications for human health, livelihoods and the environment. Milk production in Bangladesh has increased during the past two decades. Improvement of high yielding crossbreed dairy and veterinary facility are the cogent factors for this partial success. But it is still far to achieve self-sufficiency in milk production. In order to head for self-sufficiency, issues on demand for milk are also becoming important. Although the declining rate of population growth has contributed partially towards self-sufficiency but the factors like urbanization and substitution have created the increasing demand for milk. Milk production in Bangladesh has increased at a rate (2.8 per cent) slightly higher than population growth (2.2 per cent) during the period from 1984 to 1996. Total supply of milk increased even slower than production because of elimination of imports with the growth in production. Although the milk production in Bangladesh has increased but the per capita supply of milk remained stagnant because of the population increase and substitution of imports with domestic production. The real price of milk has declined during the period, which caused a slower growth of milk production compared to its potential level. On the other hand, per capita income has grown during this period. The declining milk price, on the face of a stagnant supply and increasing income, warrants examining the factors affecting the demand and price of milk in Bangladesh.
The comparative static framework for milk market
In order to pursue the issue of causality in the falling milk prices the following conceptual framework embedded in the comparative static exposition of milk market is made. The demand and supply functions of milk can be as follows
QSit = f (Pit, Tt)
ARIK ROY
Dairy has emerged recently as an important sub-sector in agriculture with profound implications for human health, livelihoods and the environment. Milk production in Bangladesh has increased during the past two decades. Improvement of high yielding crossbreed dairy and veterinary facility are the cogent factors for this partial success. But it is still far to achieve self-sufficiency in milk production. In order to head for self-sufficiency, issues on demand for milk are also becoming important. Although the declining rate of population growth has contributed partially towards self-sufficiency but the factors like urbanization and substitution have created the increasing demand for milk. Milk production in Bangladesh has increased at a rate (2.8 per cent) slightly higher than population growth (2.2 per cent) during the period from 1984 to 1996. Total supply of milk increased even slower than production because of elimination of imports with the growth in production. Although the milk production in Bangladesh has increased but the per capita supply of milk remained stagnant because of the population increase and substitution of imports with domestic production. The real price of milk has declined during the period, which caused a slower growth of milk production compared to its potential level. On the other hand, per capita income has grown during this period. The declining milk price, on the face of a stagnant supply and increasing income, warrants examining the factors affecting the demand and price of milk in Bangladesh.
The comparative static framework for milk market
In order to pursue the issue of causality in the falling milk prices the following conceptual framework embedded in the comparative static exposition of milk market is made. The demand and supply functions of milk can be as follows
QSit = f (Pit, Tt)
References: Ahmed, S., et al. 1985. The Applied General Equilibrium Model for the Third Five Year Plan of Bangladesh. Bangladesh: Government of Bangladesh, Planning Commission, Working Paper BGD/83/029 No. 1. Bangladesh, Bureau of Statistics (BBS). 1991a and 1996. Statistical Yearbook. Dhaka. Bangladesh, Bureau of Statistics (BBS). 1991b. Report of the Household Expenditure Survey, 1988-89. Dhaka: Ministry of Planning. Behrman, J. R., and A. B. Deolalikar. 1987. "Will Developing Country Nutrition Improve with Income? A Case Study for Rural South India." Journal of Political Economy, 95 (3): 492-507.