Demand for fish in the Philippines : a disaggregated analysis

Abstract

This paper sought to establish the fish consumption pattern of Filipino households and estimate the price and income elasticities of fish demand by species, as well as by income groups, i.e., low, middle, and high income. The study used the countrywide Family Income and Expenditure Survey (FIES) for year 2000 of the National Statistics Office, which includes over 39,000 households. A three-stage budgeting framework was used in the analysis, which estimated food and fish expenditure functions in the first and second stages, respectively. In the third stage, a system of demand equations for fish by species was estimated using a quadratic almost ideal demand system (QUAIDS) model. Parameter estimates of the model were corrected through the Heckman procedure to remove the possible bias brought about by zero consumption of certain fish species resulting from nonpreference or infrequent purchases. Results showed that estimated price and income elasticities of demand varied substantially across fish type and across income groups. All 11 fish types included in the study were found to have positive income elasticity for all income levels. Hence, fish in general can be considered normal goods, including processed fish. However, the high-priced fish types generated elasticity values greater than one, which rendered them as luxury food fish. Own-price elasticity, on the other hand, was found to be elastic in most species with values increasing as consumers climbed up the income ladder. This observation, however, was not true in the case of milkfish and tilapia (two most popular species in the country) where price responsiveness of demand was found to be higher among the lower-income groups.