Demographic factors and the demand for dairy products in Canada: an economic analysis

Martin, Craig
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University of Guelph

Canada's population has experienced notable changes in birth rates, divorce rates, and immigration patterns over the past 50 years. These changes have had three major effects on the structure of the population: i) more but smaller households; ii) fewer children per household; and, iii) increasing number of households headed by foreign born persons arriving from a greater variety of home countries than in the past. How do changes in the characteristics of the Canadian population affect the consumption of dairy products? This is the central issue examined in this thesis. The effects of the changes in the structure of the population of Canada were investigated for five dairy products: 1 Percent Fluid Milk, 2 Percent Fluid Milk, Butter, Cheddar Cheese and, Other Cheeses. The thesis incorporates demographic variables into a system of demand equations using the Linear Almost Ideal Demand System. The demand system is estimated using the Generalized Method of Moments estimator and data from the 1996 Canadian Food Expenditure Survey. The model is used to test if age, ethnic origin, and the composition of the household affect the consumption of the five dairy products. The results show that the demographic characteristics of the household do influence the consumption of the selected dairy products. However, the influence of the demographic factors is complex with at least one of the demographic factors influencing the consumption of each dairy product but no two dairy products being influenced by the same demographic factor in the same way. Also, no single demographic factor influenced the consumption of all dairy products in a consistent manner. The results also vary widely across geographic regions in Canada. While these results lead us to conclude that demographic variables do influence the consumption of dairy products in Canada they also demonstrate that attributing the changes in the consumption of dairy products to a single demographic factor, such as age or ethnic origin is simplistic and would likely lead to erroneous conclusions.

Canada, Dairy products, Demand, Demographic factors, Linear Almost Ideal Demand System