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Consumption Pattern of Milk and Milk Products and its Determinants: A Case of Junagadh District

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Abstract

The study was carried out to estimate expenditure and income elasticities, to examine inequality in expenditure and to know which are the factors affecting consumption of milk and milk products in rural and urban area. Major findings revealed that 50 and 16 per cent of the sample households belong to low income group whereas only 20 and 24 per cent belongs to high income group, respectively in rural and urban area. The adult (20 to 40 years) age group has the largest proportionate share of expenditure in rural and urban area. The percentage share of expenditure on food items decreased while that of non-food items increased with the increase in the level of total per capita expenditure. Milk and milk products were found to be expenditure and income inelastic in both the area. The expenditure on cereals and on meat and eggs would significantly decrease the expenditure on milk and milk products in rural and urban area, respectively. It was observed that expenditure on pulses, vegetables and fruits, sugar, edible oils and fats, other food items had positive significant effect on the expenditure of milk and milk products.
Title of the research Paper: Consumption Pattern of Milk and Milk Products and its
Determinants: A Case of Junagadh District
List of Author’s name and address
1. P.N. Gavhane
Department of Agricultural Economics
Junagadh agricultural University
Junagadh
2. Dr. K.A.Khunt
Professor
Post Graduate Institute of Agri- Business Management
Junagadh agricultural University
Junagadh-362001
Email:ka_khunt
3. Dr. N.J. Ardeshna **
Assistant research Scientist
Department of Agricultural Economics
Junagadh agricultural University
Junagadh-362001
Email:nardeshna@yahoo.com
** Author for correspondence
Consumption Pattern of Milk and Milk Products and its Determinants: A Case of
Junagadh District
The study was carried out to estimate expenditure and income elasticities, to examine
inequality in expenditure and to know which are the factors affecting consumption of milk and
milk products in rural and urban area. Major findings revealed that 50 and 16 per cent of the
sample households belong to low income group whereas only 20 and 24 per cent belongs to high
income group, respectively in rural and urban area. The adult (20 to 40 years) age group has the
largest proportionate share of expenditure in rural and urban area. The percentage share of
expenditure on food items decreased while that of non-food items increased with the increase in
the level of total per capita expenditure. Milk and milk products were found to be expenditure
and income inelastic in both the area. The expenditure on cereals and on meat and eggs would
significantly decrease the expenditure on milk and milk products in rural and urban area,
respectively. It was observed that expenditure on pulses, vegetables and fruits, sugar, edible oils
and fats, other food items had positive significant effect on the expenditure of milk and milk
products.
Introduction
India ranks first in the world milk production touching the figure of about 100 MT with
per capita availability 246 gm/day and contribute about 15 per cent of total world milk
production in 2006-07. Milk production in Gujarat has also increased from 4608.41 million
tonnes in 1995-96 to 7533.1 million tonnes in 2006-07. Total 45 dairies are presently in
operation in Gujarat state of which 18 dairies are in public sector and 27 dairies in private sector.
Micro level analysis of the behaviour of consumers, its income levels, nature of preference
about quality, packing, form of milk and milk products, etc. assumes due significance in bridging
the gap between existing and recommended level of consumption. It has been observed that at
macro level liquid milk consumption have dominant position in milk utilization pattern with 50
per cent share followed by traditional dairy products like ghee, khoa, channa and curd which
account for 45 per cent share. But at the micro level a different picture emerges with regard to
milk consumption pattern which may vary from region to region. The assessment of the existing
pattern of milk consumption across different socio-economic groups in a particular area is of
great strategic importance in the formulation of the suitable marketing strategy and the
comprehensive Dairy Development Programme. Though number of studies on consumption
pattern has been conducted by different research workers in different parts of the country from
time to time, but milk and milk products were not included in a comprehensive manner in these
studies. This demanded a detailed research investigation into consumption of milk and milk
products. Therefore, the present study was carried out to study the consumption pattern and to
estimate the expenditure and income elasticities of milk and milk products along with other food
and non food items, to examine the inequalities in the per capita expenditure and to analyze the
factors influencing the consumption expenditure of milk and milk products.
Methodology
The investigation on consumption pattern of milk and milk products was conducted in the
Junagadh district of the Gujarat state to peep into different aspects of the milk and milk products
consumption. The rural area comprises of Antroli and Chakhva villages under Mangrol block and
the urban area comprise of ward number 1 and 13 of Junagadh city. From the each area, a sample
of 50 households was selected randomly. The information on expenditure pattern on milk and
milk products along with major food and non-food items were collected from the individual
sample households for the month of December, 2008.
Regression analysis was employed to develop adult equivalent scale to define the
relationship between total expenditure and main commodity group expenditure. The
standardization of consumer unit has been done by using without/zero intercept regression
technique by following model:
Xj = b1 n1 + b2 n2 + b3 n3 + b4 n4 + b5 n5 + b6 n6 +u
and Cij = b1 n1 + b2 n2 + b3 n3 + b4 n4 + b5 n5 + b6 n6 +u
where,
Xij = Total consumer expenditure in the jth household.
Cij = Consumption / expenditure of ith item in the jth household.
n1 to n6 = Number of children respectively in the age group of below 4 years, 4-13 years,
13- 20 years, 20-40 years(male), 20-40 years (female) and above 40 years.
u = Random disturbance term
The parameters b1, b2, b3, b4, b5 and b6 were estimated by OLS technique. The standard
consumer unit was selected as adult of 40 years and above. Thus, adult equivalent consumer unit
scales are.
(a) Pre- school children (upto 4 years) = b1/b6 (d) 20 - 40 male = b4/b6
(b) School going children (4-13 years) = b2/b6 (e) 20 – 40 female = b5/b6
(c) Adolescents (13-20 years) = b3/b6 (f) 40 years above = b6/b6 = 1
The weighted households size derived by using the consumer units are as under:
1)
2)
wig = It is specific equivalent adult scale for ith item in gth age-sex group.
Wog = It is the expenditure equivalent adult scale common to all the consumption under
gth age-sex group.
∑wig ngj and ∑wog ngj are the standard household size corresponding to ith milk item and
total expenditure, respectively. Then,
will give per consumer unit (adult equivalent) consumption/ expenditure on the ith and per
consumer unit total expenditure respectively for the jth household.
To examine the consumption pattern of milk and milk products the entire sample of 50
households were post stratified into different expenditure groups on the basis of monthly
household income across the different socio-economic categories of people and expenditure
incurred on these items along with other food and non-food items.
The expenditure elasticities were worked by using various types of Engel functions to
choose an appropriate algebraic relationship between per capita expenditure on an item and per
capita total expenditure with other variables keeping constant. The various models tried were; (i)
Cij = ai + bi Xi ( Linear) (ii) Cij = ai + bi Log Xi (Semi log )(iii) Log Cij = log ai + Xi log bi
(Exponential) and (iv) Log Cij = ai + biLog Xi (Log linear ).
Where, Cij = Per capita monthly expenditure on ith item by jth household, Xi = Per capita
total monthly expenditure by the jth household, ais & bis are the parameters of a relation
pertaining to the ith commodity in question.
The income elasticities were worked out by multiplying the expenditure elasticity with a
scalar 0.81 in case of rural areas and 0.87 in case of urban areas as suggested by Nightingale
(1969). The Lorenz curve technique was employed to analyze the inequalities in rural and urban
areas in the per capita expenditure on milk and milk products and the per capita total
expenditure. Further, for finding the magnitude of inequality, the Gini ratio was worked out by
following formulae.
Where,
= Proportionate share of population in group, Proportionate share of
consumer expenditure in the group, = Proportionate share of consumer expenditure in
the group, and n = Total number of groups.
For examining the factors influencing the consumption expenditure on milk and milk
products, stepwise regression analysis was employed using the function;
Y = f ( X1, X2, X3, X4, X5, X6, X7, X8, X9, )
Where, Y = Per capita monthly expenditure on milk and milk products, X1= Per capita
monthly expenditure on cereals, X2 = Per capita monthly expenditure on pulses, X3 = Per capita
monthly expenditure on sugar, salt & jaggery, X4 = Per capita monthly expenditure on edible oils
& fats, X5 = Per capita monthly expenditure on fish, X6 = Per capita monthly expenditure on
meat & egg, X7 = Per capita monthly expenditure on vegetables & fruits, X8 = Per capita monthly
expenditure on other food items, and X9 = Per capita monthly expenditure on non-food items.
For examining the non-expenditure factors influencing consumption of milk and milk
products, stepwise regression analysis was employed. The regression function used for rural area
is; Y = f (X1, X2, X3, X4, X5, X6, D1, D2 )
Where, Y = Per capita monthly expenditure on milk and milk products, X1 = Age of head
of household (years), X2 = Years of education of head of household, X3 = Social participation, X4
= Size of land holding (ha), X5 = Proportion of adults in household (%), X6 = Number of
livestock animals, D1 = Dummy for member of co-operative society and D2 = Caste dummy.
Model for urban area is; Y = f (X1, X2, X3, X4, D1)
Where, Y = Per capita monthly expenditure on milk and milk products, X1 = Age of head of
household (years), X2 = Years of education of head of household, X3 = Social participation, X4 =
Proportion of adults in household (%) and D1 = Caste dummy.
Res u lts and Dis cuss i on
The occupational distribution of sample households (Table 1) revealed that the cultivators
group found dominant (30 %) followed by labour (28 %), business and retailer class (18 %),
service class (16 %) and others (8 %) with average monthly per capita expenditure of Rs.794 in
rural area. In urban area, the service class was the dominant occupational group (40 %) followed
by business and retailers (28 %), labour class (18 %) and others (14 %) with average monthly per
capita consumption expenditure of Rs 2012 About 50, 30 and 20 per cent of households in rural
area belong to lower, medium and high income groups respectively, whereas, in urban area just
reverse trend was observed.
Table 1: Distribution of households according to occupation and income
Occupation Household income
Type Number of
households
Average
MPCE (Rs.)
Monthly
income
Number of
households
Average
MPCE (Rs.)
Rural Urban Rural Urban Rural Urban Rural Urban
Service 8 (16) 20 (40) 836 2248 < Rs. 3000 12
(24)
8 (16) 428 1223
Business and
retailers
9 (18) 14 (28) 944 2290 Rs. 3000-
Rs. 6000
13
(26)
9 (18) 713 1660
Cultivators 15 (30) - 830 - Rs. 6000-
Rs. 9000
15
(30)
9 (18) 763 1682
Labours 14 (28) 9 (18) 511 1152 > Rs. 9000 10
(20)
24 (48) 1216 2473
Others 4 (8) 7 (14) 743 1786 Overall 50
(100)
50
(100)
794 2012
Overall/Total 50
(100)
50
(100)
794 2012
Figures in parentheses indicate % of total. MPCE=monthly per capita expenditure.
Overall per capita monthly expenditure in rural and urban areas (Table 2) found to have
positive association with educational level. The number of households having middle education
found the highest (26 %) with monthly per capita expenditure of Rs. 704 in rural area. The head
of households accounted for 16 per cent of total households having no formal education followed
by primary (12 %), secondary (16 %), higher secondary (12 %) and graduation (18 %) in rural
area. Relatively more numbers of households were found in the graduate and above category
(56 %) with monthly per capita expenditure of Rs. 2331 in urban area. Thus monthly per capita
expenditure found to increase with increase in education level in both areas.
Table 2: Distribution of household according to education level
Education category Number of households Average MPCE
(Rs.)
Rural Urban Rural Urban
No formal education 8 (16) 3 (6) 502 1092
Primary (upto 5th) 6 (12) 4 (8) 621 1461
Middle (upto 8th) 13 (26) 5 (10) 704 1243
Secondary (upto 10th) 8 (16) 4 (8) 870 1808
Higher secondary (12th) 6 (12) 6 (12) 812 1952
Graduation & above 9 (18) 28 (56) 1101 2331
Overall 50 (100) 50 (100) 794 2012
Figures in parentheses shows % of total.
The adult equivalent for the total expenditure for the rural area of the age group 20-40
male and female was the highest and 1.4 times more than 40 years group (Table 3). The adult
equivalent for the age group 20-40 years for food items was also high (1.46.) indicating that
these groups consumed more food items because people of these groups do more physical work.
In case of milk and milk product the adult equivalent for less than 4 and 4-13 age group was
quite higher than other commodity groups. It means that the expenditure on this age group was
high on milk and milk products. In case of non food items the adult equivalent of age group 20-
40 male and female was higher than other groups. This was mainly due to the expenditure on
higher education, entertainment and clothing. In case of urban area adult equivalent for age
group < 4 and 4-13 years for total expenditure observed high as compared to rural area. It
indicates that the children are taken better care than rural area. In urban area adult equivalent for
age group 20-40 years for food items was very high (1.32) than other age groups implied high
food consumption in this age group. In over all, for both rural and urban area, the people of age
group 20-40 years spends more than people of other age groups.
Table 3: Adult equivalent of rural and urban area for major commodity group
Years
Name of items
Total milk and
milk products Food items Total non- food
items Total expenditure
Rural Urban Rural Urban Rural Urban Rural Urban
< 4 0.46 1.56 0.16 0.76 0.31 0.16 0.25 0.48
4 – 13 0.65 0.47 0.26 0.68 0.15 0.05 0.42 0.26
13 – 20 0.78 0.55 0.69 0.79 0.27 0.50 0.65 0.58
20 - 40 F 0.42 0.34 0.31 0.50 0.26 0.26 1.22 0.33
20 - 40 M 1.32 1.88 1.46 1.32 1.66 1.58 1.42 1.54
> 40 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
The distribution of households according to consumption of milk and milk products across
different occupational groups (Table 4) showed that the 100 per cent of the total rural sample households
consume liquid milk followed by other milk product/sweets (64 %), ghee (60 %), curd (54 %) and
buttermilk (44 %). Moreover, in labour and cultivators class, liquid milk and curd are more preferred
items while in service and business class liquid milk, ghee and ice-cream are more preferred items. All
the urban sample households consume liquid milk followed by ghee (86 %), other milk product/sweets
(78 %), buttermilk (72 %), curd (54 %), and ice-cream (44 %). On the whole, both in rural and urban
area liquid milk is most preferred item.
Table 4: Distribution of rural and urban households according to form of consumption
Items
Occupation
Service Business &
retailer Cultivators Labour Others Total
R U R U R U R U R U R U
Liquid milk 8 20 9 14 15 - 14 9 4 7 50 50
Baby food 2 2 4 4 1 - 1 3 1 2 9 11
Curd 6 10 3 9 10 - 6 5 2 3 27 27
Ghee 8 18 7 11 8 - 4 8 3 6 30 43
Butter 6 9 4 7 4 - 0 0 0 0 14 16
Butter milk 5 15 3 9 9 - 4 8 1 4 22 36
Ice-cream 8 12 7 13 4 - 2 3 1 4 22 32
Other milk Products 8 16 8 13 13 - 13 5 4 5 46 39
R-Rural and U- Urban
The per capita total expenditure on milk and milk products in rural area amounted to Rs.
64.37 i.e. 8.10 per cent of total expenditure (Table 5). About 76 per cent of total milk and milk
product expenditure goes to the liquid milk indicating important role of liquid milk in rural
dietary. The average monthly per capita food consumption expenditure was Rs. 312.12 which
accounted for 39.30 per cent of total expenditure. Cereals, fruit and vegetables, pulses and oil
were the dominant items of expenditure in the order. The total per capita expenditure on food
plus milk and milk products amounted to Rs. 376.49 i.e.47.40 per cent of total expenditure. Thus,
the consumption expenditure of non-food items exceeded the food items which indicate towards
the improvement in standards of living of rural people. The average per capita monthly total
consumption expenditure in urban area was higher (Rs. 2012.72 ) than the rural area indicating
higher living standard of people in urban area. The average per capita expenditure on milk and
milk products was Rs. 279.33 which accounted for 13.88 per cent of total expenditure.
Randhawa and Chahal (2008) in their study also reported 10.71 per cent share of milk and milk
product in total expenditure in Amritsar district. Though the food expenditure was high (Rs.
564.58 ) as compared to rural area, share of food items to the total expenditure was found to be
low. Thus, as income increases the per capita expenditure increases but the quantity remains
more or less same which might be due to increase in consumption of quality goods. The urban
people preferred more sugar, beverages, oil and meat, fish and egg. The total per capita
expenditure on total food including milk and milk products was Rs. 843.91 (41.93 % in total
expenditure) which was less than the rural area. In urban area the per capita expenditure on non-
food items was Rs. 1168.81 (58 %) which was also found higher than the rural area, indicated
relatively high standard of living of people in urban area.
Table 5: Per capita monthly consumption expenditure in rural and urban area (Rs.)
Items Quantity(Kg) Per capita expenditure % to TE
Rural Urban Rural Urban Rural Urban
Liquid milk (lit) 985.00 1462.0
049.02 (76.14) 167.00 (59.79) 6.17 8.30
Curd and baby food 4.71 (7.32) 16.43 (5.89) 0.59 0.82
Ghee 35.23 52.25 3.26 (5.06) 36.64 (13.12) 0.41 1.82
Butter 8.00 15.00 1.51 (2.35) 4.69 (1.68) 0.19 0.23
Butter milk 1.76 (2.73) 16.44 (5.89) 0.22 0.82
Ice Cream 12.30 32.25 0.93 (1.44) 17.23 (6.17) 0.12 0.86
Other milk products 20.25 37.25 3.19 (4.95) 20.90 (7.48) 0.40 1.04
Total milk and
milk products 64.37 (100) 279.33 (100) 8.10 13.88
Cereals 1850.0
0
1382.0
0126.85 (40.64) 116.67 (20.67) 15.97 5.80
Pulses 185.00 290.00 28.63 (9.17) 41.70 (7.39) 3.60 2.07
Sugar, salt & jaggery 155.20 315.00 8.07 (2.59) 34.81 (6.17) 1.02 1.73
Edible oils & fats (lit) 386.20 267.00 27.07 (8.67) 16.86 (2.99) 3.41 0.84
Meat, fish & eggs 34.00 68.00 6.80 (2.18) 183.94 (32.58) 0.86 9.14
Fruits & vegetables 756.83 591.00 73.18 (23.45) 37.69 (6.67) 9.21 1.87
Spices 23.20 18.00 14.73 (4.72) 93.60 (16.58) 1.85 4.65
Beverages 26.80 (8.59) 39.31 (6.96) 3.37 1.95
Total foods items 312.12 (100) 564.58 (100) 39.29 28.05
Total food + milk
and milk products 376.49 843.91 47.40 41.93
Total non-food
expenditure 417.80 1168.81 52.60 58.07
Total expenditure 794.29 2012.72 100 100
Figures in parentheses indicate per cent of individual items. TE= Total expenditure
The average per capita monthly expenditure on consumption in different occupational
groups in the rural and urban area (Table 6) revealed that the business class households incurred
the highest per capita total monthly expenditure followed by service class, cultivators, monthly
expenditure followed by service class, cultivators, others and labours in rural area. Further,
highest per capita monthly expenditure on the milk and milk products was incurred by service
class households (Rs. 86.44) followed by business (Rs. 81.89), others (Rs. 67.69), cultivators
(Rs.56.57) and labours (Rs. 22.66) in rural area. In urban area too, almost similar trend was
observed with respect to total monthly expenditure and per capita expenditure on milk and milk
products. Almost reverse trend was observed for the consumption expenditure on meat, fish and
eggs. Labour group spent the lowest on food and non-food items hence, the efforts should be
more to increase access to PDS to improve the living standard of labours.
Table 6:Per capita monthly expenditure according to occupations (Rs.)
Items
Service Business
and retailers
Culti-
vators*
Labour Others
Rural Urban Rural Urban Rural Rural Urban Rural Urban
Liquid milk 59.08
(7.06)
174.60
(7.77)
61.62
(6.52)
200.00
(8.73)
54.97
(6.61)
15.28
(2.99)
98.21
(8.52)
57.39
(7.71)
159.62
(8.93)
Curd and
baby food
7.18
(0.86)
9.89
(0.44)
7.84
(0.83)
27.54
(1.20)
2.99
(0.36)
2.36
(0.46)
14.32
(1.24)
2.52
(0.34)
13.63
(0.76)
Ghee 5.72
(0.68)
45.00
(2.00)
3.14
(0.16)
29.77
(1.29)
2.80
(0.36)
1.83
(0.35)
23.82
(2.07)
2.39
(0.32)
44.62
(2.49)
Butter 4.89
(0.58)
6.70
(0.29)
1.96
(0.21)
6.62
(0.29)
0.79
(0.09)
0 0.00 0 0.00
Butter milk 1.21
(0.14)
20.80
(0.93)
1.77
(0.19)
12.46
(0.54)
2.58
(0.31)
1.52
(0.29)
13.16
(1.14)
0.43
(0.06)
16.54
(0.92)
Ice-cream 2.85
(0.34)
22.13
(0.98)
1.19
(0.13)
18.02
(0.79)
0.22
(0.02)
0.15
(0.03)
2.89
(0.25)
0.86
(0.12)
19.81
(1.11)
Other milk and
milk products
5.49
(0.66)
22.70
(1.01)
4.35
(0.46)
24.31
(1.06)
2.46
(0.29)
1.50
(0.29)
7.11
(0.62)
2.36
(0.32)
26.54
(1.46)
Total milk and
milk products
86.44
(14.53)
301.82
(13.42)
81.89
(14.27)
318.71
(13.92)
56.57
(8.04)
22.66
(4.43)
159.5
(13.84)
67.69
(9.09)
280.77
(15.71)
Cereals 121.80
(14.54)
124.55
(5.54)
134.83
(17.18)
129.57
(5.66)
126.74
(15.25)
105.97
(20.74)
83.68
(7.26)
107.92
(14.51)
105.92
(5.93)
Pulses 56.56
(6.75)
41.75
(1.86)
19.89
(2.10)
43.68
(1.91)
19.42
(2.34)
28.45
(5.56)
28.00
(2.43)
16.29
(2.19)
56.62
(3.17)
Sugar, salt &
jaggery
7.83
(0.93)
35.18
(1.56)
9.21
(0.97)
34.72
(1.52)
8.07
(0.97)
6.42
(1.26)
30.32
(2.63)
6.44
(0.87)
40.35
(2.26)
Edible oils
and fats
26.97
(3.22)
97.91
(4.35)
30.73
(3.25)
104.15
(4.55)
26.21
(3.15)
21.94
(4.29)
66.58
(5.78)
22.77
(3.06)
92.31
(5.17)
Meat, fish
and eggs
5.57
(0.67)
21.72
(0.97)
5.40
(0.57)
11.88
(0.52)
1.18
(0.14)
7.56
(1.48)
13.16
(1.14)
28.47
(3.82)
18.46
(1.03)
Fruits and
vegetables
70.89
(8.45)
192.29
(8.55)
82.38
(8.72)
200
(8.73)
72.45
(8.72)
60.55
(11.85)
127.63
(11.08)
66.32
(8.91)
198.08
(11.09)
Spices 14.38
(1.72)
38.11
(1.69)
18.64
(1.97)
36.85
(1.61)
14.56
(1.75)
10.53
(2.06)
36.68
(3.18)
12.69
(1.71)
39.81
(2.23)
Beverages 26.52
(3.17)
45.80
(2.04)
33.62
(3.56)
45.32
(1.98)
26.89
(3.24)
21.01
(4.11)
14.47
(1.26)
24.00
(3.23)
38.85
(2.17)
Total food +
milk and milk
products
417.00
(49.77)
899.25
(39.99)
416.60
(44.09)
924.88
(40.39)
362.37
(43.61)
285.50
(55.79)
560.02
(48.61)
352.62
(47.40)
871.19
(48.76)
Total non-food
items
420.93
(50.23)
1349.67
(60.01)
528.34
(55.91)
1365.17
(59.61)
468.50
(56.39)
225.95
(44.21)
592.11
(51.39)
391.30
(52.60)
915.58
(52.60)
Total
expenditure
837.94
(100)
2248.92
(100)
944.94
(100)
2290.05
(100)
830.88
(100)
511.06
(100)
1152.13
(100)
743.92
(100)
1786.77
(100)
* cultivators were not found in urban study area.
In the rural area (Table 7), it is revealed that high income group incurred the highest per
capita total monthly expenditure followed by upper middle income group, middle income group
and lower income group and almost the same trend was observed in milk and milk products. The
share of expenditure on all food items found the highest in low income group (54%) and the
lowest in high income group (42%). This observation was in conformity with the Engel’s law of
consumption. The percentage share of expenditure on milk and milk products also slightly
decreased with the increase in the level of monthly household income.
In urban area also the high monthly income group (> Rs.12000) incurred the highest per
capita total monthly expenditure (Rs.2473.86) followed by upper middle income (Rs.9000-
Rs.12000) group, middle income (Rs.6000-Rs.9000) group and lower income (Rs. 3000-
Rs.6000) group in urban area. Further, the trend in per capita monthly expenditure on milk and
milk products was also observed in same order of income groups i.e. Rs. 340.69 followed Rs.
238.36, Rs 221.39 in urban area. It is also evident that with the increase in the level of monthly
income, the percentage share of expenditure on food items decreased from 49 per cent in low
income group to 39 per cent in high income group while the reverse trend was observed for non-
food items i.e. it increased from 51 to 61 per cent in urban area. This observation in both rural
and urban area was in conformity with the Engel’s law of consumption Keynes Psychological
Law of Consumption states that as income increases consumption expenditure also increase but
by a somewhat smaller amount. It was also observed that, the percentage share of expenditure on
milk and milk products decreased from 15 to 13 per cent with the increase in the level of
monthly household income. The high inclination was also observed for non-vegetarian food in
high income group.
A comparative analysis of rural and urban sector brings out that the average per capita total
expenditure in urban area is Rs. 2012.71 which was much higher than rural area Rs. 794.29. The
average per capita expenditure on milk and milk products was Rs. 167 in urban area as compared
to Rs. 49.01 in the rural area. The urban consumer spent 41.93 per cent on food including milk
and milk products and 58.07 per cent on non-food items as compared to 39.29 per cent on food
and 52.60 per cent on non-food by rural consumers. This disparity in the consumption and
expenditure pattern was observed in the urban and rural households which might be due to the
difference in level of income between them.
Table 7: Per capita monthly expenditure according to monthly household income (Rs.)
Items < Rs.3000 Rs.3000- 6000 Rs.6000-9000 > Rs.9000
Rural Urban Rural Urban Rural Urban Rural Urban
Liquid milk 26.29
(6.13)
110.44
(9.03)
53.96
(7.56)
134.24
(8.23)
46.98
(6.15)
136.73
(8.13)
65.69
(5.40)
205.23
(8.29)
Curd and baby food 2.19
(0.51)
16.44
(1.35)
3.43
(0.48)
7.73
(0.47)
3.27
(0.43)
18.37
(1.09)
10.41
(0.86)
18.22
(0.74)
Ghee 1.61
(0.38)
32.96
(2.70)
3.96
(0.56)
28.37
(1.74)
3.32
(0.44)
40.91
(2.43)
3.76
(0.31)
40.04
(1.62)
Butter 0.24
(0.06)
0.00 1.95
(0.27)
3.03
(0.19)
1.85
(0.24)
1.02
(0.06)
1.52
(0.12)
8.07
(0.33)
Butter milk 0.56
(0.13)
14.07
(1.15)
1.17
(0.16)
13.03
(0.79)
3.30
(0.43)
12.24
(0.73)
0.71
(0.06)
20.00
(0.81)
Ice-cream 0.11
(0.03)
4.07
(0.33)
1.17
(0.16)
9.55
(0.58)
0.87
(0.11)
18.88
(1.12)
1.42
(0.16)
22.16
(0.89)
Other milk and milk
products/ sweets
1.68
(0.39)
10.74
(0.88)
3.12
(0.44)
25.45
(1.56)
2.91
(0.38)
10.20
(0.60)
4.96
(0.41)
26.96
(1.09)
Total milk and
milk products
32.69
(7.62)
188.74
(15.44)
68.75
(9.64)
221.39
(13.33)
62.45
(8.18)
238.36
(14.17)
88.45
(7.27)
340.69
(13.77)
Cereals 84.06
(19.60)
87.55
(7.16)
116.36
(16.31)
99.91
(6.12)
129.99
(17.02)
107.79
(6.41)
165.93
(13.64)
133.25
(5.39)
Pulses 16.26
(3.79)
29.88
(2.44)
21.94
(3.08)
48.00
(2.94)
30.61
(4.00)
34.63
(2.06)
41.72
(3.43)
45.97
(1.86)
Sugar, salt &
jaggery
5.02
(1.17)
35.78
(2.93)
7.27
(1.02)
33.09
(2.03)
8.11
(1.06)
30.29
(1.80)
11.19
(0.92)
37.18
(1.50)
Edible oils and fats 15.56
(3.63)
67.41
(5.51)
20.38
(3.42)
102.42
(6.28)
26.82
(3.51)
85.31
(5.07)
39.27
(3.23)
101.29
(4.09)
Meat, fish and eggs 10.17
(2.37)
7.41
(0.61)
14.22
(1.99)
23.64
(1.45)
3.96
(0.52)
17.76
(1.06)
1.54
(0.13)
16.75
(0.68)
Fruits and
vegetables
45.28
(10.56)
130
(10.63)
67.67
(9.49)
135.45
(8.29)
73.03
(9.56)
174.49
(10.37)
101.06
(8.31)
216.82
(8.77)
Spices 7.37
(1.72)
45.63
(3.73)
12.71
(1.78)
37.48
(2.29)
14.84
(1.94)
34.79
(2.07)
22.39
(1.84)
37.07
(1.49)
Beverages 13.56
(3.16)
16.66
(1.36)
22.89
(3.21)
33.33
(2.04)
29.52
(3.87)
37.78
(2.25)
36.61
(3.01)
47.57
(1.92)
Total food + milk
and milk products
229.97
(53.63)
609.07
(49.81)
356.19
(49.93)
734.73
(44.25)
379.36
(49.68)
761.19
(45.24)
508.16
(41.79)
976.59
(39.48)
Total non-food
items
198.85
(46.37)
613.52
(50.18)
357.20
(50.07)
925.69
(55.75)
384.29
(50.32)
921.35
(54.76)
707.94
(58.21)
1497.27
(60.52)
Total expenditure 428.83
(100)
1222.59
(100)
713.39
(100)
1660.02
(100)
763.66
(100)
1682.44
(100)
1216.1
(100)
2473.86
(100)
Figures in parentheses indicates per cent to total expenditure in respective columns.
The estimates of expenditure and income elasticities along with the best among
alternative forms of Engel functions for rural and urban area (Table 8) showed that no single
form of production function was found satisfactory for all commodities. In rural area, linear form
was found to be most appropriate for explaining the consumer behaviour in respect of buttermilk,
curd, ice-cream, sugar, salt and jaggery, oil and fats, fish, meat and eggs, and non-food items.
Double log form was the best fitted for liquid milk, ghee, total milk and milk products, cereals,
pulses, fruits and vegetables, spices, beverages and total foods. Semi log function was the best
fitted for other milk products and sweets. In rural area, expenditure elasticities were found to be
more than unity in case of curd and ghee, fish, meat & eggs, fruits & vegetables, beverages and
non-food items indicating the fact that these items were elastic in nature whereas in case of
cereals, pulses, sugar & salts, and total food items, expenditure elasticities were less than unity
reflecting that these items were relatively less elastic. Among the milk items, curd and ghee were
income elastic in nature whereas liquid milk, butter milk and sweets were found to be income
inelastic in rural area suggesting that liquid milk was the necessity of life. Relatively high value
of both income as well as expenditure elasticities in case of total non-food items indicate
behavioural change in respect to taste and habits. One common feature of the results of
expenditure and income elasticities is that for all the individual items of expenditure, the
expenditure elasticities found higher than income elasticities. i.e. expenditure on individual items
is more responsible to total expenditure than income. This is in conformity with the
psychological law of consumption given by Prof. J.M. Keynes i.e. “It states the tendency of not
to spend on consumption in terms the full amount of an increment of income.”
In urban area, linear form was found the most appropriate for explaining the consumer
behaviour in case of butter milk, curd, ghee, oil and fats, meat and eggs, fruits and vegetables,
and spices. Double log form was best fitted for liquid milk, total milk and milk products, cereals,
pulses, sugar & salt, fish, beverages, total foods and non-food items. Semi log function was the
best fit for sweets. In urban area, expenditure elasticities were greater than unity in case of
Table 8: Expenditure and income elasticities in rural area
Items Model Expenditure
elasticity
Income
elasticity
Rural Urban Rural Urban Rural Urban
Liquid milk Double log Double log 0.76 0.42 0.61 0.36
Butter milk Linear Linear 0.42 0.40 0.34 0.34
Curd Linear Linear 1.26 1.32 1.02 1.14
Ghee Double Log Linear 2.30 1.75 1.86 1.52
Other milk products/
sweets
Semi Log Semi Log 0.80 1.23 0.64 1.07
Total milk products Double Log Double Log 1.63 1.46 1.32 1.27
Cereals Double Log Double Log 0.32 0.30 0.26 0.26
Pulses Double Log Double Log 0.65 0.57 0.53 0.49
Sugar, salt & jaggery Linear Double Log 0.63 0.56 0.51 0.48
Edible oils and fats Linear Linear 0.77 0.76 0.62 0.66
Fish Linear Double Log 1.30 1.02 1.05 0.88
Meat and eggs Linear Linear 1.02 0.98 0.83 0.85
Fruits and vegetables Double Log linear 1.19 1.02 0.96 0.88
Spice Double Log Exponential 0.63 0.73 0.51 0.63
Beverages Exponential Double Log 1.11 1.05 0.89 0.91
Total food including
milk and milk products
Double Log Double Log 0.84 0.73 0.68 0.63
Total non-food items Linear Double Log 1.51 1.33 1.22 1.15
certain dairy products such as curd, ghee, other milk products or sweets reflecting their elastic
behaviour whereas it turned out to be less than one for liquid milk and buttermilk, implying that
these items are inelastic. However, with respect to total milk and milk products, it was found to
be elastic (1.46). Thus, nature and extent of response of each item of milk and milk products
should be considered while fixing the price policy of dairy products and expansion of the dairy
industries. Most of the other items were found to be inelastic except fish, fruits & vegetables, and
beverages which had elasticity co-efficient slightly above unity. The total food including milk
and milk products was found less elastic (0.73) to total expenditure but it was found elastic
(1.33) with respect to non-food items. Chand (1992) in his study of the consumption pattern of
milk and milk products in Saharanpur city of Uttar Pradesh. He found that the income elasticity
of demand was 0.8839 for all food items and 1.2610 for all non food items.
Further, comparing the expenditure and income elasticities between the rural and urban
areas it was found that both expenditure and income elasticities were high in case of milk and
milk products, total food items and non-food items in rural area than the urban area. This might
be due to inherent low level of consumption in rural area. In both the area liquid milk was found
to be as necessity of life.
To study the inequalities in the per capita expenditure on milk and milk products and per
capita total expenditure on all food and non-food items, the Lorenz curve technique was used
which shows the deviation of consumer expenditure on milk and milk products and total
expenditure on all food and non-food items from the egalitarian line. Larger the deviation from
egalitarian line, higher is the degree of inequality. The Lorenz curves for the rural and urban area
have been depicted in Figure 1 and Figure 2, respectively. Gini concentration ratio on the other
hand indicate the value of inequalities and its value varies from zero to one (Table 9). The Gini
concentration ratio for per capita monthly expenditure on milk and milk products was found to
be 0.60 and for per capita total expenditure on all food and non-food items, it was turned out to
0.25 in rural areas. The Gini ratio was found to be 0.33 for milk and milk products and 0.20 for
the total expenditure comprising of all food and non-food items in urban area. The magnitude of
inequality is more in case of total expenditure on milk and milk products than all food and non-
food items in both areas. Further, it was higher in rural area than in urban area. The higher
magnitude of inequalities for expenditure on milk and milk products is indicative of the
influence of factors such as consumer preferences and availability of these items.
In order to look into the effect of expenditure factors on the consumption expenditure of milk and
milk products, stepwise regression procedure was used and the results are given in Table 10. The
regressors explained 69 and 51 per cent variation in the regressond in rural and urban area, respectively.
The regression coefficient for per capita expenditure on cereals was found to be negative and significant
while the coefficient for fish was found to be negative and non-significant in rural area. The coefficient
for meat and egg, vegetable and fruits and non-food items were found to be positive and statistically
significant indicating that with the increase in expenditure on these items, the expenditure on milk and
milk products in rural area would increase.
Fig.1:Cumulative % of per capita expenditure
and cumulative % of households in rural
area
Fig.2: Cumulative % of per capita expenditure
and cumulative % of households in urban area
Table 9: Gini concentration ratio for consumption of milk and milk
products
Particulars
Gini concentration ratio
Rural Urban
Consumption on milk and milk products 0.60 0.33
Total food 0.38 0.34
Total non-food 0.46 0.40
Total consumption 0.25 0.20
The regression coefficient for per capita expenditure on cereals was found to be positive and non
significant while for meat and egg it was found to be negative and significant indicated that
inclination toward the non-vegetarian foods would reduce the consumption of milk and milk
products in urban area. Coefficient for edible oils, fruits and vegetables, pulses and total non
food items were found to be positive and significant in urban area. These results are in
conformity with the findings of Roy (2004) who stated that per capita per month income, total
Table 10: Factors influencing the consumption of milk and milk products in rural and
urban area
Per capita
expenditure on
different items
Rural Urban Non-expenditure items Rural Urban
Constant 21.71 43.25 Constant -34.13 7.85
Cereals -0.54*
(0.20)
0.20
(0.36)
Age of household (years) 0.72
(0.96)
-0.10
(0.12)
Pulses 0.28
(0.24)
1.12**
(0.90)
Years of education of
head of households
3.82*
(1.09)
1.19**
(0.15)
Fish -0.03
(0.44)
-0.79
(0.47)
Social participation -2.5
(9.44)
0.12**
(0.98)
Meat and eggs 0.12*
(0.43)
-0.99*
(0.56)
Size of land holding 0.29
(2.56)
-
Vegetables and fruits 1.14*
(0.28)
0.12*
(0.19)
Proportion of adults
in household
0.79**
(0.90)
-
Non-food items 0.05**
(0.01)
0.09*
(0.02)
Number of livestock animals -3.48
(2.52)
-
Edible oils and fats - 0.53**
(0.32)
D1 member of milk co-operative
society for rural area
-12.05
(16.10)
-
R20.69 0.51 D2 caste dummy 2.78
(16.28)
5.46
(2.27)
R20.57 0.63
**: Significant at 1% level *: Significant at 5% level
per capita per month expenditure on all food items had positive and significant influence on the
per capita per month expenditure on milk and milk products, whereas, family size and
expenditure on fish had no significant influence on the per capita per month expenditure on milk
and milk products in Burdwan district of West Bengal.
The selected set of variables explained 57 and 63 per cent variation in the dependent
variable in case of non expenditure factors in rural and urban area, respectively. The coefficient
of age of household, years of education of head of household, size of land holding, proportion of
adults in households and upper caste peoples were found positive but it was statistically
significant only for the variables, years of education of head of household and proportion of
adults in households in rural area. Badola (2003) also found that size and composition of family,
occupation and annual family income had direct bearing on the level of consumption of dairy
products in Nainital district of Uttarakhand. The coefficient for the education level of head of
household, social participation and caste factor were found positive but was statistically
significant only for education and social participation in urban area. Thus, in urban area too,
literacy factor was found conducive to enhance the milk and milk production.
Conclusions
The total expenditure was much higher in urban area than rural area. The share of
expenditure decreased on food items as income increases but on non food items it increased in
both the area. The expenditure on milk and milk products increased with increase in income in
both the areas. In case of elasticities, liquid milk was found essential item in diet in both the
areas. The consumption of milk and milk products significantly affected by expenditure on
cereals in case of rural area and expenditure on meat and eggs in case of urban area. In case of
non-expenditure items in both the areas, literacy level has positive impact on consumption of
milk and milk products.
Suggestion
In the rural area expenditure on fruits and vegetables was elastic in nature. This suggest
that these items should be provided through rationing to control the problem of under nutrition.
Employment opportunities should be created in rural area to increase purchasing power of people
of rural areas.
References
Badola, J. C. (2003); Behavioural study of consumer buyers of dairy products. MBA dissertation,
Indira Gandhi National Open University, New Delhi.
Chand, S. (1992); Consumption pattern of milk and milk products in Saharanpur city (U.P.).
Unpublished Ph.D. thesis, NDRI, Karnal (Haryana) – India.
Nightingale, Ray Willey (1969); The modernization decision in Indian urban fluid milk markets.
Occasional Paper No. 17, Department of Agricultural Economics, Cornell University,
USAID, Price Research Project, April, 1969, PP.7-14.
Randhawa, G. S. and Chahal, S. S. (2008); Consumption of Milk and its Derivatives in Punjab.
Indn. J. of Agril. Mark., 22(1): 60-71.
Roy, S. S. (2004); Consumption pattern of milk and milk products in the rural areas of Burdwan
District of West Bengal. An unpublished M.Sc. thesis, NDRI, Karnal (Haryana) - India.
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