Demand Analysis for Tomato, Onion, Peppers, and Fresh Okra in Nigeria

The results found in this study have implications for local Nigerian food producers, retailers, other participants of the food sector, and government food policy makers.

In this thesis the demand analysis for onion, peppers, fresh okra and tomato in Nigeria was conducted using General Household Survey data collected by the World Bank and the Nigeria National Bureau of Statistics. The two stage estimation procedure and Linear Approximation Almost Ideal Demand System addressing censoring were used to analyze the demand system. The analyses are based on the assumption that every household is maximizing its utility subject to a budget constraint. Standard errors on both stages of the estimation as well as for the calculated elasticities were adjusted using a bootstrap procedure.

Most of the demographic characteristics determining consumption were significant. Marshallian cross price elasticities suggest that the products are a mix of gross substitutes and complements, whereas positive values of Hicksian cross-price elasticities indicate that all vegetables are net substitutes. According to expenditure elasticities, not all of the vegetables appear to be normal goods. Negative expenditure elasticity for fresh okra indicates that the vegetable is an inferior good.

A combination of policies that increase purchasing power of population, and fosters food supply would benefit a developing country, like Nigeria, the most. Increased supply would trigger an increase in quantity demanded, improving the livelihood of agricultural producers, poor households and potentially creating more jobs in agricultural and related industries.