Hedonic Analysis of Beef Demand

Abstract of Hedonic Analysis of Beef Demand

This study was aimed at the hedonic analysis for beef and the impact of income changes on household consumption in Benin City. The study was carried out between the months of July and November 2011. The study was carried out in two tertiary institutions; University of Benin in Oredo Local Government Area and Benson Idahosa University, Egor Local Government Area, which were selected because the researcher’s target was on educated beef consumers in the City. A cursory look at the processing method and environment in the existing abattoirs in Benin Metropolis throws up a myriad of questions. If beef consumers are dissatisfied with what obtains currently, how would such dissatisfaction be expressed? Is it already being expressed in preferred processing options? A multistage sampling procedure was used to select 170 respondents for the study. Descriptive statistics such as tabular presentations, percentages and frequencies were adopted to describe the socio-economic characteristics of the respondents and their expenditure on beef, the constraints to demand of beef and compare the quantity of beef demanded in the study area. The study indicated that a larger proportion of the respondents (54%) were females. This could be because women are looked on as the food planners of the family in most homes. The male respondents were men who were either bachelors or married, thus compelling them to circumstantial food planners. The study also revealed that the respondents were mainly Civil Servants (about 74%). A larger proportion of the respondents were in the age bracket of 31 – 40 and 41-50 years with 32.4% and 53.5% falling into each category respectively. The distribution of income showed that more of the respondents fell within the middle income group of between N40,000-59,000. Two models were used to determine the sensitivity analysis of beef consumers. The R-squared value from the Simple Linear Regression Model implies that Taste, Processing Style, Neatness, Hygiene, Freshness and Packaging all explains 90% of the price of beef in the study area. Abattoir operators are advised to adopt the modern processing method of Liquefied Petroleum Gas (LPG) for the singeing of the hair. This confers special taste on the resultant beef. The beef industry must develop healthier products without compromising quality. The beef industry must improve the safety of its products (as well as consumers’ perceptions regarding safety) to stimulate consumer confidence and increase demand.

CHAPTER ONE

INTRODUCTION

Background of Study

Beef is the culinary name for meat from bovines, especially domestic cattle. Beef can be harvested from cows, bulls, heifers or steers. It is one of the principal meats used in the cuisine of the Middle East, Pakistan, Australia, Argentina, Europe and the United States, and is also important in Africa, parts of East Asia, and Southeast Asia (Wikipedia, 2011). Meat is the most important supplier of animal protein in Nigeria and beef is the single most important meat to the Nigerian consumer, contributing more than 32% of all meat consumed in the country (FAO, 1980).

Hedonic consumption designates those facets of consumer behaviour that relates to the multi-sensory, fantasy and emotive aspects of one’s experience with products (Hirschman and Holbrook, 1982).

In recent times, beef consumption in Benin City appears to be taking a new dimension, particularly among informed consumers. A major factor responsible for this is the evolution of modern processing methods such as the use of Liquefied Petroleum Gas (LPG) for the singeing of the hair. This confers special taste on the resultant beef. Apart from the resultant effect on taste, the use of LPG, according to experts, has no carcinogenic effect (unlike the use of kerosene) and no other substance is required to clean the slaughtered animal (not even soap) except water.

The nutritional intake of people is determined by four major factors – the availability, type, quality of food as well as the income level of the consumers (Peng, 1981). In most developing countries, food is not sufficiently accessible to a very large segment of the population; the types of food consumed are often nutritionally inadvisable and the quality of food is poor (Peng, 1981). This work attempts to provide econometric evidence for answering such questions as to how the quality of beef (with respect to wholesomeness and hygiene) affects the consumption and how much an individual spends and is willing to spend on beef meat in a month.

Statement of Problem

From records, beef is the most consumed meat in Nigeria for a multiple of reasons therefore, it is important to know why and how informed consumers in Benin City derive pleasure from this product. Sonaiya (1982), envisaged that as consumers become more articulated and organized, their demand for wholesome animal protein will exert a powerful influence upon quality, production method and strategies.

Although beef seems to be the most consumed meat in Benin City and most parts of the country, the level of beef demand and consumption in Benin City has questionably and progressively remained low in the open market. What could be responsible? Is it only the price of beef that affects its demand? What about consumers taste and preference?

We are in the information age and consumers are more than ever before showing more concern about what they eat. A cursory look at the processing method and environment in the existing abattoirs in Benin Metropolis throws up a myriad of questions. Are consumers satisfied with the quality of beef they are offered in the open market? Would they prefer a more hygienic and wholesome product? If they are dissatisfied with what obtains currently, how would such dissatisfaction be expressed? Is it already being expressed in preferred processing options? These are some of the questions this study would attempt to answer.

Objective of Study

General Objectives

The objective of this study was to analyze beef consumption patterns and to conduct econometric analyses of the product demand structure in Benin.

Specific Objectives

To examine the socio economic characteristics of beef consumptions.

To determine the price demand function for beef.

Measure the consumers’ implicit demand for beef within the framework of a hedonic analysis.

To explore the concept of customer satisfaction and retention in beef consumption (sensitivity analysis).

Justification of Study

An individual’s taste for variety will be expressed in his/her consumption behavior and individuals differ in their consumption behavior in various ways. The price a consumer pays for his/her consumption bundle does not only reflect the values of the underlying attributes of goods purchased, but also accounts for any preference for variety that he/she might have. It is possible that the most informed consumers are already showing dissatisfaction with the unwholesome beef that litter our markets.

It is expected that the result of this research would provide the parameters needed for evaluating the consumer’s preference for beef meat. This result would also provide empirical evidence that would help improve the quality of beef meat, meet customer’s desire for satisfaction from consuming the product and sustain the desire derived from consuming the meat.

Understanding the basic factors underlying beef consumption may enable the industry to design effective marketing strategies and predict demand.