The Effects of Food Price Increaseson UrbanHouseholdFood Commodities Expenditures in Ghana

Abstract

The paper analyses the elasticities of urban food demand using household survey data. Expenditure endogeneity and truncated expenditures were controlled in the estimation process using the “Augmented Regression Approach” and Heckman two-stage procedure respectively. Household demographic characteristics such as household size, education, sex, and age of household head have significant influences on food expenditures by urban households. The marginal expenditure shares show that cereals and bread,roots and tubers, fish and vegetables will continue to constitute important share of Ghanaian urban food expenditure as they collectively constitute about 78% of future food expenditure.The study finds that urbanisation generally presents market opportunities for Ghana’s local economy, and this potential can fully be exploited if appropriate agricultural policy is focused on increasing food production rather than guaranteed prices.

Key words: Ghana, Urban, LAIDS, Demand, Food, Elasticities