Item

The demand for milk : an econometric analysis of the New Zealand market

Brodie, R. J.
Moffitt, R. G.
Gough, Janet D.
Date
1984-01
Type
Monograph
Fields of Research
Abstract
This report presents the results of a preliminary econometric analysis of the factors affecting town milk consumption in New Zealand. The study objectives are: (1) to review overseas studies which have examined the demand for fluid milk; (2) to specify and estimate quarterly and annual econometric models in order to quantify the factors which determine demand; and (3) to investigate the models' suitability for short-term and medium term forecasting and policy analysis. The study demonstrates that econometric analysis provides an effective tool for quantifying the factors which determine the per capita consumption of milk. The estimated models show consumption is largely determined by four factors. These are: (1) the previous period's consumption level, (2) the real price of milk, (3) the proportion of young people in the population, and (4) seasonal factors. The New Zealand market is very price inelastic or unresponsive to price changes and is even more unresponsive than the Australian market. Other factors such as disposable income and advertising do not appear to have an important influence on milk consumption but further investigation is necessary to determine their exact effect. The estimated models appear to be highly suitable for accurate shortand medium-term forecasts.