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2120 final report.pdf - Agra CEAS Consulting

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THE SOCIO-ECONOMIC IMPLICATIONS OF THE VARIOUS SYSTEMS TO KEEP LAYING HENSA1.3.5.3. Demand and supply elasticitiesSome research into the price elasticity of eggs in Denmark has taken place. Two methods wereused: a household panel of 2,000 respondents and retailer scanner data. Results from these twoapproaches broadly agree, although the scanner results suggest a greater responsiveness to price,possibly reflecting the quality bracket of the stores taking part. The greater elasticity also stems fromthe way in which the models were constructed in that data were highly disaggregated in one form ofthe model allowing greater substitution possibilities. Where the model treated eggs produced underdifferent systems to be variants of the same product, again, a high degree of substitutability wasassumed.This is not the place to fully discuss the methodology and results and the reader should refer to thestudy itself carried out by the Danish Research Institute of Food Economics 61 . However, Table A1.18presents own and cross-price elasticities based on the household survey panel and Table A1.19 theown and cross-price elasticities derived from retail scanner data.The own price elasticities suggest that demand for organic and free range eggs is more elastic thanthat for eggs from caged and barn systems, probably reflecting their higher price. Additionally thecross-price elasticities show that an increase in the price of organic eggs has little impact on demandfor eggs from other systems. In contrast, an increase in the price of caged eggs results in higherdemand for eggs from alternative systems. As might be expected a priori the scanner-derived datashows that an increase in the price of free range eggs does not result in higher demand for cagedeggs, but interestingly a price increase for barn eggs does suggest substitutability with caged eggs.This seems to suggest that consumers do not differentiate as much between caged and barn eggs asthey do between free range and caged eggs.Table A1.18: Own and cross-price elasticities derived from household panel dataProduction systemCage Barn Free range Organic PasteurisedCage -1.99 0.30 0.36 0.33 0.07Barn 0.63 -1.76 -0.24 0.50 -0.04Free range 0.92 -0.10 -2.34 1.13 -0.07Organic 0.41 0.24 0.64 -2.55 -0.02Pasteurised 0.66 -0.21 -0.32 -0.19 -0.75Source: Fødevareefterspørgsel i Danmark – perspektiver for produktdifferentiering.Fødevareøkonomisk Institut. Rapport nr. 16561 Fødevareefterspørgsel i Danmark – perspektiver for produktdifferentiering. Fødevareøkonomisk Institut. Rapport nr. 165. Located at:http://www.foi.dk/Publikationer/Rapporter/rap165.PDF141

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