INCOME-ELASTICITY OF POULTRY MEAT CONSUMPTION IN METROPOLITAN AREAS OF BRAZIL

Studies on the meat market behavior may result in interesting parameters for the market and public policy agents. The definition of the income-elasticity of poultry consumption enables the elaboration of prospective analysis on the potential demand of this product. Thus, the main objective of the present study is to estimate the income-elasticities of poultry consumption. Data from the 1995-96 and 1987-88 Consumer Expenditure Survey, published by IBGE (Brazilian Institute of Geography and Statistics), were used in the analysis. The elasticities were obtained by fitting a three-segment polygonal curve relating the logarithm of the per capita poultry meat consumption as a function of the per capita family income. Generalized Least Squares method was used for the econometric model fitting. The elasticities were obtained considering the total, carcasses and selected individual poultry parts consumption. Average income elasticity of the total consumption enables the classification of poultry meat as a normal product. The observed average income elasticities showed that breast and thighs are superior products. In the last period, a negative elasticity was observed for carcasses.


INTRODUCTION
Brazilian poultry production has increased considerably over the last decades.Its share in world´s production raised from 2.2% in 1974 to 14% in 1999.In this period, Brazil went up from tenth to second in the ranking of the largest world producers, below United States only.In relation to exports, Brazil also stands out as the third largest world exporter, after the United States and Hong Kong (ABEF -Brazilian Association of Poultry Producers and Exporters).
Poultry is nowadays one of the main sources of protein for the Brazilian consumer.In 1999, according to ABEF, the annual per capita consumption of poultry was 29 kg, which was comparable to beef consumption and exceeded by far the consumption of pork.Analyzing aspects related to the poultry-slaughtering sector in Brazil, Barros (1994) pointed out that the sector had an important role in the improvement of Brazilian food quality.
The significance of poultry slaughtering in the nation's economy and of the poultry meat in the Brazilian consumer's nutrition make the implementation of the analysis of the consumption of this item extremely important, especially because it can help agents of the sector in making decisions regarding production and commercialization.Knowing poultry demand elasticities allows a prospective analyses of its internal consumption to be made, enabling the identification of its exportable surplus.Besides this, these studies can underlie the formulation of sectoral policies.Therefore, the main objective of this study is to determine poultry demand income-elasticity.Given the increasing trend, in the last few years, of the consumption of specific parts of the carcass, elasticity for the most consumed parts -breast and thighs -were also analyzed.

Analysis of the Poultry Market
Over the last decades, Brazilian poultry slaughtering was the agricultural activity with the highest production and productivity levels.This activity has incorporated great technological advances and, today, its performance is comparable to that of developed countries such as the United States and France.
In 1970, Brazil produced approximately 200 thousand tons of poultry.By 1995, the production had increased to 4 million tons.The industry grew 1,760% in the period of 25 years with an average annual rate of 14.42% (Araujo, 1996).The evolution of Brazilian production in the last 10 years can be seen in Table 1, where we can verify that the variation rate is positive for every year of the series, reaching 19% in 1995.
The increase in production and productivity of poultry slaughtering after the 1970s caused a sharp decrease in the price of poultry in the 90s (Figure 1).By the end of the 90s, the price of poultry was more than 50% lower than the price at the end of the 80s.However, since 1995, the price has decreased at lower rates than the observed in the early 90s.
Considering the present technological level, a sharp decrease in the price of poultry would only be possible as a consequence of a fall in the price of the inputs used in its production.As effect of productivity increase and fall of prices, a great and constant increase in the consumption of this product has been observed (Figure 2).
The consumption of poultry, and more specifically the white meat, has also been stimulated by the search for a healthier low-fat diet as a result of the valorization of health-and aesthetic-related aspects.Besides this, the intense migration to urban areas in the 1970s created a new potential market for poultry products (Rizzi, 1993).The consumption of poultry increased at an average rate of 8.1% per year between 1989 and 1999.
An important fact for the poultry meat market in the last decade was the increase in the commercialization of special parts.In some metropolitan areas of Brazil, the current consumption of parts is relatively high.In 1995/ 96, the consumption of parts (breast, thighs, wings) in São Paulo, for example, represented approximately 30% of the consumption of eviscerated poultry and, in Curitiba, approximately 16% (IBGE).
Brazilian companies of the poultry sector have tried to meet consumer preferences in terms of weight, meat color and parts that are specific to each niche of the market.The technological evolution of the sector provided the necessary conditions for the use of less noble parts.For example, parts of the bone, ribs and neck are used in the manufacturing of sausages and cold cuts.

Distribution of family monthly income in the income classes of the Consumer Expenditure Survey
In order to estimate the income-elasticity of the physical consumption of poultry and poultry parts, data from the IBGE's Consumer Expenditure Survey for nine metropolitan areas (Belem, Fortaleza, Recife, Salvador, Belo Horizonte, Rio de Janeiro, São Paulo, Curitiba and Porto Alegre), the Federal District and the city of Goiania were used in this study.The data are presented for individual metropolitan areas and for "all areas".The latter is the object of this analysis.
IBGE distributes families into 10 classes according to their income 1 , (Table 2), which also presents the number of families per income class, the average number of people per family and the monthly per capita income for each class.The analysis used the surveys from 1987-88 and 1995-96, published in 1991 and 1998, respectively, with the objective of analyzing changes occurred in the period.

Per capita consumption of poultry -comparison of the data from the Family Income Surveys from 1987-88 and 1995-96
In Table 3, data of per capita consumption of poultry per income class is presented for "all areas", considering the carcass (slaughtered poultry according to IBGE) and parts for 1987-88 and 1995-96.Comparing 1995-96's to 1987-88's values, the consumption of noble parts (breast) by higher classes has increased significantly in the period studied.This increase in consumption is associated to aspects related to health and aesthetics.The consumption of thigh by higher-class families (three highest income classes) also increased between 1987-88 and 1995-96, although less expressively than that of breast.The highest increase in the consumption of parts took place in families whose income ranged from 20 to 30 minimum salaries.We could not observe a defined pattern for the consumption of wings, and a decrease was verified in some income classes, whereas in 1 All economic revenues are considered income: wages, rental, sporadic sales of goods (estate or non-estate), loans, gains with investments, profits, income tax restitution, etc. (IBGE, 1999:30).
others, consumption increased.Between 1987-88 and 1995-96, there was an increase in the consumption of carcass by lower income families.The increase was more expressive for families whose income was below eight minimum salaries.For lower classes, the consumption of poultry must be more associated to the fall in prices than to the "health effect".The consumption of carcass by higher-class families has fallen in the studied period.

The method for elasticity determination
The estimates of consumption income-elasticities for poultry and poultry parts were obtained by fitting a polygonal curve with two vertices (three segments), considering the model: where C i is the per capita poultry consumption of the i-th class; R i is the per capita family income of the i-th class, φ h is the family income level corresponding to the h-th vertex (with φ 1 < φ 2 ); Z hi is a binary variable, being Z hi = 0 if R i is less than or equal φ h and Z hi = 1 if R i is more than φ h , and µ i are independent errors with average zero and variance inversely proportional to the number of families per class of family income.
The limit between two strata of per capita income was taken as the limit between the two classes of family income divided by the geometrical average of the average size of the families in these two classes (Hoffmann, 2000).
The weighed least squares method was used to estimate the parameters of the model.The number of families per family income class was used as the weighing factor.
The calculation of the average elasticities of the strata was done through the weighed average of the elasticities of each stratum, and the weighing factor used was the participation of each stratum in the total consumed amount.
Several models were fitted considering alternative forms of grouping the income classes of the Consumers Expenditure Survey in the three strata.

Table 2 -
Number of families, family average size, per capita income in the 10 family monthly income classes for the total of the areas covered by the Consumers ExpenditureSurvey -1987-88 and 1995-96.Source: IBGE Note: In 1987-88, the minimum salary was US$ 39.12 in the exchange rate ofDecember, 1987 and in 1995/96, it corresponded to US$ 115.67, considering to exchange rate ofDecember, 1995.

Table 3 -
Annual per capita consumption of poultry per household.

Table 4 -
Income-elasticities of the consumption of poultry and parts.