Abstract
This study attempts to explain growth in household real food consumption expenditure in Cameroon between 2001 and 2007. Specifically, the paper assesses the relative importance of household real total expenditure in explaining household real food consumption expenditure; evaluates the direction of change of the marginal propensity to consume between the two periods and investigates the role of access to endowments and returns to endowments in explaining growth in household real food consumption spending. To achieve these objectives, use is made of a micro-econometric analysis of household real food consumption functions, a Shapley-Oaxaca-Blinder decomposition of growth in household consumption spending and the 2001 and 2007 Cameroon household consumption surveys. Results show that the marginal propensity to consume declined significantly between 2001 and 2007; real total spending predominantly explains real food consumption spending and its growth; and returns to endowments overwhelmingly account for the negative growth in real food consumption spending. These results show that well-being marginally improved between 2001 and 2007. These findings have implications for household income earning opportunities, adult education, rural development and issues related to food insecurity in Cameroon.
Keywords: Food consumption expenditure, Shapley- Oaxaca-Blinder decomposition, marginal propensity to consume, Cameroon.
I. Introduction
The proportion of food consumption expenditure in total household expenditure can be considered as an important criterion for gauging welfare levels. Ebru and Melek (2012) corroborate this view by indicating that food expenditure is a compulsory element of household total expenditure and can thus be used in determining the level of household economic welfare. Deaton (1997) further highlights the important role food consumption plays in the determination of household welfare by revealing that food consumption often represents the largest portion of total household expenditure in developing countries, especially amongst low income countries like Cameroon. These poor households spend about three-quarters or more of their total budget on food (Haq et al., 2008).
Over the past decades, most governments, international organizations and researchers have been stressing on policies related to income distribution, poverty reduction and welfare (Clarke et al, 2003). Much attention has been paid to policies targeting income distribution since high income inequality leads to inequality in household consumption patterns and low economic growth (Krueger and Perri, 2005). Poor households generally spend a large share of their income on food consumption (Deaton, 1997), thus any slight variation in household spending patterns may affect household welfare and poverty status because food affects key human capital components like education and health.
The World Bank report on Cameroon states that in 2001 the per capita household consumption (in constant 1995US dollars) was $496 and private consumption grew at an annual rate of 3%. Approximately 33% of household consumption was spent on food, 8% on fuel, 2% on health care, and 9% on education. The richest 10% of the population accounted for approximately 36.6% of household consumption and the poorest 10% approximately 1.9 % (World Bank, 2011)
The impact of frequent food crisis has a potential impact on household food consumption patterns and on poverty, inequality and welfare in both the urban and rural areas of Cameroon. In the Cameroon economy, even though the rural agricultural sector has been perceived as contributing most to the country’s gross domestic product (GDP), due to food inflation, food consumption expenditures are still dominating the household budget. Poor households are consuming even less than before and the quality has also deteriorated. Food purchase decisions are hinged on a budget that also covers expenses such as clothing, housing and other goods and services. Thus the total budget allocated for food consumption expenditure depends spending on other goods and services (Haq et al, 2008).
Thorough understanding of the distribution household food consumption requires an understanding of the complete function of household welfare. Effective evaluation of food policy issues requires enough information on household food consumption patterns. Household consumption is preferred to income as a measure of household economic welfare because literature has proven that income as a proxy for welfare especially in Sub-Saharan Africa has many flaws (Datt and Jolliffe, 1999). There are four major reasons for preferring consumption to income (Datt and al, 2001). Firstly, according to Atkinson (1987), income is only a measure of welfare opportunity and not achievement. This is due to the idea that not all the income is used for consumption and not all consumption spending are financed out of income. Secondly, expenditure fluctuates less than income and thus provides us with more accurate and stable measure of welfare. Also households are more willing to provide information on expenditure than income. Fourthly, there is a large proportion of self-employed and own consumption; measurement of income is often fraught with difficulties.
Recent shifts in the purchase of food items have reveal a good number of changes in the consumption patterns for food items around the entire African continent. These changes are perceived to continue growing in the years to come. A good number of driving forces account for these changing patterns, but growth in total household expenditure (proxy for income) is thought to be the most important amongst these factors. Growth of total expenditure during the past decades has resulted in increased purchasing power of households around the world that in turn has caused a shift of consumption to more expensive food items. The overall budget available for food depends on the amount of total household budget spent on other goods and services.
Even though for richer households the budget allocated to food consumption may grow relatively at a slower rate, the overall food consumption budget at the world level is rapidly growing with an increasing demand for more quality, variety and convenience food items. Despite the considerable growth in food consumption expenditure in the recent decades, the goal of adequate food for all is still an issue with need for many governments to resolve. Food security and poverty alleviation are high priority of international donors and many governments throughout the world. Concerning the fight against hunger/malnutrition governments and international organizations have put in place several policies with one of them based on raising the incomes of the poorest percentiles (Grimard, 1996).
According to Baye and Epo (2009), the adoption of the poverty reduction strategy paper led Cameroon to the attainment of the completion point in April 2006. Notwithstanding, the effects of the completion point are still not felt by some regions in Cameroon despite an average growth rate of 4.5% of GDP between 2000-2002 and a fall to 3.2 from 2003 to 2007 (National Institute of Statistics, 2005). As such, the economic growth rate between 2001 and 2007 was not able to enhance the wellbeing of Cameroonians. Such observations present the opportunity to investigate household consumption patterns. Thus how household food expenditure, which largely accounts for total expenditure affects growth is important for policy options. This is because household consumption patterns are affected by food crisis that make households to constantly restructure their budgets.
Literature also suggests that when households suffer from idiosyncratic shocks most of them turn to the share of food expenditure and use part of the money allocated for food for other needs (Dimitris et al, 2011). Hence, a shock like food crisis which will in turn affect the consumption pattern of households can be hazardous to welfare and these necessitates that we study and understand how it affects household economic growth. Without a thorough understanding of the sources of this growth in food expenditure and how these patterns are changing over time, it will be difficult to design policies that can effectively resolve the food crisis issue and improve food security over the broad range of heterogeneous low-income households.
To better understand growth in household food consumption expenditure in Cameroon, our main research question is what are the determinants of growth in household food consumption expenditure in Cameroon? The corresponding main objective is to explain growth in household food consumption expenditure in Cameroon. Specifically, the paper seeks: (1) to assess the relative importance of household total expenditure in explaining household food consumption expenditure; (2) to evaluate the variation in marginal propensity to consume at the household level between 2001 and 2007; (3) to investigate the role of access to endowments and returns to endowments in explaining the growth in household food consumption expenditure. These questions and objectives are guided by the claims that: total expenditure is the predominant variable explaining household food consumption expenditure; the marginal propensity to consume increased between 2001 and 2007; and access to endowments is more likely to account for growth in household food consumption expenditure than returns to endowments.
The rest of the paper is structured as follows: Section II reviews literature on food consumption. Section III dwells on the methodology and data presentation. Section IV presents the empirical results and Section V submits the concluding remarks.