English abstract
Market demand is an important component of the price determination process and provides useful knowledge on the responsiveness of consumers to changes in prices and income. In Oman, very little is known about the nature of the demand for fish and seafood commodities, due to the lack of a complete data set to perform such an analysis.
The objective of this study is to estimate the demand parameters for fish consumption in Oman during the period 1986-2000 and forecast that consumption for the next six years.
A linear version of the Almost Ideal Demand System (LA/AIDS), developed by Deaton and Muellbauer, is specified and estimated using the Seemingly Unrelated Regression Estimation method (SUR). AIDS satisfies the axioms of choice exactly and allows consistent aggregation of micro level demand up to a market demand function.
The estimated model is used to forecast fish consumption and compared to the popular exponential smoothing method, which is based on past consumption trend by smoothing out the random fluctuation of the time series.
Secondary data from the Ministry of Agriculture and Fisheries and other government institutions are used in the estimation. In addition to the qualitative analysis, a descriptive overview of fish consumption and consumer preferences in Oman is also provided based on recent household surveys conducted by the Ministry of National Economy.
The results show that the quantity of fish demand in Oman is inversely related to price, and the demand of fish is price inelastic as in most countries, except for kingfish. Income elasticities are positive and inelastic for all commodities, which is consistent with Engel's law for normal goods, implying that further increase in income will lead to less than proportional increase in fish consumption.
The results for price constant scenario of fish forecasting show that per capita fish consumption in Oman will increase at annual rate of 0.7% during the period 2001-2006. The exponential smoothing scenario shows that per capita consumption of fish in Oman will decrease in the next six years if past trends are maintained.
This study is among the first studies of this kind in Oman and provides important information about demand parameters. This information is useful for policymakers, providing them with an improved understanding of the changes that are needed in both the production and marketing arena to meet consumers' needs at the national and international levels. Forecasting the local consumption of fish is very important in order to develop a long term strategy to improve the fish sector in Oman.
