Food consuption and economic development in the European Union

European review of agricultural economics Food consumption and economic development in the European Union JOSÉ M. GIL, A. GRACIA and L PÉREZ Y PÉREZ* Unidad de Economía Agraria, Zaragoza, Spain Summary This paper investigates the relationship between food consumption and economic development in 16 European countries. Differences in food diets are analysed using data on per capita calorie intake. Results provide a better knowledge of the dynamic evolution of consumption patterns in European countries, the existence of convergence towards a common diet and the adequacy of implementing common food policies in these countries. Keywords: food diet; European Union; convergence. 1. Introduction This paper analyses trends in food consumption patterns in Western Europe over the last two decades. The countries included are the fifteen members of the enlarged European Union plus Norway. The analysis uses data compiled by the Food and Agriculture Organisation of the United Nations (FAO) and the International Monetary Fund (IMF) on aggregate food consumption, its product composition expressed in calories per capita per day, and real per capita income in U.S. dollars (at 1985 domestic prices and exchange rates). Data refer to the quantíty of food available for human consumption allowing for waste in storage and processing. Although data may not be treated as precise estimates of consumption, they provide a useful approximation to changes that have taken place over time. However, food balance sheet reliability depends on the accuracy of national data, methods of data collection and data availability (Henson and Loader, 1991). The definition of edible food, movements of food via tourism, wastage and levéis of food production are problems which arise when making compari- * This research was supported by the Instituto Nacional de Investigación y Tecnología Agraria y Alimentaria (INIA). European Review of Agricultural Economics 0165- 1587/95/0022-0385 22 (1995) 385-399 © Walter de Gruyter, Berlín sons between countries. These problems are not randomly distributed between countries and must be borne in mind when using food balance sheet data. The use of caloric equivalents has both advantages and limitations. It facilitates aggregation of different foods and the derivation of shares by types of foodstuff. Caloric equivalents are assumed to be constant over time and to be common across countries, which simplifies cross-country compari-sons of changes in consumption. When using monetary measures, differences in price levéis between countries must be taken into account, which makes the study more complex. However, the use of a common set of caloric conversión factors for all countries and years to convert from product weights to caloric equivalents, is the main limitation. This approach ignores that these conversión factors may differ through time and across countries. The study of trends in food consumption patterns is not new. In Blandford (1984), for OECD countries, and Wheelock and Frank (1989), for nine developed countries, a convergence of dietary patterns in European countries is suggested. Henson and Loader (1991) use the same data that are used in this paper and suggest that there are patterns in food consumption although these patterns are not entirely geographical. Grigg (1993) relates the convergence in food patterns to economic development and to concerns about health. Connor (1994) and Uhl (1991) compare food consumption patterns in the USA and Western Europe. Both show a convergence and Connor (1994) establishes that European per capita food consumption growth has been correlated with prior, but not contemporaneous, growth in the USA, so trends in the USA are good predictors of changes in Western Europe, particularly at more aggregate levéis. In all these papers, there is no attempt to measure how this convergence process has taken place and if it only affects total calorie intake or extends to specific producís. Herrmann and Róder (1995) provide a methodology to measure crosscountry differences in food consumption and reach similar results to those obtained in this paper. The objective of this paper is to analyse the evolution of food diets in some European countries and to see if it is possible to identify a common European diet. To achieve this objective, the paper is organised as follows. First, trends in total food consumption and in the consumption of animal versus vegetable producís are outlined. Next, the evolution of diet composi-tion is evaluated over the 1970 to 1990 period using a dynamic factor analysis. Finally, some measures of convergence are deemed in order to determine if European countries are achieving a common consumption pattern. 2. Trends in total food consumption in EU countries Table 1 shows the evolution of the apparent per capita daily food consumption for EU countries. The apparent average food consumption in EU countries was 3,211 calories/capita/day in 1970, and increased at an average rate of 0.4 per cent per year to reach 3,452 calories/capita/day in 1990. Consumption in most countries has shown an upward trend except for the Netherlands and Sweden, where it has remained constant, and the United Kingdom and Finland where it has declined slightly. Spain, the country with the lowest apparent per capita consumption in 1970 has shown the largest increase, about 25 per cent between 1970 and 1990. Economic theory suggests that the main determinants of changes in food consumption are variations in real consumer income and in the price of complementary or substitute goods. In the case of food, few other goods can be considered cióse substitutes. Thus, it is likely that the principal economic determinant of long-run changes in per capita food consumption is variation in real consumer income. Generally, a positive correlation between income and consumption is observed, so that countries with higher income levéis have higher consumption levéis. However, a mínimum level of food consumption must be attained. Therefore, with low income levéis, food consumption is relatively high and, as income grows, food consumption increases at a lower rate, up to a threshold which is difficult to surpass because of physical limitations (population is growing relatively slowly in EU countries), although it generally becomes more diversified. The proportion of calories derived from animal products is lower than the proportion derived from vegetable products in each country (Table 1), although there have been significant changes in many countries in recent years. In 1970, and especially in Mediterranean countries (Greece, Spain, Italy and Portugal), differences were more significant and, on average, animal products provided just 19 per cent of total food calorie intake. In the other countries, over 30 per cent of total calories were derived from animal products. Over time, two major trends in food calorie consumption can be observed. All countries, with the exception of Germany, showed an upward trend in the share of animal calories consumed over the period 1970 to 1980. However, in the decade from 1980 to 1990, the share of animal calories has stabilised or even declined. In 1990, on average, EU countries derived 34 per cent of their total consumed calories from animal products. Income is likely to be a major determinant of long-run changes in the proportion of food derived from animal sources. It is also possible that changes in the price of animal products relative to vegetable products may have had an impact. The growth of industrialised livestock production in Europe and the decline in the relative price of many animal products have reinforced the trend towards increased consumption of these products with growth in incomes (Blandford, 1984). However, no price data are available and so the analysis has been restricted to the relationship between total food consumption and per capita income, and between animal calories and per capita income. Table 1. Evolution of average food consumption and per capita GDP in EU countries (daily calories and dollars) 1970 1980 1990 Total Animal Per capita Total Animal Per capita Total Animal Per capita calories calories (%) GDP calories calories (%) GDP calories calories (%) GDP Austria 3292 33.5 5717 4323 36.5 8087 3459 34.9 9848 Belgium-Lux. 3358 35.7 5981 3529 39.3 8003 3922 39.7 9582 Denmark 3402 41.5 8271 3505 44.8 9942 3647 45.6 12186 Finland 3128 40.1 7230 3107 43.2 9854 3026 39.5 12842 France 3330 35.7 6902 3431 39.6 9003 3618 38.5 10696 Germany 3197 35.7 7448 3303 34.8 9621 3465 35.9 11550 Greece 3204 19.4 2099 3347 24.5 3032 3779 24.7 3354 Ireland 3693 40.6 3639 3905 42.6 4915 3987 36.9 6844 Italy 4321 18.8 5032 3588 23.4 7018 3483 25.6 8543 Netherlands 3043 31.7 6901 3097 33.6 8474 3024 32.5 9622 Norway 3047 37.2 10774 3387 38.7 12065 3219 36.7 14809 Portugal 2991 16.5 1360 2929 19.5 2027 3420 24.3 2631 Spain 2822 22.7 3174 3268 28.8 4118 3494 32.3 5296 Sweden 2927 33.5 9418 3036 37.0 11062 2962 36.1 12974 United Kingdom 3316 38.9 6186 3146 37.0 7425 3281 33.4 9297 Source: FAO (1993) and IMF (several years). 3. Methodology Taking into account the possibility that the evolution in consumption of both total and animal producís might reach a máximum as income grows, statistical estimates were derived using regression analysis assuming a recip-rocal functional form: Ct=α0+ α1(1/GDPt)+et ACt=β0+ β0(I/ GDPt)+ et where Ct = per capita consumption (calories/capita/day) ACt =per capita animal product consumption (calories/capita/day) GDPt =real per capita GDP in US dollars, at 1985 domestic prices and exchange rates α0 β0 =upper asymptotes (máximum potential consumption levéis) α0 β0 =parameters attached to income et =disturbance term. Functions (1) and (2) were estimated by ordinary least squares (OLS), and by generalised least squares (GLS) when serial correlation was present. Annual data from 1961 to 1990 were used. Table 2 presents estimated income elasticities, for years 1970, 1980 and 1990, and the máximum potential levéis of food and animal product consumption derived from these regression equations. Due to the specific properties of the reciprocal functional form, income elasticities decrease in all countries for both total and animal producís consumption over the period considered. In Table 2, the absence of any valué indicates that, for that country, no significant relationship (at the 5 per cent level of significance) was found between income and total food consumption or between income and animal product consumption. Higher valúes are presented in countries with lower consumption levéis in the first years, like Spain, Greece and Italy, or where apparent per capita food consumption has substantially increased in recent years (i.e. Belgium). Two main features of the elasticities are noteworthy. First, the income elasticities for animal producís are always higher than those for total food consumption. Second, higher income elasticities are found in countries with a higher máximum potential level of consumption. 4. Evolution of dietary structure in EU countries The STATIS method (Lavit, 1988) has been used to analyse the dynamic evolution of diet structure in EU countries. Three years (1970, 1980 and Table 2. Estimated income elasticities and máximum potential level of consumption for apparent per capital total food and animal products consumption Per Capita Food Consumption Per Capita Animal Products Consumption Austria Belgium-Lux. Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden United Kingdom Máximum potential level1-2-3 3720(24.21) 4688(10.64) 3950 (21.42) 3845(10.83) 3922 (43.9) 4252 (26.72) 4285 (71.72) 4309(13.18) 3531 (19.42) 4269(16.39) 3206 (33.28) 3928(14.18) Income elasticities2 1970 1980 199 0 0.14 0.09 0.08 0.45 0.32 0.24 0.18 0.14 0.11 0.15 0.11 0.09 0.23 0.18 0.14 0.30 0.20 0.16 0.16 0.11 0.08 0.36 0.25 0.21 0.14 0.49 0.33 0.2 0.09 0.07 0.0 0.25 0.25 0.1 Máximum potential level1-2 2083(16.54) 1913(10.01) 1645 (31.57) 1450 (26.63) 1239 (21.56) 1091 (22.7) 1308 (9.73) 1365(11. 35) Income elasticities21990 1 980 1970 0.7 0.49 0.3 0.3 5 0.26 0.2 0 0.3 7 0.25 0.2 0 0.2 9 0.22 0.1 8 0.9 1 0.49 0.3 8 0.1 0.07 0.0 0.1 0.11 0.1 0.09 0.1 1 0.25 1 Calones per day. 2 All coemcients were significant at the 5% level. 3 t-ratios are in parentheses. 0.37 0.27 1990) and fifteen countries have been considered. The following product groups have been incorporated into the analysis: (1) cereals; (2) potatoes; (3) meat; (4) fish; (5) vegetable oils; (6) animal fats; (7) milk, dairy products and eggs; (8) vegetables and pulses; (9) fruits; and (10) sugar. This method involves three stages: (a) the global evolution of variables during the sample period is studied and a compromise, or intermediate matrix, is defined; (b) a factor analysis is carried out on the intermediate matrix; and (c) the average relative position of each country and its movements through the period considered are defined. Results of factor analysis on the intermediate matrix show that the first three factors explain more than 76.5 per cent of matrix inertia. Correlations between variables and the main factors are shown in Table 3. The first factor explains 46.1 per cent of variance. It is positively correlated with the share of average calorie intake from meat, animal fats, milk and dairy products and sugar, and negatively correlated with vegetable oils, fruits and vegetables. Most of the positive correlation diminishes over the period considered whilst the negative correlation remains significant. This factor separates countries with a high consumption of animal products from countries with a high consumption of vegetable products. The second factor explains 15.4 per cent of variance. It is positively correlated with fish consumption and negatively with the relative importance of meat consumption. The third factor explains 14.9 per cent of variance and is positively correlated with the share of calorie intake coming from fruits and negatively correlated with potatoes. The evolution of diet structure in EU countries over the period 1970 to 1990 is analysed looking at the path followed by each country with respect to its average over the period. Results are shown in Figure 1. The horizontal and vertical axes correspond to factors 1 and 2 from the factor analysis. The number following each country's initials indicates the year (1 = 1970; 2=1980; 3 = 1990). An asterisk cióse to each country indicates its average position over the period considered. In general, there have not been large movements along the horizontal axis, which indicates that the proportion of total calories from animal fats, milk and dairy products, sugar, vegetables and fruits has only changed slightly over the period 1970 to 1990. However, there has been some movement along the vertical axis, indicating that the proportion of calories from meat and fish has changed. Denmark and Spain are interesting cases, as meat products represent an increasing proportion of total calories. Norway has an upward trend, indicating the growing relative importance of calories from fish. Mediterranean countries have a diet structure which differs from other EU countries. However, slight movements to the right have been observed, while in the rest of the EU, if any horizontal movement has occurred, it is towards the left, indicating convergence in the structure of diet within the European Union. Finally, the degree of similarity in the evolution of the structure of calorie Table 3. Correlations between variables and main factors from factor analysis made on the intermedíate matrix from the STATIS method Cereals Potatoes Meat Fish Veg. Oils Animal Fats Milk, Dairy and Eggs Veg. + Pulses Fruits Sugar Factor 1 197 0 198 0 199 0 Factor 2 197 0 198 0 199 0 Factor 3 197 0 198 0 199 0 0.90 0.31 0.63 -0.07 -0.73 0.83 0.14 0.55 0.13 -0.90 0.58 0.30 0.32 0.06 -0.89 0.00 0.02 -0.61 0.66 0.30 0.11 -0.03 -0.73 0.74 0.19 0.23 0.22 -0.69 0.64 0.10 0.04 -0.76 -0.18 -0.55 0.17 0.12 -0.75 -0.24 -0.38 0.06 0.15 -0.64 -0.33 -0.48 0.01 0.87 0.88 0.71 -0.18 -0.23 -0.37 0.19 0.29 0.40 0.70 0.61 0.63 0.55 0.57 0.54 0.15 0.12 0.17 0.92 -0.71 0.92 0.93 -0.48 0.75 0.89 -0.55 0.66 0.18 -0.01 0.26 0.17 0.08 0.35 0.21 0.24 0.40 0.26 0.61 -0.00 0.21 0.68 0.24 0.28 0.65 0.35 is needed at different levéis of aggregation although a lack of sufficient homogeneous information across Europe will make this difficult. References Barro, R. J. and Sala i Martin, X. (1991). Convergence across states and regions. Brookings Papers on Economic Activity 1: 107-158. Barro, R. J. and Sala i Martin, X. (1992). Convergence. 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