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Abstract
The recent rise in food prices has increased concern about the choice of a healthy food basket, especially in the context of the current formulation of a National Food
Policy for Scotland. This concern has revived interest in food price and expenditure demand systems as they provide information about consumers’ food decisions. The paper focuses on the consumption of brown and white bread, as they are the most
typical forms of cereals use in the UK. Moreover, nutritionists recommend the
consumption of wholemeal or brown bread in contraposition to white bread as part of
an appropriate diet due to its health benefits. The overall purpose of the paper is to measure the impact that the increase in the price of cereals during the period 2005 to 2008 would have had on the purchase of brown and white bread. This is undertaken
in two stages: the first measures the effect of changes in milling wheat prices on brown and white bread prices, and the second measures the elasticities of the purchases of brown and white bread with respect to changes in their prices through the estimation of four demand systems. The results, excluding those from the static
LA/AIDS that seem to high, indicate, ceteris paribus, that the increase by 72 per cent
in the price of wheat produced a decrease in brown and white bread purchases in the
range of 30 to 40 per cent; however, as regards the question what type of bread
decreased more, the answer depends on the demand model used.