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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.