Vol. 12, Issue 4 (2023)

Author(s):
A Sandhya Neelima, K Nirmal Ravi Kumar and M Jagan Mohan Reddy

Abstract:
To estimate the demand for main fruits in the Guntur district of Andhra Pradesh, household-level primary data were fitted to the Working-Leser and Linearized Almost Ideal Demand System (LA/AIDS) model. For the purpose of collecting data, 300 families were chosen following convenience sampling technique. The findings of the Working-Lesser model and LA/AIDS model showed that all fruits' expenditure elasticities had positive signs, suggesting that there exists direct relationship between income and demand. Further expenditure elasticity for apple, orange, pomegranate, muskmelon and pineapple were greater than one showing that these fruits are regarded as luxury goods in the research area. The relative low expenditure elasticity for banana, guava, papaya and sapota indicates that they were considered as necessity goods in the study area. The calculated own price elasticity coefficients were negative, which means that as the price of fruits rises, the relative share of household expenditures declines in tandem and that they were hence regarded as normal goods. Furthermore, the cross-price elasticity estimates showed that the chosen fruits had both positive and negative signs, suggesting that certain fruits were substitutes and others were complimentary. On the basis of the study's findings, suggestions to increase demand for these fruits were formulated.