Effects of Economic Policies Aimed at Encouraging a Healthier Grain Consumption

In this paper, we evaluate the effects of policy reforms aimed at achieving two policy objectives for grain consumption; (a) to double the intake of bread and breakfast cereals and (b) to ensure that half of the bread and breakfast cereals consumed are whole grain products. The overall aim of these policy objectives are to increase the dietary fibre intake from grain consumption so as to significantly contribute to the general recommended (minimum) increase of the fibre intake. Based on parameter estimates from a demand system we simulate the resulting changes in volumes purchased and fibre intake from two policy reforms entailing differentiated VAT on grain products. In the first reform we remove the VAT on "keyhole labelled" bread and breakfast cereals, in the second reform we consider a more extensive policy package of subsidizing the keyhole labelled bread and breakfast cereals by 20 percent while removing the VAT on all other grain products. Our results indicate that both reforms are likely to be successful in ensuring that the consumers attain the nutrition recommendations that half of the bread and breakfast cereals consumed are whole grain products, but that additional policy instruments are needed to reach the recommendation that the intake of bread and breakfast cereals should be doubled