Agricultural Economics
Z. Shokoohi; M.H. Tarazkar
Abstract
Price bubbles and price fluctuations of agricultural products are important issues that can significantly affect the welfare of consumers and producers. Therefore, in this study, the price bubbles in three main protein products, i.e. lamb, beef, and chicken meats, were investigated by the state-space ...
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Price bubbles and price fluctuations of agricultural products are important issues that can significantly affect the welfare of consumers and producers. Therefore, in this study, the price bubbles in three main protein products, i.e. lamb, beef, and chicken meats, were investigated by the state-space model based on the Kalman filter using monthly time series data on the price of selected protein products from June 2001 to November 2020. We considered barley, concentrate feed prices, broiler chicken, and corn prices as the main important inputs used for producing lamb, beef, and chicken meat production, respectively. Also, real exchange rate and real oil price were used in the model. The results showed the differences in structures making positive and negative price bubbles, period and number of occurrences and the collapse of the bubble during the sample period. Also, in contrast to chicken prices, we concluded the price bubble of lamb and beef, is not significant compared to the real prices. For chicken meat, the main cause of price bubbles was due to the disruption of the marketing process of agricultural products, the lack of transparency of information, and contradictory government interventions in the market. To deal with the problem, the implementation of aggregated market information through merging technologies in Information and Communication Technology could be considered an efficient tool as suggested. In addition, government intervention should be prioritized on reforming the market structure instead of controlling prices.
Agricultural Economics
Z. Shokoohi; M.H. Trazkar; F. Nasrnia
Abstract
Introduction: Studying Iran’s poultry sector shows that the feed costs account for a large portion of the total cost of poultry production. Besides, corn as the feed for poultry had the largest share of total feed cost. According to the governmental trade policy and exchange rate variability, corn ...
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Introduction: Studying Iran’s poultry sector shows that the feed costs account for a large portion of the total cost of poultry production. Besides, corn as the feed for poultry had the largest share of total feed cost. According to the governmental trade policy and exchange rate variability, corn prices fluctuate in Iranian market. However, the demand for chicken meat has increased in recent years. This is due to the relative increase in the price of red meat compared to chicken, as well as promoting the health benefits of consuming white meat (chicken and fish). However, the chicken meat market has been accompanied by price shocks and price increases, and these fluctuations are one of the main challenges of poultry industry in the country. Examining the cost of production inputs in the Iranian poultry industry shows that poultry feed costs, especially corn, accounts for the largest share.Materials and Methods: In this study, the smooth transition autoregressive (STAR) model was used to investigate the threshold effect of corn price, as one of the most important inputs of poultry feed, on the price of chicken meat. This method is a nonlinear approach of time series analysis which evaluates the asymmetric changes in the pattern parameters with a smooth transition by considering one or more thresholds. Nonetheless, this model allows several regimes and the transition among them to examine the relationship among research variables which is more realistic than that obtained using the traditional linear regression model. To estimate the nonlinear STAR model, monthly data of corn and chicken meat prices from 1993 to 2020 were collected from the State Livestock Affairs Logistics (S.L.A.L). Several steps were performed to estimate the STAR model. First, data stationary was tested using the seasonal Hylleberg, Engle, Granger, and Yoo (HEGY) unit root test. After investigating the order of variables, the optimal number of lags was determined using the Akaike information criterion (AIC). Smooth threshold linearity versus nonlinearity test was then performed to ensure that the STAR method was appropriate. Then, the applicable forms of transfer function and transfer variable were determined. Finally, after estimating the model, the hypotheses of normality and non-autocorrelation of residuals were tested.Results and Discussion: HEGY seasonal unit root test indicates that the logarithms of corn and chicken meat prices do not have seasonal and non-seasonal unit roots, and these data are stationary. Then, three lags are selected as the optimal number of lags using the AIC, and the first lag of chicken meat logarithm is determined as the best transition variable based on the minimum sum of squares of error. Besides, nonlinearity tests suggest that the Exponential Smooth Transition Auto-regression (ESTAR) specification with two-regime switching fits the data better. The empirical results imply that the real threshold value of chicken meat price is statistically significant and equal to 1028.6 Rails. According to the consumer price index in 2020, the nominal threshold value of chicken meat price is 28800 Rails. Therefore, 1% increase in the price of corn will increase chicken meat price by 0.4% and 1.2% in the lower and upper regimes, respectively, after three months.Conclusion: In this study, the threshold effect of corn price as one of the most important inputs of poultry feed on the price of chicken meat was investigated using Smooth Transition Regression (STR) model. This study's results show that the effect of corn price on meat price is nonlinear and asymmetric. The asymmetry feature is revealed in three aspects: lagged impact, direct impact, and the strength of influence. Based on the results, it is suggested that the government adopt appropriate policies to establish the stability in corn price as one of the most important inputs of poultry industry via foreign exchange and trade policies. Thus, fluctuations in the price of chicken meat can be prevented. It is also expected that if the chicken meat price increases in one period, the price in the next period will also be affected by the relationship between the first lagged chicken meat prices and its current period prices in both regimes. Therefore, the government should prevent fluctuations in chicken meat prices to ensure food security. In this regard, in addition to implementing pricing policies affecting the price of poultry industry inputs, based on the results of the previous section, controlling the price of corn is the most important factor.
Z. Shokoohi; A.H. Chizari; M. Amiri
Abstract
Introduction: Economic theories and empirical results show that the economic performance and the resulting social welfare are influenced by the market mechanism, and the gap of the market structure from the competitive market implies the failure of the market and in this situation allocation of resources ...
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Introduction: Economic theories and empirical results show that the economic performance and the resulting social welfare are influenced by the market mechanism, and the gap of the market structure from the competitive market implies the failure of the market and in this situation allocation of resources will be inefficient. In other words, there is a causal relationship between the existence of market power and the lost prosperity of the economy. Thus, the market structure affects market incentives and decision making process on market outcomes. Also, the analysis of the situation of market competition can affect the process of adopting supportive policies and its results. In market structure studies, economists have traditionally defined industry horizontally i.e. by including firms that make similar products. While non-competitive behavior in the market is not necessarily related to horizontal behavior and the horizontal structure only represents just a part of the market power. In fact what is known as market power is the result of combination of the vertical and horizontal competition in different levels of the markets.
Milk is one of the agricultural products that more than 70 percent of it goes into the processing industry. The average per capita consumption of milk in Iran is about 90 kg, while the average global consumption is 156 kg and in the European countries is 300 kg. Also, the statistics of dairy factories collected by the Statistical Center of Iran show that between 2004 and 2011 more than 65% of the total amount of raw milk was absorbed by less than 10% of dairy factories. This is a sign of the high concentration of this industry. Meanwhile, the industry is facing a large number of dairy consumers to sell its products with their average per capita consumption in the country much lower than that recommended by the World Health Organization. However, increasing concentration in this industry can affect the bargaining power of the processors and the formation of the price of dairy products. Therefore, the purpose of this study is evaluation of the horizontal and vertical market structure in dairy products market including pasteurized milk, yogurt and cheese.
Materials and Methods: In order to investigate the vertical structure of the market, based on the formation of the price of dairy products, a bilateral monopoly bargaining pattern with axiomatic approach was used. In estimation of the bargaining model we applied EM algorithm to overcome the hidden supply reservation price. The horizontal structure of the market was also evaluated using the Lerner index. Its needed to be explained that the statistics and information required for this study including the production of dairy products, pasteurized milk, yogurt and cheese, the amount and value of consumable inputs including labor, raw milk, milk powder, inventory of capital goods, cost of depreciation, The cost of maintenance and packaging costs for a number of dairy enterprises were collected from the Iranian Statistics Center during the period 1990-2012.
Results and Discussion: the results of this study showed that the horizontal structure of the market for these three products was far from competitive and Producers are able to raise the price of these products above the marginal cost. However, the value of Lerner index in the study period has been decreasing with many fluctuations and this meant improving the competition in the studied years. Also, the results of the bargaining model demonstrated that the bargaining power of processors in pricing these products are more than consumers. Somehow, in average about 70% of dairy trade gains owned by processors and 30% of that is the consumers' share. In all three products, in addition to the price of raw milk, the price of capital input and packaging play a significant role in the agreed price change of dairy products, especially pasteurized milk. So one percent reduction in the price of capital input with current conditions, leads to a decrease in prices of milk, cheese and yoghurt by 0.33, 0.13 and 0.15 percent, respectively.
Conclusions: The results indicate that 70 percent of the welfare loss of the manufacturer is passed on to the consumer as a result of higher costs while only 30 percent increase in welfare as a result of cost reduction Will be given to consumers. As a result, the negotiations on the price formation of these products have been in a way that the government has diverted from its basic goal. The reason for this would be the coincidence of the duties of the government organization responsible for pricing law, consumer protection and producer protection. Therefore, it is necessary to examine the formation of independent governmental or non-governmental organizations in support of consumers and to study the appropriate ways to operate existing laws in order to support consumers.
H. Salami; A.M. Jafari; Z. Shokoohi
Abstract
While ignoring income distribution and estimating aggregate demand generally leads to aggregation bias and thus, does not reflect households’ demand properly, yet aggregation bias is rarely considered in empirical demand studies and simply is ignored in most cases. The objective of the present study ...
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While ignoring income distribution and estimating aggregate demand generally leads to aggregation bias and thus, does not reflect households’ demand properly, yet aggregation bias is rarely considered in empirical demand studies and simply is ignored in most cases. The objective of the present study is to estimate aggregation bias in households’ demand for various types of meats and to evaluate its effects on the magnitudes of price and income elasticities. Ultimately, AIDS demand function was estimated using time series data over the period 1984-2007. Results indicate that correcting the aggregation bias has considerable impacts on the estimated parameters especially on the elasticities.
JEL classification: D1, D12, C51
