Forecasting Meat Prices: An Inverse Demand Approach

Document Type : Research Article

Authors

• H. Salami ¹
• S. Rezaei ²

¹ Tehran university

² Faculty of Economics and Agricultural Development, University of Tehran

10.22067/jead2.v1389i3.7727

Abstract

Abstract
In Agriculture, there is a lag between planting decision and supplying the produced commodity to the market. This makes the marketed commodities as predetermined variables and prices as market clearing factor. Under such a condition, the inverse demand function in which price is a function of quantity is an appropriate tool for forecasting price responses to the injected quantities to the market. In this study, a system of prices equations is estimated for three meat commodities namely; beef, lamb, and broiler, using time series data over period 1985-2006. Results of the estimated own-quantity elasticities (price flexibilities), indicate that a one percent increase in quantities of each of these meats, injected to the market, will cause, a decrease of 0.86, 0.76, and 1.03 percent, respectively, of the prices of beef, lamb, and broiler. The estimated cross-quantity elasticities revealed that beef and lambs are not good substitutes for the broiler. Thus, it is not expected to notice a considerable decline in the price of the latter commodity by injecting more beef and lambs to the market.

Keywords: Inverse demand, Quantity elasticities, Forecasting prices, Beef, Lamb, Broiler

20.1001.1.20084722.1389.24.3.4.1

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