COVID-19 and the Canadian cattle/beef sector: Some preliminary analysis

Canada's cattle/beef sector has already weathered a shock after a 2003 case of BSE resulted in closed borders and industry restructuring. Now, the sector has to adjust to similar shocks due to COVID-19. This paper examines the supply chain from the consumer up to the cow–calf producer by considering consumer reactions, labor market constraints, and supply response. A quarterly market model of North American cattle and beef markets is used to examine price and revenue impacts associated with the market disruptions. Depending on the scenario, there is considerable price and revenue suppression at all levels of the market.     

An error correction almost ideal demand system for meat in Greece

This paper represents a dynamic specification of the Almost Ideal Demand System (AIDS) based on recent developments on cointegration techniques and error correction models. Based on Greek meat consumption data over the period 1958–1993, it was found that the proposed formulation performs well on both theoretical and statistical grounds, as the theoretical properties of homogeneity and symmetry are supported by the data and the LeChatelier principle holds. Regardless of the time horizon, beef and chicken may be considered as luxuries while mutton‐lamb and pork as necessities. In the short‐run, beef was found to have price elastic demand, pork an almost unitary elasticity, whereas mutton‐lamb, chicken and sausages had inelastic demands; in the long‐run, beef, and pork were found to have a demand elasticity greater than one, whereas mutton‐lamb, chicken, and sausages still had inelastic demands. All meat items are found to be substitutes to each other except chicken and mutton‐lamb, and pork and chicken.     

A time series analysis of Danish markets for pork, chicken, and beef

We offer a first-time empirical depiction of Danish dynamic meat price/quantity transmissions by formulating, estimating, and testing a VAR model of market-clearing quantities and prices of the Danish pork, chicken, and beef markets. The analysis illuminates how these markets dynamically handle shocks, and it is demonstrated that: (i) the three meats are close substitutes; (ii) chicken and pork market shocks have own-market and cross-market effects that occur rapidly and swiftly, while beef market shocks have more enduring impacts on pork and chicken markets; (iii) prices are in general more endogenous than quantities; and (iv) the price of chicken is much more endogenous than the prices of pork and beef.     

Asymmetry in beef,lamb and pork farm-retail price transmission in Australia

The hypothesis of asymmetry in price transmission within the Australian meat market is tested using monthly data for beef, lamb and pork prices at different market levels over the period 1971–1988. The results indicate that asymmetrical price response is a strategy used by beef and lamb retailers and wholesalers to adjust to changing input prices, but not by pork retailers and wholesalers. This difference is perhaps unexpected given the similarity in behaviours relating to price levelling in this market, the high cross-price elasticities of demand between these meats, and the relatively greater degree of concentration in the pork market.     

MARKETING MARGINS IN THE MEAT SECTOR,ENGLAND AND WALES 1978–1987

The paper presents a basic analysis of price spread data for beef, lamb and pork over the period 1978 to 1987. The results are reviewed in the light of existing margin theory in order to assess how far the characteristics of price and margin behaviour today differ from those highlighted in earlier work. It is concluded that while short run behaviour is well explained, further research is required if we are to fully understand the factors influencing the longer term development of margins in the meat sector.     

Demand System Estimation with Upward-Sloping Supply

There are three important implications of this work. First, demand systems estimates that overlook supply response are as subject to simultaneous equations bias as single ad hoc demand equations. Theil shows theoretically that assuming supply curves are perfectly elastic, when in fact they are not will underestimate price responsiveness in demand equations. An empirical example is presented that demonstrates that the price elasticities generally increase when upward-sloping supplies are assumed.
Second, the iterative testing procedure presented may provide direction for model building when the true structure of the system is unknown. For example, the results of the Wu-Hausman test indicate that assuming chicken supply is perfectly elastic in a model of the Japanese livestock industry is justified. The results also indicate that the supplies of Wagyu beef, dairy beef, pork and fish are upward-sloping and therefore should be modeled as endogenous variables in the demand system.
Third, the results emphasize the sensitivity of projections of Japanese beef imports to the assumptions underlying the demand system. If perfectly elastic meat supplies are assumed for an analysis of reducing Japanese beef import liberalization, the results will likely underestimate the impacts on beef imports.
In summary, the supply curves for agricultural products tend to slope upward within the time periods used for traditional policy analysis and demand system estimation, which in turn implies that prices are determined endogenously within the system. Endogenous price determination is contrary to the assumptions that underlie the theoretical foundations and many empirical applications of demand systems. We present a methodology to test for and adjust demand systems for endogeneity. The importance of this adjustment is demonstrated by using an analysis of the liberalization of the Japanese beef market.     

Volatility in Oilseeds and Vegetable Oils Markets: Drivers and Spillovers

Food price volatility has re‐emerged as an important topic of political discussion since the food price crisis of 2007–2008. Different volatility drivers have been identified for different markets in the theoretical and empirical literature. However, there is no comprehensive analysis that considers a large number of potential drivers and investigates their joint effects in a dynamic model of interrelated markets. Our study provides such a volatility analysis for the oilseeds and vegetable oils markets. We use a common GARCH approach and a VAR model to identify volatility drivers and spillover effects. Our results show that exchange rate volatility is very important. However, the hotly debated financialisation of commodity markets is not found to be volatility increasing in our monthly data. Impulse response functions show strong spillover effects. Because many volatility drivers found to be important in other markets have no significant effect in our study, our results suggest that volatility drivers are market specific. This implies that any volatility‐reducing policies need to be designed for the market in question.     

Short-Run Supply Responses in the U.S. Beef-Cattle Industry

This article investigates the response of beef-cattle producers to changes in the price of cattle. Previous research has suggested that there may be a negative short-run supply response to a permanent increase in the price of cattle. We build a dynamic, rational expectations model that separates the markets for fed and unfed beef. This separation generates predictions that the supply response is generally positive, even for permanent shocks in the short run, and nests the negative supply response as a special case for appropriately restricted demand shocks.     

QUARTERLY ESTIMATES OF THE DEMAND AND PRICE STRUCTURE FOR MEAT IN NEW SOUTH WALES

Multiple regression estimates of demand and price relationships for fresh beef, lamb and mutton in the N.S.W. livestock auction, wholesale, and retail markets during the period from January 1951 to June 1963 are presented. The results show that direct price elasticities of demand were negative, and of greatest absolute value in the retail market. Mutton is shown to have been a close substitute for beef and lamb, but the latter were not close substitutes with respect to price.     

Dynamic adjustment in the US beef market with imports

This paper hypothesizes that while there are important qualitative differences in domestic beef and imported beef, beef and cattle imports also represent attempts by the US beef processing and wholesale sector to adjust to short-run changes in supply and demand. Dynamic production theory is applied to the problem to test for this adjustment process, and presents a production theory approach to meat trade that has previously been included in demand functions. The results of this analysis suggest that the method used provides a reasonable and appropriate representation of the import behavior of the US processing and wholesale beef sector.     

Price and Volatility Transmission and Market Power in the German Fresh Pork Supply Chain

We investigate the relationship between the transmission of price volatility and market power in the German fresh pork supply chain. We use a theoretical model underpinning this relationship followed by an empirical application that uses monthly farm, slaughterhouse and retail pork price data for the period 2000–2011. We examine both the relationships of market power with price level transmission and price volatility transmission in the chain. We use a vector error correction model and least squares regressions to analyse price transmission and price volatility transmissions, respectively. Results show that retail market power limited both types of transmissions. Competition inducing policy measures coupled with measures that support price risk management initiatives of chain actors are suggested.     

A partial adjustment model with rational expectations applied to the goat sector in Greece

In this paper an attempt is made to examine the rational expectations hypothesis for the goat-meat sector in Greece within the framework of a single equation method that describes the factors affecting demand and supply. The structural equations of the model are estimated by applying the Cochrane-Orcutt technique. The calculated elasticities suggest that Greek goat producers should pay more attention to milk rather than meat production. Statistical indications also confirm the effects of the Chernobyl accident upon the goat sector. Moreover, the forecasting ability of the model has been tested using simulation procedures, which indicate a small deviation between theoretical and observed values. Finally, some further implications concerning the goat sector are drawn from this analysis.     

Factors Influencing Retailers' Decision to Sell PDO/PGI Fresh Meat

Abstract

The objective of this paper is to analyze retailers' attitudes toward region of origin labeling in fresh meat and the factors influencing retailers' decision to sell these quality labeled meats. Data come from a survey conducted with retailers in Spain (Aragon) in 2002. Firstly, retailers' attitudes toward region-of-origin labeled meat are investigated. Secondly, factors affecting the probability to sell region-of-origin labeled for two meat products (beef and lamb) and the level of sales are determined. To do this, a probit model has been specified to analyze the probability to sell region-of-origin labeled beef/lamb and an ordered probit, to study the level of sales for beef/lamb.     

Price Dynamics in a Vertical Sector: The Case of Butter

We develop a reduced-form model of price transmission in a vertical sector, allowing for refined asymmetric, contemporaneous and lagged, own and cross-price effects under time-varying volatility. The model is used to investigate the wholesale-retail price dynamics in the U.S. butter market. The analysis documents the nature of nonlinear price dynamics in a vertical sector. It finds strong evidence of asymmetric retail price responses, both in the short term and the longer term, but only weak evidence of asymmetric wholesale price responses. Asymmetric retail responses play a major role in generating a skewed distribution of butter prices. The empirical results indicate the presence of imperfect competition at the retail level.     

How integrated are world beef markets? The case of Australian and U.S. beef markets

The objective of the paper is to examine market integration between Australian and U.S. beef prices at the farmgate level. If these two prices are found to be integrated then it can be alleged that Australian beef prices can be used as a world price in empirical analyses and/or as a ‘reference price’ to measure the level of support accorded the U.S. beef sector. Co-integration analysis and a time-varying parameter estimation procedure based on the Kalman filter model are applied. The paper distinguishes between steer and cow beef segments and it uses monthly data over the 1972:1 to 1993:2 period. The results indicate that Australian and U.S. beef prices are co-integrated, albeit not fully and that the degree of convergence between the various price pairs has not substantially increased over time. The results also suggest that Australian prices can not unequivocally be adopted as a world price in empirical analyses.     

Destabilizing role of futures markets on North American hard red spring wheat spot prices

The objective of the paper is to determine if the futures prices of hard red spring wheat (HRSW) have stabilizing or destabilizing impact on spot HRSW price in North America. Several important results emerge from thorough empirical analysis. First, both Granger causality tests and directed acyclic graph algorithms (DAGs) point to two-way causality between futures and spot HRSW prices and thus endogeneity in both prices formation. To the contrary, both procedures suggest that ending stocks are exogenous to spot and futures HRSW prices. Both vector error correction model and impulse response functions point to a large and long-lasting impact of a shock to futures price on spot price level. Finally, variance decomposition analysis indicates that futures prices are responsible for the bulk of spot price volatility in both short and long run. Our result is consistent with those of theoretical models suggesting that when production (supply side) is the dominant disturbance, spot price is destabilized in both the short and the long run by futures prices. An important implication of this research is the need for alternative market mechanisms or alternative farm policy measures that would mitigate price risk and ensure sustainable farming of American HRSW farmers.     

中加菜籽油期货市场波动溢出实证研究

利用误差修正模型、BEKK-GARCH模型和格兰杰因果关系实证研究了加拿大和中国菜籽油期货市场之间的信息传导、波动溢出和价格引导关系。实证结果显示：这两个市场之间存在一定的信息传导关系;加拿大菜籽油期货市场对中国菜籽油期货市场存在显著的波动溢出效应,而中国菜籽油期货市场对加拿大菜籽油期货市场的波动溢出不显著;短期内加拿大菜籽油期货市场对中国菜籽油期货市场的价格引导作用更强些,这与加拿大菜籽油期货市场是全球菜籽油定价中心的实际相吻合,而中国菜籽油期货市场的竞争力有待进一步提升。     

Food scares, advertising, and the demand for meat cuts in Great Britain

Retail demand systems for 19 different cuts of meat for beef, lamb, pork, bacon and poultry in Great Britain are estimated from monthly time series of consumer expenditure from 1989-2000 using a two stage budget allocation process and an LA/AIDS specification. The unconditional expenditure, own and cross price elasticities are derived for the individual meat cuts. The impact of adverse publicity from meat scares, especially BSE, and of positive publicity through consumer promotion and advertising are incorporated into the modelling. Meat scares produced a reallocation of consumer spending from red to white meats during the 1990s. The impact of species-based advertising was shown to have complex spillover effects both within and between meat species, and the response of consumer demand to advertising was considerably less than to adverse publicity.     

THE EFFECT OF PRICE REDUCTION AND DIRECT INCOME SUPPORT POLICIES ON AGRICULTURAL INPUT MARKETS IN AUSTRIA

The purpose of this paper is to examine empirically the effects of a shift from price support to direct income policy on agricultural factor markets and aggregate output. By utilising an econometric model for the Austrian agricultural sector, it is argued that the main purpose of this policy change, which is to move producers away from making production decisions in response to income support policies and to facilitate their response to market signals (‘decoupling’), is only partially realised. Switching from price to direct income support would result in little reduction in output, but some positive secondary effects can be observed. Ecological goals could be realised by lessening the degree of industrialisation due to lowering the capital-labour and intermediate input-labour ratios.     

Canadian Hog Supply Response: A Provincial Level Analysis

Canada's hog sector has faced two decades of tumultuous growth, yet there are no recent estimates of supply response. This study uses state‐space methods to account for a multiplicity of autonomous structural changes impacting the sector and determines if the fundamental relationship between supply response and hog prices has changed from previous estimates. The results are consistent with prior research but offer the reader previously unavailable estimates of supply response with respect to feed prices and the variability of hog and feed prices. Feed price elasticities are somewhat larger than hog price elasticities. The effects of price risk for supply response appear quite muted but the impacts of feed price risk are greater than for hog price risk.