Browsing by Author "See, Brian Benson M."
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Item Restricted Market integration and vertical price transmission among agricultural markets(2008-04) See, Brian Benson M.This paper attempts to investigate market integration and pricing behaviour between the com and pork markets. Previous studies have long documented the importance of com as an important animal feed ingredient which in tum is a key input for hog production. By using cointegration tests, granger causality tests and error correction models (ECM), it finds that the three markets namely wholesale yellow com markets, slaughter farm gate hog prices and retail pork prices have a common trend, thus sharing a long- run equilibrium relationship and are market integrated. Short run granger causality tests indicate that a quick feedback mechanism between farm gate hog price and retail pork prices exist though price transmission between wholesale com prices and farm gate hog prices does happen in only one direction. While co integration tests validate market integration among the three markets, error correction modelling indicates that adjustments to the long- run equilibrium relationship for all three price series are slow. Given that the level of government intervention in the three markets is low, unlike in the rice sector, for example, it is possible other factors may have come into play. Possible factors include the poor transportation network and transaction costs though the increasing presence of imported animal feeds ingredients may have led to a weakening of short run relationship on part of wholesale com prices to the farm gate hog and retail pork prices.