The Vertical Price Transmission in Pork Meat Production in the Czech Republic

• Published in: Agriculture (Basel) 2023-06, Vol.13 (6), p.1274
• Main Authors: Sirohi, Jitka, Hloušková, Zuzana, Bartoňová, Klára, Malec, Karel, Maitah, Mansoor, Koželský, Robert
• Format: Article
• Language: English
• Subjects: Agribusiness; Agricultural production; Agriculture; agriculture price; agro-food market; Commodities; Common Agricultural Policy; Consumer Price Index; Consumers; Decomposition reactions; Distribution costs; Error analysis; Error correction; Exports; Farmers; Farms; Hogs; International economic relations; Meat; Meat processing; Meat production; Pandemics; Pork; Pork industry; pork meat; price transmission; Pricing policies; processing price; Standard deviation; VECM
• ISSN: 2077-0472; 2077-0472
• DOI: 10.3390/agriculture13061274

The paper aims at vertical price transmission of the agri-food market in the Czech Republic. It is focused on the analysis of price transmission in pork meat by investigating the short-run and long-run relationships within the product and the speed of establishing the equilibrium relationship. For this purpose, there is employed specially VECM (Vector Error Correction Model), impulse-response analysis, and decomposition of variance of VECM, which show the system’s reaction. The applied approach considers five alternatives in the Johansen approach. The results suggest that there is an existence of the equilibrium relationship in vertical markets and this relationship is simultaneous and demand-driven. The impulse-response analyses show the response of the processing price to one standard deviation shock to the agriculture price from approximately 15–20 periods reaching long-run equilibrium. The response of the agriculture price to one standard deviation shock to the processing price reaching long-run equilibrium is also from approximately 15–20 periods.