Dynamics of Price Transmission in the Presence of a Major Food Safety Shock: Impact of H5N1 Avian Influenza on the Turkish Poultry Sector

Saghaian, Sayed H.; Özertan, Gökhan; Spaulding, Aslihan D.

doi:10.1017/s1074070800002480

Cited by 23 publications

(23 citation statements)

References 34 publications

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“…It is worth noting that the analysis of EPTs implicitly assumes that price transmission proceeds downward along the marketing channel. However, the direction of causality may be opposite (i.e., upward along the channel), particularly when other studies have found mixed evidence on this matter in different markets (e.g., Capps & Sherwell, ; Goodwin & Harper, ; Goodwin & Holt, ; Saghaian, Ozertan, & Spaulding, ; Tiffin & Dawson, ). Regardless the direction of causality, EPT values different than one, will point to imperfect competition or a breakdown in the transmission of price signals at specific levels of the marketing chain…”

Section: Resultsmentioning

confidence: 98%

Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry

2013

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This study examines the impact of different food scare events on marketing margins in the U.S. beef and pork industries. The authors analyze how market stresses induced by the Food Safety Inspection Service (FSIS) recalls and bovine spongiform encephalopathy (BSE) outbreaks affect price spreads and the extent of price transmission at the slaughter-to-wholesale and wholesale-to-retail levels. They use monthly national data for the period 1986-2008, which includes records of FSIS recalls of varying severity and BSE events in the United States and Canada. The authors account for immediate and delayed effects of food scares and for potential cross effects across industries and countries. The results indicate that beef and food recalls do not affect their corresponding price margins and overall food safety incidents have minor cross-industry and cross-country effects. However, BSE discoveries in the United States considerably affect marketing margins in the beef industry, particularly at the wholesale-to-retail level. Interestingly, subsequent discoveries had smaller impacts on price margins. Bovine spongiform encephalopathy outbreaks also appear to affect the extent of price transmission between wholesalers and retailers.This study examines the effect food recalls and disease outbreaks on marketing margins in the U.S. beef and pork industry at farm-wholesale-retail levels. In particular, we evaluate how market stresses induced by different food recalls and disease outbreaks affect price margins at the farm-to-wholesale and wholesale-to-retail levels. We further examine the extent of price transmission along the marketing channel during food scares. We use monthly national data for the period 1986-2008.The analysis of potential effects of food scares on the red meat supply chain requires considering certain aspects. First, because food recalls and BSE outbreaks may occur simultaneously, some confounded effect is expected between food contamination and animal disease. It is important, then, to isolate the effect of different types of food scares when assessing their impact on the marketing channel. In addition, these effects may vary with the severity of the events. We separately account for BSE outbreaks and three different types of FSIS recalls: (a) recalls due to pathogenic bacteria or class I bacterial; (b) the rest of class I recalls that originate, for example, due to allergenic ingredients or underprocessing (hereafter called class I other); and (c) national recalls that are effective in all of the states in the United States and are not necessarily a class I recall.Another aspect to consider is the likely cross-effect across industries and countries during food scare events. Accordingly, we jointly model price spreads for beef and pork to control for any underlying correlation or substitution effects across these markets. We focus on beef and pork because they are the two main red meat products, which are direct, close substitutes of each other and are frequently handled by the same agents across the marketing ...

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Section: Resultsmentioning

confidence: 98%

Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry

2013

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“…Some research on the characteristics of food markets suggests that these markets are typically oligopolistic (Sexton and Lavoie, 2001;Sheldon and Sperling, 2003), allowing the exercise of market power by downstream industries. It is not surprising that among the arguments 4 that have been provided to account for asymmetric price movements the most commonly cited is the presence of market power in retail and/or processing industries (see, for example, McCorriston et al, 1998McCorriston et al, , 2001.…”

Section: Asymmetric Price Transmission -Existing Theories and Empiricmentioning

confidence: 99%

Does Market Structure Influence Price Transmission in the Agro‐food Sector? A Meta‐analysis Perspective

Bakucs¹,

Fałkowski²,

Fertő³

2013

J Agricultural Economics

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There exists a large literature on price transmission in agro‐food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not investigate the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations of why we should expect (a)symmetry. In response, this paper investigates the reasons for asymmetric price transmission in the agro‐food chain, using meta‐analysis of existing studies. Our focus is on the organizational and institutional characteristics of the agro‐food supply chain. Our findings suggest that asymmetric price transmission in farm–retail relationships is more likely to occur in sectors/countries with more fragmented farm structure, higher governmental support and more restrictive regulations on price controls in the retail sector. On the other hand, more restrictive regulations on entry barriers in the retail sector and the relative importance of the sector tend to promote symmetric farm–retail price transmission. The latter is also more likely in the presence of a strong processing industry.

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“…For example, Saghaian, Ozertan, and Spaulding () and Hassouneh, Radwan, Serra, and Gil () identify supply shocks in terms of influenza outbreaks that threaten food security. Saghaian et al () study the Turkish poultry sector, whereas Hassouneh et al () investigate the Egyptian poultry sector. Both studies show a significant impact on vertical price transmission along the supply chain.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The supply chain of less‐developed countries, in particular for poultry, has some specific characteristics such as a lack of appropriate storage facilities, relatively short production cycles in an environment characterized by high search, and processing costs (Chaudhry & Miranda, ). These features make poultry chains in less‐developed countries especially interesting for analyzing cost pass‐through dynamics (Chaudhry & Miranda, ; Hassouneh et al, ; S. S. Hosseini et al, ; Saghaian et al, ; Ukum, Molua, & Ake, ).…”

Section: Literature Reviewmentioning

confidence: 99%

Demand peaks and cost pass‐through: The case of Iran's poultry market

2019

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This study employs traditional holidays in Iran as proxies to analyze the impact of periods of peak demand on cost passthrough in the poultry market. We use weekly wholesale and retail price data for all 30 provinces of Iran from 2010 to 2016. By panel cointegration techniques, we estimate cost pass-through elasticities and speed of adjustment during periods of peak demand. We find that cost passthrough elasticities slightly increase; the speed of adjustment in periods of peak demand remains the same, but retail-wholesale margins decrease. Thus, peak demand leads to an increase in retail-wholesale competition similarly observed by Chevalier et al. (2003, Am Econ Rev, 93, 15-37). K E Y W O R D S cost pass-through, Iran, panel error correction model, peak demand, poultry market J E L C L A S S I F I C A T I O N D12, L11, L81

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Dynamics of Price Transmission in the Presence of a Major Food Safety Shock: Impact of H5N1 Avian Influenza on the Turkish Poultry Sector

Cited by 23 publications

References 34 publications

Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry

Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry

Does Market Structure Influence Price Transmission in the Agro‐food Sector? A Meta‐analysis Perspective

Demand peaks and cost pass‐through: The case of Iran's poultry market

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