The Effectiveness of Self-Sufficiency Policy: International Price Transmissions in Beef Markets

Abstract

International beef markets have shocked regional markets in importing countries due to unexpected events such as the COVID-19 epidemic, bovine spongiform encephalopathy (BSE) and high prices for grain feed. After the global food price spikes in 2008, many national governments aimed to improve food self-sufficiency to secure food supply. However, the efficacy of food self-sufficiency policy, particularly that of meat products, is not fully understood. This paper investigates the causal nexus and estimates the degree of volatility transmissions between global and regional beef prices in 10 beef-importing nations for the period January 2006 to December 2013. Furthermore, we empirically analyze how beef self-sufficiency rates affect the correlations between global and local beef markets using a panel analysis. Our primary findings are: (1) Unidirectional causality from global to local markets was found for Georgia, the UK and the United States. Meanwhile, Japan is a large beef importer, and its price causally influences global prices; (2) We found that the interconnectivity between world and regional markets is relatively weak. Regional markets can absorb external shocks in the meat sector better than wheat because meat production is more flexible than grain production, which is heavily dependent on climatic conditions and (3) Empirical results provide strong indications that high self-sufficiency is useful in isolating local markets from global markets. The results obtained from our analysis are extremely useful for policymakers of national governments who desire to insulate domestic from international beef markets in an emergent situation.

Enhancing Beef Supply through Beef Self-Sufficiency Policy in Indonesia: An Econometric Approach

“…According to Permani [22], the increased income is associated with the relative increased demand for imported beef in Indonesia. Moreover, beef demand has considerable effects on the global beef market [23].…”

Analisis Faktor – Faktor Yang Memengaruhi Harga Daging Sapi di Jawa Barat

“…Peningkatan populasi sapi potong akan dapat mewujudkan swasembada daging sapi Indonesia. Hasil penelitian Guo & Tanaka (2020) Lebih lanjut dari sisi kondisi usaha peternakan sapi potong, saat ini jumlah peternakan rakyat masih sangat sedikit, dengan tehnik budidaya yang relatif tradisional, serta skala usaha yang relatif kecil, yakni hanya memiliki 2-3 ekor/rumah tangga (Direktorat Jenderal Peternakan dan Kesehatan Hewan, 2021a). Pada usaha peternakan rakyat, hewan ternak hanya berperan sebagai tabungan dan tidak bersifat komersial, sehingga produktivitasnya rendah dan peternak tidak responsif terhadap perubahan harga (Zainuddin et al 2015b).…”

Food Import Dependency and National Food Security: A Price Transmission Analysis for the Wheat Sector

“…Commodity price data for many nations in the GIEWS are available, but we found only 10 regions that meet our requirements, such as the availability of data on retail prices of wheat flour for a recent period and being non-self-sufficient in wheat. Following the literature (e.g., [20]), both the global wheat price and local wheat prices were invoiced in the US dollar. The global wheat price is the export price of wheat (the US No.…”

“…However, most of the price transmission analyses mentioned above fail to explore the potential determinants behind international price pass-throughs. Guo and Tanaka examined the effectiveness of self-sufficiency in wheat for wheat importers and exporters, respectively [8,20]. They discovered that a high autarky rate has the potential to weaken price volatility transmissions between global and local markets.…”

“…The contribution of this research to the literature is to discover the potential determinants of international price volatility pass-throughs concentrating on net wheat import or dependency on foreign suppliers. Even though there exists a large body of literature on agricultural price transmissions as stated above, only a few articles attempt to find the potential drivers behind price or price volatility transmissions [8,20,21]. The past research concentrates on self-sufficiency policy in agricultural commodities, but no article discusses the role of food import dependency in the connectedness between global and local markets.…”