2023, Volume 26, Paper 14
ISSN: 2209-6612
Price Transmission in Sheep Meat Saleyard Markets
Meizal Popat – Former postgraduate student and Adjunct Professor, UNE Business School, University of New England, Armidale; Lecturer in Agricultural Economics, Universidade Eduardo Mondlane, Maputo, Mozambique
Garry Griffith – Former postgraduate student and Adjunct Professor, UNE Business School, University of New England, Armidale; School of Agriculture, Food and Ecosystem Sciences, University of Melbourne
Abstract
There are multiple markets for sheep meat, segmented by age of animal, breed of animal, domestic or export market and type of end product. The different market segments are therefore influenced by a range of supply and demand factors, many of which apply to multiple segments depending on the degree of substitution between animal types possible in the final markets for these products. A relevant question for producers is to what extent are the various sheep meat market segments inter-related. The aim of this paper is to describe the relationships between the prices of six different sheep and lamb categories sold at saleyards in New South Wales. Rather than simple linear models, vector autoregression models (VAR) are used to evaluate these relationships. Results from this study suggest that all sheep meat categories respond significantly to own price shocks. In terms of cross price transmission, restocker and mutton categories are the most responsive to cross price transmission from other sheep meat categories. From an overall sheep meat supply chain perspective, these outcomes suggest that exogenous factors such as adverse climate conditions and changes in the world market are likely the most important to explain volatility in domestic sheep meat prices.
Key words: sheep meat, market segments, price transmission, price volatility, VAR, GARCH
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