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| Price transmission in hog and feed markets of China |
| ZHOU De, Dieter Koemle |
1、College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, P.R.China
2、Department of Agricultural Economics and Rural Development, University of Göttingen, Göttingen 37073, Germany |
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摘要 There is an increasing demand for feed as the industrialization of hog production in China. Land scarcity limits China’s ability to continue increasing its hog production without feed imports, particularly soybean, and the feed markets are increasingly integrated into the global market. This study performs an analysis of price transmission between the hog price in China and feed prices, specifically domestic maize price and international soybean price, from January 2000 to April 2014. We identified a long-term stable equilibrium relationship between the three markets. However, further analyses show that there is no significant Granger causality between hog and feed market, and the long-run equilibrium partially results from Granger causality between the international soybean market and domestic maize market. This suggests that the domestic hog market has been distorted by different policies. The results also indicate that the efficiency of price transmission is very low and it takes about 11 months to correct one-half of any long-run disequilibrium for the hog market in China. Therefore, to stabilize hog price in China, only market intervention to regulate the maize and soybean markets would be insufficient and comprehensive measures need to be taken into account such as hog production modernization, agricultural insurance, epidemic surveillance etc.
Abstract There is an increasing demand for feed as the industrialization of hog production in China. Land scarcity limits China’s ability to continue increasing its hog production without feed imports, particularly soybean, and the feed markets are increasingly integrated into the global market. This study performs an analysis of price transmission between the hog price in China and feed prices, specifically domestic maize price and international soybean price, from January 2000 to April 2014. We identified a long-term stable equilibrium relationship between the three markets. However, further analyses show that there is no significant Granger causality between hog and feed market, and the long-run equilibrium partially results from Granger causality between the international soybean market and domestic maize market. This suggests that the domestic hog market has been distorted by different policies. The results also indicate that the efficiency of price transmission is very low and it takes about 11 months to correct one-half of any long-run disequilibrium for the hog market in China. Therefore, to stabilize hog price in China, only market intervention to regulate the maize and soybean markets would be insufficient and comprehensive measures need to be taken into account such as hog production modernization, agricultural insurance, epidemic surveillance etc.
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Received: 27 July 2014
Accepted:
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| Fund: the sponsorship of German Research Foundation (RTG1666), A Project Funded by the Priority Academic Program Development of Jiangsu Higher Education Institutions (PAPD), China, and the National Natural Science Foundation of China (71173110). |
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Corresponding Authors:
Dieter Koemle, E-mail: dieter.koemle@gmail.com
E-mail: dieter.koemle@gmail.com
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| About author: ZHOU De, E-mail: zhoude@njau.edu.cn; |
Cite this article:
ZHOU De, Dieter Koemle.
2015.
Price transmission in hog and feed markets of China. Journal of Integrative Agriculture, 14(6): 1122-1129.
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