Agricultural Economics and Development

Agricultural Economics and Development

Price Transmission from World Markets to Iran\'s Domestic Markets for Poultry Imported Inputs (Case Study: Soybean Meal and Fish Powder)

Authors
R. Heidari Kamalabadi
N. Shahnoushi
10.30490/aead.2012.58699
Abstract
The price and market efficiency is influenced by factors and different indexes in which symmetry of price transmission in different markets levels is significantly important. Since, imported soybean meal and fish powder are formed great part of poultry nutrition, the purpose of this paper is examining the way of world prices influence the domestic prices of these inputs applying an Error-Correction Model (ECM) to the monthly data over the period of 2001-2010. The results indicate that decrease and increase of world prices of soybean meal and fish powder have positive effects on their domestic prices. Also, price transmission test of both inputs represent that price transmissions from world markets to domestic market are symmetric in short-run and long-run. World price fluctuations, especially when it increases, can create problem for manufacturing firms attributed to imported inputs thereby suggested that government improves fishery sector's infrastructures in order to increase production of fish powder and enhance performance of soybean to rising relevant industries (soybean meal). All of the last mentioned cases can cause to reduce import of these inputs.

JEL Classification: E30, Q11

Keywords:
Price Transmission, Error-Correction Model, Imported Inputs, Poultry, Iran