AGRICULTURAL PRICES AND MARKETS

Transcription

1 AGRICULTURAL PRICES AND MARKETS Sponsored by a Grant TÁMOP /2/A/KMR Course Material Developed by Department of Economics, Faculty of Social Sciences, Eötvös Loránd University Budapest (ELTE) Department of Economics, Eötvös Loránd University Budapest Institute of Economics, Hungarian Academy of Sciences Balassi Kiadó, Budapest Author: Imre Fertő Supervised by Imre Fertő June 2011

2 AGRICULTURAL PRICES AND MARKETS Syllabus The aim of the module: The overall objective of this course is to get you to realize that supply and demand constructs are not vacuous notions used only by economists in the context of a chalkboard in front of a classroom. That is, we can combine the basic supply-demand framework from microeconomic theory with statistical methods to learn something about the behavior of commodity prices and/or supply and demand conditions in commodity markets. The module basically follows book by Tomek, W.G. Robinson, K. (2003): Agricultural Product Prices. Cornell University Press (T R), supplementary books by Hudson (2007): Agricultural Markets and Prices. Blacwell (H), and Ferris. J.N. (1997): Agricultural Prices and Commodity Market Analysis. McGraw-Hill (F). In addition, we use various articles for each section. 1. Introduction The system of food markets Characteristics of food markets 2

3 Characteristics of food systems Issues of food systems Structural change in agriculture Food for thought: A case study on the right price of food Swinnen, JF. M. (2010): The Right Price of Food: Reflections on the Political Economy of Policy Analysis and Communication. Katholieke Universiteit Leuven. Licos Discussion Paper, FAO (2009): The state of agricultural commodity markets, Rome 2. Agricultural demand Different approaches of consumer behaviour The basics of demand theory Determining factors of demand Price elasticity of demand Income elasticity of demand Relationships between demand elasticities The pattern of food consumption The methodologies of demand analysis An empirical example: the Hungarian beer consumption T R 2 3. chapter 3

4 H 1. chapter F 2 4 chapter Chai, A. Moneta, A. (2010): Engel Curves. Journal of Economic Perspectives, 24 (1) Bouamra-Mechemache, Z. Réquillart, V. Soregaroli, C. Trévisiol, A. (2008): Demand for dairy products in the EU. Food Policy 33, Agricultural supply Theory of agricultural supply Determining factors of demand Price elasticity of demand Characteristics of supply The methodologies of supply analysis Distributed lags models Introduction to efficiency analysis T R 4. chapter H 2. chapter F 6 chapter 4

5 Application Chavas, J.P. Johnson, S. (1982): Supply dynamics: the case of U.S. broilers and turkeys. American Journal of Agricultural Economics Bakucs, L. Z., Fertő, I., Fogarasi, J., Latruffe, L. (2010) The impact of EU accession on farms technical efficiency in Hungary. Post-Communist Economies Vol. 22. (2) Market and market structures Definitions of market Qualitative approach Quantitative approach Market structure Measuring market concentration T R 5. chapter H 3, chapter Sexton R.J. (2000): Industralization and Consolidation in the U.S. Food Sector: Implication for Competition and Welfare. American Journal of Agricultural Economics, 82, Bukeviciute, L. Dierx, A. Ilzkovi, F. (2009): The functioning of the food supply chain and its effect on food prices in the European Union. European Economy, Occasional Papers 47 May

6 5. Marketing margin Approaches of marketing margin Empirical measurements of marketing margin Types and changes of marketing margin Price elasticities and marketing margin Market structures and marketing margin T R 6. chapter H 4. chapter F 5. chapter Bakucs Lajos Zoltán: Kereskedelmi árrés és ártranszmisszió a magyar sertéshúspiacon. Közgazdasági Szemle LII. évf., 2005 szeptember Price differences and spatial relationships Intramarket price structures Interregional market relationships Market boundaries Spatial equilibrium models 6

7 T R 8. chapter H 6. chapter F 12. chapter Bakucs Lajos Zoltán Fertő Imre: A agricultural prices térbeli integrációja a magyar tejpiacon. Területi Statisztika Vol. 10. (47) (5) pp (2007) 7. Price variation through time Price variation through time Seasonal variation in prices Annual price behaviour Long run trends in price Cyclical price behaviour Explaining variation through time using demand and supply models T R 9. chapter H 7. chapter F. 14. chapter Waugh, F. (1964): Cobweb models. Journal of Farm Economics

8 Hayes, Dermot J; Schmitz, Andrew (1987): Hog Cycles and Countercyclical Production Response. American Journal of Agricultural Economics, vol. 69, no. 4, Price differences and quality Issue of quality in the economics Quality grading in the food chain Operational and price efficiency The impact of quality grading on D and S Relationships between quality grades Quality grades and marketing margin Classification issues T R 7. chapter H 8. chapter Parcell, J.L. Schroeder, T.C. (2007): Hedonic retail beef and pork product prices. Journal of Agricultural and Applied Economics 39 (1) Agricultural terms of trade Determining factors of general level of agricultural prices Measuring general level of farm prices Agricultural terms of trade Definition 8

9 Measurement Facts T R 10. chapter Colman, D. (2009): Agriculture s Terms of Trade: Issues and Implications. Presidential Address prepared for presentation at the 27th Conference of the International Association of Agricultural Economists, Beijing, China, August 17, Zanias, G.P. (1998). Inflation, Agricultural Prices and Economic Convergence in Greece. European Review of Agricultural Economics, 25, Mechanisms discovering prices Meaning and relevance of price discovery Different ways of classifying price discovery mechanisms Characteristics of different price discovery mechanisms Evolution of price discovery mechanisms T R 11. chapter Bakucs Lajos Zoltán Fertő Imre Szabó G. Gábor (2010): Contractual relationships in the Hungarian milk sector. IAMO Forum 2010, Institutions in Transition Challenges for New Modes of Governance, June 2010, Halle (Saale) Germany, Mathew C. Stockton, David A. Bessler, and Roger K. Wilson (2010): Price Discovery in 9

10 Nebraska Cattle Markets. Journal of Agricultural and Applied Economics, 42,1: Vertical coordination in agriculture Definitions of vertical coordination Different approaches to vertical coordination Reasons for vertical coordination Vertical coordination in practice Theory: Hudson (2007): Agricultural Markets and Prices. Blackwell, Chapter 13. Peterson, H. C., Wysocki, A., Harsch, S. B. (2001): Strategic Choice along the vertical coordination continuum. International Food and Agribusiness Management Review, 4, Martinez, S. W. (2002): Vertical Coordination of Marketing Systems: Lessons From the Poultry, Egg, and Pork Industries. USDA, AER No. 807 MacDonald, J. et al. (2004): Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities, USDA, AER No Cooperatives in agri-food chain What is a cooperative? How important are co-ops in the food system? 10

11 Do co-ops perform differently than investor owned firms? Theoretical perspectives Empirical perspectives Challenges facing cooperatives and their responses Staatz, J. M. (1989): Farmer Cooperative Theory: Recent Developments. ACS Research Report No. 84, June 1989, US Department of Agriculture Royer JS (1999): Cooperative organizational strategies: A neo-institutional digest. Journal of Cooperatives 14: Government interventions in agriculture The framework of agricultural policy analysis The basic forms of price regulations Price supports Deficiency payments Minimum price Maximum price Price discrimination The costs of agricultural policy: The example of the CAP Numerical examples 11

12 Tomek, W. G. and Robinson, K. (2003): Agricultural Product Prices. Cornell University Press, Chapter 14 Latruffe, L and Le Mouël, C (2009): Capitalisation of government support in agricultural land prices: What do we know? Journal of Economic Surveys, 23(4),