The Relationship between Farm-Gate and Consumer Demand for Meat Products in Iran

مجله اقتصاد و توسعه کشاورزی

Article 4, Volume 27, Issue 4, January 2014, Pages 300-308   

Document Type: Research Article

DOI: 10.22067/jead2.v1391i5.24721

Authors

F. Fathi^* ; M. Bakhshoodeh

Agricultural Economics, Agricultural College, Shiraz University, Shiraz, Iran

Abstract

Demand for farm output is theoretically consistent with consumer demand and marketing performance. Many studies have focused on demand interrelationships at the retail level, but not on the demand for farm output. In this study, derived demand elasticities of sheep, beef and chicken were estimated in a complete system of demand functions by seemingly unrelated regression estimator (SURE) for the years 1984-2012. Sheep, beef and chicken are considered as inputs for food processing and marketing and so their corresponding derived demands are related to consumer demand and marketing performance. Based on findings of this study, the elasticities of substitution are estimated to be 0.26 for sheep, 0.38 for cattle and 0.32 for poultry. The results showed that derived demand elasticity is more sensitive than the one measured by the traditional method. The price elasticities of the derived demands for the three types of meat were calculated-0.922, -0.775 and -0.716 for sheep, beef and chicken, respectively. This presents that demands at the farm level are less elastic than the associated demands at the retail level. Therefore, policies that change meat price at farm or retail level affect marginal markets of other meat products. According to the results of this study, it is necessary for policy makers to have information on the derived demand elasticity.

Keywords

Elasticity of substitution; Derived demand; Farm-gate demand; Consumer demand; Meats