Input Price Fluctuations and Light livestock Supply (Application of State-Space Model)

اقتصاد و توسعه کشاورزی

Article 1, Volume 30, Issue 4, December 2017, Pages 277-284   

Document Type: Research Article

DOI: 10.22067/jead2.v30i4.48049

Authors

E. Sadeghi^{* 1}; R. Moghaddasi²

¹Faculty of Agriculture, Science and Research Branch, Islamic Azad University, Tehran, Iran

²Agricultural Economics Department, Faculty of Agriculture, Science and Research Branch, Islamic Azad University, Tehran, Iran

Abstract

Introduction: Light livestock is one of the main resources of the red meat supply. In our country, annual growth rate of light livestock production is decreased by 6.4 percent in 1383 -93. In the other words, the required input price of light livestock producing have fluctuations that have much effect on producer decisions quality. Therefore, more attention to light livestock nurturing and factors that are effective on the rate of its supply is understood more than before. So, the article goals include effective factors considering on light livestock supply rate. About the studied subject, many studies have been proformed locally and globally, that include Adam (5) in South Africa, Fisher and Wall in Canada and Australia, Jezghani and Moghaddasi(7), Azizi(3) in Iran.
Material and Methods: Research seasonal data includes years 1381-91 and for three provinces of East Azerbaijan, Isfahan & Qom. Price fluctuation is investigated by GARCH models. These models are concentrated on homogenous variance contradiction (stable variance) and instead heterogeneous variance should be encountered as a problem, it is tried the heterogeneous variance is used in modeling. So, a prediction is estimated for every error period variance. The supply function has estimated in an article, is using the method of the state space model which permit seasonal, trend & unobservable cycle elements change during time randomly. The state space model is returned to standard regression model in the unobservable elements absence. The used method for the article for seasonal elements is time fixed seasonal variations.
Data analysis: The research indicates that there is inputs prices and light livestock price. Barley price with past season lag, alfalfa price in one and two past season and the light livestock price with past season lag become significant and all GARCH coefficients in every three mentioned variant is less than one percent and significant. According to the effect of independent variants on light livestock supply in province of East Azerbaijan, it is determined that light livestock expected price has positive and significant effect, inputs expected price has negative and significant effect on light livestock supply, variance coefficient of light livestock price has negative and significant effect on light livestock supply, barely input price variance has negative and significant effect on light livestock supply. By considering the effect of independent variants on light livestock supply in Isfahan province , it is determined that expected price of light livestock has positive and a significant effect on light livestock supply, expected price of input on supply rate has negative and significant effect, variance coefficient of light livestock price has negative and significant effect on light livestock supply rates. Barely price variance has a negative and significant effect on light livestock supply. By considering the effect of independent variants on the rate of light cattle supply in Qom province, it is determined that light livestock expected price has positive and significant effect on light livestock supply rates, input expected price has negative and a significant effect on supply rate, variance coefficient of light livestock price has negative and significant effect on light livestock supply rate, barely an input price variance has negative and significant effect on light livestock supply. Summer, autumn and winter seasonal fluctuations, in a province of east Azerbaijan has a negative and significant effect on light livestock supply. Summer and autumn seasonal fluctuations in Isfahan and Qom had negative and significant effect on light livestock supply while winter seasonal fluctuation had a positive and significant effect on light livestock supply. The trend has a positive and significant effect on light livestock supply rate in three provinces. In the other words, trend fluctuation has a positive effect on supply rate. In three provinces, light livestock supply rate has positive and significant cyclic fluctuations with random coefficient in every year.
Results: In the provinces of East Azerbaijan, Isfahan, Qom, light livestock expected price has a positive and significant effect on its supply rate. While light livestock price variance has a negative and significant effect on its supply rate. Inputs expect price of and its variance has a negative and significant effect on its supply rate. Cyclic and trend fluctuations have a positive and significant effect on the flight cattle supply rate. Light livestock supply is less elastic than the ratio of inputs price and light livestock price change. The effect of light livestock price risk is greater than the inputs price risk.

Keywords

GARCH process; Light livestock; State Space; Supply response

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