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Volatility in Live Calf, Live Sheep, and Feed Wheat Return Markets: A Threat to Food Price Stability in Turkey

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  • Faruk Urak

    (The Turkish Radio and Television Corporation (TRT), Erzurum Directorate, Erzurum 25100, Turkey)

  • Abdulbaki Bilgic

    (Department of Management Information Systems, College of Economics and Administrative Sciences, Bilecik Şeyh Edebali University, Bilecik 11320, Turkey)

  • Gürkan Bozma

    (Department of Economics, College of Economics and Administrative Sciences, Iğdır University, Iğdır 76420, Turkey)

  • Wojciech J. Florkowski

    (Department of Agricultural and Applied Economics, University of Georgia, 1109 Experiment Street, Griffin, GA 30223-1797, USA)

  • Erkan Efekan

    (Agriculture and Rural Development Support Institution (ARDSI), Erzurum Provincial Coordinatorship, Şükrüpaşa Neighborhood, T.M.O. Lodgings Street No:1, Yakutiye, Erzurum 25100, Turkey)

Abstract

The volatility of meat prices affects the accessibility and even food security of some consumers in Turkey. This study analyses the prices of selected livestock and a major feed component, wheat, as well as the exchange rate of the domestic currency in Turkey because imports augmented the domestic live calf and sheep supply. The analysis applies 470 price observations from January 2005 to October 2019 for each of the following price series: live calf, live sheep, feed wheat, and exchange rate of Turkish lira to US dollar. The series are analyzed by using the VAR-Asymmetric BEKK-GARCH technique. The results show that the elicited conditional variances of the return series were significantly affected by both short-term shocks and shocks across the return series. The uncertainties in the live calf, live sheep, and feed wheat markets were affected by both long-term volatilities and long-term swings in their own and the other markets, but their own market-induced effects were stronger. Similarly, the conditional variances of the returns of live calves, live sheep, and feed wheat were significantly affected by the rapid price ascent in the exchange rate and the periods of livestock imports as compared to the periods when imports were absent. The unfavorable news exerted particularly negative effects on persistent volatility in markets. Additionally, the live sheep market faced greater risks than the live calf or wheat markets and was greatly affected by the limited domestic sheep supply. Results provide knowledge useful in augmenting policy, assuring sustained accessibility to animal protein in Turkey and eliminating food insecurity.

Suggested Citation

  • Faruk Urak & Abdulbaki Bilgic & Gürkan Bozma & Wojciech J. Florkowski & Erkan Efekan, 2022. "Volatility in Live Calf, Live Sheep, and Feed Wheat Return Markets: A Threat to Food Price Stability in Turkey," Agriculture, MDPI, vol. 12(4), pages 1-24, April.
    • Handle: RePEc:gam:jagris:v:12:y:2022:i:4:p:566-:d:795357
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