Decomposing Producer Price Risk: An Analysis Of Livestock Markets In Northern Kenya
AbstractThis paper introduces a simple method of price risk decomposition that determines the extent to which producer price risk is attributable to volatile inter-market margins, intra-day variation, intra-week (day of week) variation, or seasonality. We apply the method to livestock markets in northern Kenya, a setting of dramatic price volatility where price stabilization is a live policy issue. Large, variable inter-market basis is the single most important factor in explaining producer price risk in animals typically traded between markets. Local market conditions explain most price risk in other markets, in which traded animals rarely exit the region. Seasonality accounts for relatively little price risk faced by pastoralists in the dry lands of northern Kenya.
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Bibliographic InfoPaper provided by Western Agricultural Economics Association in its series 2001 Annual Meeting, July 8-11, 2001, Logan, Utah with number 36154.
Date of creation: 2001
Date of revision:
Livestock Production/Industries; Risk and Uncertainty;
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