The Effect of HPAI on ECOWAS Meat prices Using Price Transmission Analysis

This paper assesses impacts of Highly Pathogenic Avian Influenza (HPAI) outbreaks on meat prices in the Economic Community of West African States (ECOWAS). It analyzes price-transmission, applying innovative techniques, spatial models and a temporal dynamic structural model using VAR analysis coupled with impulse response functions (IRF’s), to assess the magnitude of shocks on meat prices and length of time over which their effects persist. Results find that the shock of HPAI outbreaks had a stronger negative impact on ECOWAS poultry prices than on the international prices, but weaker positive impact on ECOWAS beef and pork prices than on international prices. Poultry in ECOWAS was perfectly segmented during the pre-HPAI, but became more integrated post-HPAI, due to rising import demand for poultry evidenced by an average of 23 percent per year in the post-HPAI years 2009-2012. Block-exogeneity-Wald tests indicated weak connectivity of international markets to ECOWAS poultry markets and strong connectivity of ECOWAS to the international markets. This means that if international prices of poultry are high (low), we can predict high (low) prices in ECOWAS, ceteris paribus, while prices in international markets do not follow ECOWAS prices, being a small market. There is strong connectivity between international and ECOWAS beef and pork prices, but weak relationships between ECOWAS prices and international markets. Linkages in both directions are significant for sheep and goat prices. Inference from Impulse Response Functions indicated that speed recovery from price shocks in international markets are faster than in ECOWAS.