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Factors affecting changes in prices and farmers' incomes on the Polish pig market

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  • Hamulczuk, Mariusz
  • Stańko, Stanisław

Abstract

The paper presents market-based mechanisms underlying changes in pig prices and pig meat producers’ income in Poland. The pig prices are determined by supply and demand equilibrium. Farmers are price takers and market price is a parameter which enables them to make economic calculation and verify their individual effectiveness. This paper comprises also an empirical analysis of the factors affecting pig prices developments in 1997-2012. The analysis based on VAR models indicates that pig prices in Poland are determined mostly by the situation on foreign markets. In the long term, only around 30% of pig prices’ vari-ation in Poland depends on national conditions. The Granger causality tests proved that changes in the prices of pork in the marketing chain occur according to a pattern typical of a competitive market – the direction of price signals comes from producer prices towards consumer prices. The farmers margins in pork meat marketing chain have not changed over the analysed period – they fluctuated cyclically and seasonally around the level of 37%. The collapse of pork production in Poland since 2008 has been caused mainly by structural reasons. Pig production in Poland is very fragmented in comparison with the other EU countries thus small economy of scale is reflected in farmers’ low incomes. High cost of production per unit leads to deterioration of the price relationships between foreign and do-mestic prices and lowers demand for domestic pork.

Suggested Citation

  • Hamulczuk, Mariusz & Stańko, Stanisław, 2014. "Factors affecting changes in prices and farmers' incomes on the Polish pig market," Problems of Agricultural Economics 235395, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
  • Handle: RePEc:ags:iafepa:235395
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    File URL: http://ageconsearch.umn.edu/record/235395/files/Hamulczuk-Stanko.pdf
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    References listed on IDEAS

    as
    1. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, Oxford University Press, vol. 52(2), pages 255-280.
    2. Hamulczuk, Mariusz, 2007. "Powiązania cen wieprzowiny pomiędzy rynkiem polskim, duńskim i niemieckim," Problems of World Agriculture / Problemy Rolnictwa Światowego, WydziaÅ‚ Nauk Ekonomicznych, Uniwersytet Warszawski, vol. 2(17), pages 1-12, June.
    3. Bruce L. Gardner, 1975. "The Farm-Retail Price Spread in a Competitive Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 399-409.
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