Price Transmission Along the Ukrainian Pork Supply Chain

Abstract

Pork production plays an essential role in the Ukrainian agricultural sector. At the beginning of the 90s, Ukraine was one of the biggest pork producers in Eastern Europe. However, due to the collapse of the Soviet Union’s planning economy and the beginning of privatisation processes, the Ukrainian meat industry has experienced profound changes. One of those changes was the increase in concentration among pork producers and retailers during the last decades. Therefore, investigating how the transformation of the pork sector influenced the competitive environment within the supply chain is crucial. One of the ways to examine this phenomenon is to analyse the transmission of price adjustments along the supply chain. In this study, we used monthly price series of pork producers and consumers from January 2013 till December 2021. To analyse the data, we employed the Threshold Autoregressive, Momentum-Threshold Autoregressive and Error Correction models. The results of our analysis strongly indicate the presence of the long-run equilibrium between the investigated price series. At the same time, only one out of four estimated models weakly suggests the presence of asymmetric price adjustments along the pork supply chain. Finally, the Granger causality tests demonstrated that the pork producers’ price Granger cause the consumers’ price. However, there is not enough evidence to say that consumers’ price have a similar effect on producers’ price. Therefore, we can conclude that producers might be the driving force of pork price change on the Ukrainian market.