An Analysis of Price Transmission in Chicken Meat Market, Fars Province

Producers and consumers’ price behavior were analyzed in chicken meat market in Fars Province. Monthly average producers and consumers prices from June 1997 to July 2008 were taken into account. Changes in the producer and consumer prices indicated that the prices follow an increasing trend with much fluctuations. Marketing margin has an increasing trend of violent fluctuations. The result of Granger causality test is indicative of bilateral relationship between producer and consumer prices. Generalized Autoregressive Conditional Hetroscedasticity (GARCH) was selected and estimated for an investigation of producer and consumer price behaviors. The results indicate a bilateral transition relationship between producer and consumer prices. Marketing margin isnt constant and market structure is uncompetitive, thus retailers as well as slaughterhouses asked additional profit in addition to the constant margin. This profit, is related to market power and incidental shocks, and is varied. During the study period, an asymmetric price transmission was confirmed on both the long and short runs.