Welfare Effects of Maize World Price Change

Studies revealed that importance of chickens in consumption pattern has been increasing in recent years as compared with meat. On the other hand since a great deal of maize as main nutrient in chickens production is provided from import, chickens market is exposure to global changes of maize market. Changes in maize world price may cause great welfare consequences by affecting meat market. These changes, among the others, are also influenced by the price transmission pattern from world market to domestic one. However the price transmission from maize world market to domestic one has not been considered. In this study impact of changes in maize world price on meat market was evaluated using simulation by multi market framework. The scenarios are increase in maize world price by 5, 10 and 15 percent and decrease by same levels. Changes in meat prices obtained by simulation was used in evaluation of changes in welfare and poverty indices including head count ratio, poverty gap and poverty severity. Welfare changes were calculated for producers, consumers and whole of the society. Price transmission from world market to domestic one was also considered using the different specifications for symmetric and asymmetric conditions. Effect of maize world price on society groups including producers, consumers as well as poverty indices was investigated under two conditions of symmetric and asymmetric price transmission. Findings The results showed that price transmission from world market to domestic one is asymmetric in short run while a symmetric transmission is observed in long run, indicating that in short run price increase is transmitted more complete than price decrease to domestic market. Based on the results in meat and chicken market it was found that increased (decreased) maize world price affects producers positively (negatively). However, the response of welfare changes to price changes was more vigorous inlong run as compared to short run, so that in higher price changes the difference between long run and short run welfare changes tends to decrease rapidly. In the case of consumers it was found that increase (decrease) in maize world price results in decreased (increased) welfare. Like the meat producers the welfare effects was evaluated more considerable in short run as compared to long run. It was also found that the response of the welfare changes to maize world price changes is more noticeable as compared to short run. Society welfare as sum of producers and consumer welfare showed tendency to decrease in long run as maize world price assumed to increase, however it was increasing in short run and for maize world price increments of 10 and 15 percent. Effect of maize world price decrease also was found positive on society welfare. Increased maize world market results in considerable increase in poverty indices especially poverty gap and poverty severity indices while decreased maize world price has a thin impact on poverty indices improvement. An asymmetric pattern is perceptible in welfare changes and changes in poverty indices under scenarios of increase and decrease in maize world price.