Study of transmission of price from farm to retail shops in saffron market (Case study Fars province)
Journal Title: Journal of Science and today’s world - Year 2013, Vol 2, Issue 2
Abstract
The market margin presents the difference between the price offered by supplier and consumer and is very important in supplying agricultural products especially when the effect of supplier offered price increase (reduction) isn’t symmetric on the price offered by the consumer. The main purpose of this research was to study the procedure of price transfer (symmetric or asymmetric) in saffron market of Fars province. The research data have obtained from monthly prices of saffron retail and whole sale during 2005-2010 by the agricultural Jihad organization. The price transfer test and Hook and asymmetric error modification models were used for determining saffron transfer price from whole sale to retail. The tractions obtained from hook method show the effect of price increase and decrease in farms price separately. If the time series variable is convergent but not static (i.e. there is a balance and long term relation between the variables), then the Hook method can’t be applied and instead error correction model should be used.in this condition, the acceptance of null hypothesis shows the price transfer symmetry, while non-acceptance shows the asymmetry in price transfer. The results suggest that although the price transfer from supplier to whole sell is asymmetric in short time, this is symmetric in long time. Also the price transfer from whole sell to retail is asymmetric in long term. There is a reasonable relation between the supplier price and whole sell price and vice versa. Therefore, establishing the supply cooperatives especially agricultural marketing once including farmers, whole sellers, and even dealers is recommended for solving these problems. This results in making closer the relation between the farmers and whole sellers and eliminating unnecessary dealers in one hand and more benefits of final price for the farmers.
Authors and Affiliations
Javad Torkamani, Niloofar Pejman , Nematollah Mousavi
Keywords
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