A Study on Causal Relationship Between Sugar Beet Supply and Sugar Price - Sustainability Issues and Opportunities

Abstract

Sugar Beet is one of the essential sources of energy. However, most of the division in Iran supply sugar beet through domestic production. The present study is going to investigate the causal relationship between sugar beet supply and sugar price in Iran between the year 1995 to 2016. By Applying the Johansen-Juselius cointegration method along with Granger causality test. Besides, this research going to analyse the causal relationship between sugar beet supply and sugar price by considering the sustainability issues and opportunities. However, The result of the Johansen-Juselius cointegration test shows that there is a positive long-term co-integration relationship between variables. Although According to the GC test, there is a causal relationship between sugar beet supply and sugar price. Also result of the vector error correction model represents that sugar price has a significant impact on sugar beet supply which indicates that every increase and decrease in sugar price reflect on sugar beet production. Therefore, the necessity of an appropriate policy-making and proper planning for sugar beet production has been bolded.