Causality Analysis of the Factors Affecting the Consumer Price of Veal: The Case of Turkey

Burak Mat,Mustafa Bahadir Çevrimli,Mehmet Saltuk Arikan,Mustafa Agah Tekindal,Ahmet Cumhur Akin

doi:10.3390/su12156257

Burak Mat, Mustafa Bahadir Çevrimli + Show 3 more

Open Access

https://doi.org/10.3390/su12156257

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Abstract

It is interesting to identify the reasons and the direction of the correlation between the input/output prices and the macro/micro parameters in animal production processes. In the present study, the time series of the monthly data between the years 2014 and 2019 were analyzed to examine the factors that affected the consumer price of carcass meat in Turkey. An attempt was made to identify the relationship between the consumer price of carcass meat and the prices of cattle fattening feed, the exchange rate of the dollar, producer price index (PPI), and the agricultural PPI, which were anticipated to affect the consumer price of carcass meat as determined by the Granger causality analysis. According to econometric analysis results, when there is a change in carcass producer price, cattle fattening feed and PPI in the short term, the consumer price of carcass meat is affected by this. The producer price of carcass and PPI variables are determined to be the cause of each other’s Granger. At the same time, the PPI variable and the consumer price of carcass meat and dollar rate variables were found to be the cause of each other’s Granger. If Turkey is to prevent the excessive fluctuations in the consumer- and producer-prices of carcass meat caused by macro variables, an effective price control mechanism should be put into practice. It seems that this change would be possible only by developing and implementing policies to lower the input prices and production costs.

Highlights

Red meat production in Turkey was approximately 1.1 million tons as of 2019
The Vector Autoregression (VAR) method, first implemented by Sims, allows for dynamic and wide-ranging analysis of the relationships among the variables in the model [31]. It is an improved version of the Granger causality test; it attempts to estimate the dynamic relationships between the endogenous variables without any restriction [32]
The results of the analysis revealed that the consumer price of the red meat was affected by short-term changes in the producer price of carcass meat, price of the fattening feed, and the producer price index (PPI)

Summary

Introduction

Red meat production in Turkey was approximately 1.1 million tons as of 2019. Of this production, 89.7% was beef, and 10.3% was mutton, goat meat, and water buffalo meat [1]. Feed costs have the highest share of the costs incurred by businesses producing red meat, only to the costs of cattle fattening materials [7,8]. Feed input is an important cost factor in beef cattle breeding and directly affects the unit costs of the producers [9]. Due to the external dependence on the supply of raw materials and additives used in feed production in Turkey, the feed prices are adversely affected by changes in foreign exchange rates in the short term [10]. It has been stated that the food price index, oil price, global food index, and exchange rates of the dollar and euro significantly affect the producer prices of animal and agricultural products [11]

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