Abstract
After implementation of the Real Plan in July 1994 by the Brazilian government, the industrial chicken was established in consumer preference causing change in their spending habits. This change was attributed in great part due to their affordability to the consumer. This article aims to analyze the price transmission elasticity of poultry in the state of São Paulo market and identify which market level focuses on the greatest power of pricing, either at the producer level, wholesale and retail. By studying São Paulo’s poultry market, we intend to provide information to support decision making by managers of the production chain. Furthermore, São Paulo is the largest poultry consumer market in the country. Therefore, it is used in the treatment of poultry price data at the producer level, wholesale and retail the econometric model of Vector Autoregressive (VAR). The results found by analyzing the variance decomposition of forecast errors demonstrate that the producer has a high power setting of prices of poultry in the São Paulo’s market, having direct influence on the formation of prices both at wholesale as well as retail.
Highlights
After implementation of the Real Plan in July 1994 by the Brazilian government, the industrial chicken was established in consumer preference causing change in their spending habits
As the analysis of prices is a major instrument influencing the planning of agricultural production (Arêdes et al, 2009), this article aims to analyze the elasticity of price transmission from chicken in São Paulo State market and identify which market level focuses on the greatest power of pricing: the producer, wholesale or retail
The table below shows the results obtained in research on price elasticity of transmission of chicken in São Paulo state market in the producer level, wholesale and retail
Summary
After implementation of the Real Plan in July 1994 by the Brazilian government, the industrial chicken was established in consumer preference causing change in their spending habits. This change was attributed in great part due to their affordability to the consumer. Chicken demand was enhanced in consequence of better prices in comparison to other types of meat and to the fact that Chicken is considered healthier in relation to read meat. In additions the increase in income achieved by Brasilians over the last two decades which contributed significantly to the higher demand of chicken meat. The average monthly income of the population increased from R$ 689.31 in 1995 to R$ 961.65 in 2012, increasing the purchasing power of the population (Applied Economic Research Institute-‐IPEA, 2014)
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