Scrutinizing Pork Price Volatility in the European Union over the Last Decade.

Abstract

Simple SummaryThe volatility of prices for agricultural products is of great importance for both producers (due mainly to continued optimization of the production process) and consumers. We analyzed long-term trends as well as cyclical, seasonal, and irregular fluctuations in pork prices in European Union (EU) countries. Despite the existence of the EU common market, there is considerable spatial variation in pork prices between member states. Pork prices in the EU are characterized by seasonality and are generally higher than average in summer and lower in winter. Considering risk management in agribusiness, the nature of price fluctuations, their amplitude, and period are of paramount importance. Regular seasonal changes or long-term trends can be considered during the decision-making process, but short-term and randomly occurring fluctuations and medium-term changes with large deviations from the expected prices constitute a serious risk.The aim of this study was to analyze the factors that can influence pork prices, particularly the effects of various types of fluctuations on the volatility of pork prices in the European Union as a whole market and individual EU countries. The research material consisted of monthly time series of pork prices collected from 2009 to 2020. These data originated from the Integrated System of Agricultural Information coordinated by the Polish Ministry of Agriculture. Information on global pork production volumes is from the Food and Agriculture Organization Statistics (FAOSTAT) database. Time series of prices were described by the multiplicative model, and seasonal breakdown was performed using the Census X-11 method. The separation of the cyclical component of the trend was performed using the Hodrick–Prescott filter. In 2019, pork production in the European Union totaled 23,954 thousand tonnes, which accounted for 21.8% of global pork production. The largest producers were Germany, Spain, and France, supplying more than half of the pork to the entire European Union market. Pork prices in the EU, averaged over the 2009–2020 period were Euro (EUR) 154.63/100 kg. The highest prices for pork were recorded in Malta, Cyprus, Bulgaria, and Greece, whereas the lowest prices in Belgium, the Netherlands, Denmark, and France. The breakdown of the time series for pork prices confirmed that, in the period from 2009 to 2020, pork prices exhibited considerable fluctuations of both a long-term and medium-term nature as well as short-term seasonal and irregular fluctuations. Prices were higher than average in summer (with a peak in June–August) and lower in winter (January–March). Overall, the proportions of different types of changes in pork prices were as follows: random changes—7.9%, seasonal changes—36.6%, and cyclical changes—55.5%.