Supply and Demand Changes, Pig Epidemic Shocks, and Pork Price Fluctuations: An Empirical Study Based on an SVAR Model

Abstract

The price of pork, as an important livelihood indicator in China, and its price fluctuations have a significant impact on the lives of residents and social stability. Therefore, it is vital to study the main factors that affect pork price fluctuations and implement targeted regulatory measures in a timely manner. In the context of the increasing number of pig epidemics and increased pork imports, it is necessary to consider the impact of pig epidemics and imported pork on pork price fluctuations, which can more accurately reflect actual pork price fluctuations in China. In this paper, a structural vector autoregressive (SVAR) model was applied to analyze the main factors affecting pork price fluctuations from the aspects of the pork price, supply and demand changes, and pig epidemic shocks. The results indicated that the impact of the pork price on pork price fluctuations was the largest, with the largest contribution rate, whereas the current month’s pork price had a 29.60% impact on the pork price 18 months later. The supply factor that affected the pork price was the pig herd, with the current month’s pig herd having a 34.85% impact on the pork price after 18 months. Imported pork had a relatively small structural impact on pork price fluctuations, with a positive impact in the first four months and a subsequent negative impact. However, pig epidemics mainly caused pork price fluctuations by changing the market relation between demand and supply, with the current month’s epidemic depth index having a 9.78% impact on the pork price 18 months later. Based on the results of this study, it is recommended to focus on the monitoring and early warning of the pork price by analyzing big data, promoting large-scale farming, and strengthening the implementation of early prevention and control measures during disease outbreaks to stabilize pig herd and achieve a stable pork market supply and price.