Abstract
International beef markets have shocked regional markets in importing countries due to unexpected events such as the COVID-19 epidemic, bovine spongiform encephalopathy (BSE) and high prices for grain feed. After the global food price spikes in 2008, many national governments aimed to improve food self-sufficiency to secure food supply. However, the efficacy of food self-sufficiency policy, particularly that of meat products, is not fully understood. This paper investigates the causal nexus and estimates the degree of volatility transmissions between global and regional beef prices in 10 beef-importing nations for the period January 2006 to December 2013. Furthermore, we empirically analyze how beef self-sufficiency rates affect the correlations between global and local beef markets using a panel analysis. Our primary findings are: (1) Unidirectional causality from global to local markets was found for Georgia, the UK and the United States. Meanwhile, Japan is a large beef importer, and its price causally influences global prices; (2) We found that the interconnectivity between world and regional markets is relatively weak. Regional markets can absorb external shocks in the meat sector better than wheat because meat production is more flexible than grain production, which is heavily dependent on climatic conditions and (3) Empirical results provide strong indications that high self-sufficiency is useful in isolating local markets from global markets. The results obtained from our analysis are extremely useful for policymakers of national governments who desire to insulate domestic from international beef markets in an emergent situation.
Highlights
From a historical perspective, infectious animal disease outbreaks, the malfunction of value chains and transport systems due to pandemics such as COVID-19 or the high price of feed grains have jolted both global and local meat markets [1,2,3] (Figure 1) (Figure 1 shows the dataset used in the present article that does not cover the periods of major pandemics such as the bovine spongiform encephalopathy (BSE) and COVID-19, but the food crisis in 2007–2008)
The AR (1)-exponential GARCH (EGARCH) (1,1) model was selected for each price return because the model had the lowest Bayesian information criterion (BIC) value
It was noticeable that the asymmetric (γ1) terms were statistically significant for the price returns of international beef prices (IBP), Azerbaijan, Georgia and Tunisia
Summary
Infectious animal disease outbreaks, the malfunction of value chains and transport systems due to pandemics such as COVID-19 or the high price of feed grains have jolted both global and local meat markets [1,2,3] (Figure 1) (Figure 1 shows the dataset used in the present article that does not cover the periods of major pandemics such as the BSE and COVID-19, but the food crisis in 2007–2008) Such unexpected events have even changed food consumption patterns of local citizens, impeding the efficient consumption of the food supply [4]. Countermeasures against the vagaries of global food markets have attracted the attention of food-deficit governments
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