Farm and retail prices in the South African poultry industry : do the twain meet?
CITATION: Mkhabela, T. & Nyhodo, B. 2011. Farm and retail prices in the South African poultry industry : do the twain meet? International Food and Agribusiness Management Review, 14(3):127-146.
The original publication is available at http://www.ifama.org
The study intended to determine the producer (farm)-retail price transmission behavior in the South African poultry industry. At the heart of the study was to desire to establish whether there was symmetry or asymmetry in the price transmission. Using price data from 2000 to 2010 and employing both the Houck and Error Correction Model (ECM) approaches the study found that there was symmetry in the farm-retail price transmission of poultry in South Africa, where a change in farm price of chicken was observed to lead to a similar change in the retail price in South Africa. The price setting system in the poultry industry was further defined by estimating elasticities of price transmission and it was found that retail price is very sensitive to change in farm price, particularly falling prices.