Does international cattle price volatility affect farmer prices and marketing margins?
What is it about?
The effects of export price volatility in cattle markets on farmer prices and marketing margins were studied using a sample of twelve countries, including developed and developing countries. Results demonstrate that farmer prices are affected by prices previously paid to farmers, variations in export prices and volatility of export prices. The volatility decreases farmer prices in developed countries and it increases them in developing countries. In contrast, marketing margins are reduced by contemporaneous export price volatility and are increased by previous volatility. Therefore, exporters in developing countries take more time to transmit shocks in international prices, pay lower prices to farmers and absorb a bigger proportion of price fluctuations.
Why is it important?
The price transmission imperfections reported in this study affect investments, technology adoption, production level and quality across the chain in developing countries, which negatively impact farmers, input and service providers, traders and other actors of the beef cattle chain.