The spillover effect of imported inputs on broiler prices in Turkey

Berkay Keskin; Gokhan Cinar

The spillover effect of imported inputs on broiler prices in Turkey

2018

Berkay Keskin | Gokhan Cinar

The broiler sector in Turkey has advanced particularly in recent years. Hence, it has become one of the most crucial sub-sectors in the food industry, serving as a huge source of employment. Despite all these developments, land scarcity and energy capacity obstruct the procurement of input within the scope of the country. Therefore, certain substantial inputs needed by the poultry sector are provided by import. At this conjuncture, it is believed that the high cost of inputs and the external dependence on inputs have retarding effects on the sector’s progress. The aim of this study is to identify the spillover effect on prices of imported inputs (energy and soybean), which are widely used to determine broiler prices in Turkey’s broiler sector. In the research, the long-term correlation of monthly price data spanning the time period of 2003:1 and 2016:9 was analyzed as benefiting from VECM (Vector Error Correction Model). The findings, in the long term, the broiler prices increase by 2.60% in the face of 10% increase in energy prices, while it rises by 3.84% against a 10% increase in soybean prices. In addition to that, short-term one-way relation of causality from energy prices to soybean prices was determined. For the poultry sector, the results show that integrated strategic plans, including both energy and feed markets, must be designed.

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