RESEARCH PAPER
FACTORS AFFECTING CHANGES IN THE PRICES AND FARMERS’ INCOMES IN PIG MARKET IN POLAND
 
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Szkoła Głowna Gospodarstwa Wiejskiego Warszawa
Acceptance date: 2013-09-15
Publication date: 2013-09-15
 
Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics 2013;336(3):44–66
 
ABSTRACT
The paper presents market-based mechanisms underlying changes in pig prices and pig meat producers' income in Poland. The pig prices are determined by supply and demand equilibrium. Farmers are price takers and a market price is a parameter which enables them to make economic calculation and being verify their individual effectiveness. This paper comprises also an empirical analysis of the factors affecting pig prices development in the 1997-2012. The analysis based on VAR models indicates that pig prices in Poland are determined mostly by the situation on foreign markets. In the long term only around 30% pig prices variation in Poland depends on national conditions. The Granger causality tests proved that changes in the prices of pork in the marketing chain occur according to a pattern typical for a competitive market – the direction of price signals comes from producer prices towards consumer prices. The farmers margins in pork meat marketing chain have not changed over analyzed period – they varied in cyclical and seasonal motion around 37% level. The collapse of pork production in Poland since 2008 has been caused mainly by structural reasons. Pig production in Poland is very fragmented in comparison to other UE countries thus small economic of scale is reflected in farmers’ low incomes. High cost of production per unit leads to deteriorating the price relationships between foreign and domestic prices and thus lowers demand for domestic pork.