|A study on the convergence test of livestock prices|
This study analyzes prices by distribution stage to test the convergence of price transfer using livestock price statistics from the Livestock Quality Assessment Service from January 2011 to November 2020. It also focuses on the asymmetry between prices in each distribution phase as a factor affecting the convergence.
According to our analysis, the cattle prices of the wholesale and retail markets show an asymmetric relationship. However, the production, wholesale and retail prices of pigs are symmetric. Moreover, cattle’s wholesale prices converge on their retail prices, while they do not converge on production prices. In the case of pigs, their wholesale prices do not converge to retail prices.
This result indicates that there are inefficiency and monopoly in the market between wholesale prices and retail markets in the case of cattle and pigs. In conclusion, as some distribution channels can occupy profits in the livestock market, the government needs to establish a distribution policy to protect cattle and pig producers and consumers.