The Spanish hog market: The effects of the EC enlargement
Albiac-Murillo, Jose
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Permalink
https://hdl.handle.net/2142/19241
Description
Title
The Spanish hog market: The effects of the EC enlargement
Author(s)
Albiac-Murillo, Jose
Issue Date
1991
Doctoral Committee Chair(s)
Garcia, Philip
Department of Study
Agricultural and Consumer Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Language
eng
Abstract
The hog industry is the largest component of the Spanish livestock sector and developments in this industry affect the entire Spanish agricultural sector. Spain's recent entry into the European Community which was accompanied by falling producer prices generated considerable concern over the effect of accession on the hog market. This study analyzes the impact of accession into the Community on the Spanish hog market.
The analysis is performed using a quarterly econometric model which captures the constancies and operation of the Spanish hog market. The model includes causal economic relationships, factors to identify technological change and is specified consistent with biological hog production processes. After examining the relevancy of several price expectations mechanisms (e.g. naive, adaptive and rational expectations), hog supply is specified by a polynomial distributed lag which assumes that expectations about prices are formed as a function of weighted past prices. Demand is modeled within a price dependent, single equation framework. Structural change is detected in demand after entry into the Community.
The econometric model is used to derive the welfare consequences of accession by simulating the evolution of the hog market under a non-entry scenario. The effects of entry are assessed by comparing the actual and the non-entry evolution of the prices and quantities. Economic surplus measures are used to compute gains and losses to market participants.
Welfare measures indicate that in the hog market, direct gains from the entry into the European Community exceed the direct losses. Consumers gained considerably through increased imports from the Community at lower prices. However, losses to hog producers were quite large and government compensation to them has been limited. More indirect effects of the entry to the agricultural sector included obtaining development assistance for poor or declining regions and the fostering of a more competitive environment which will likely increase technological adoption and lower costs leading to a more efficient hog industry. Government programs designed to induce further productivity advances and to facilitate Spanish pork product exports into the Community would be particularly useful to ameliorate the negative effects of entry on the hog market.
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