The Study of transmission of price from farm to retail Shops in Saffron Market (case study of Estahbanat)

Authors

  • Niloofar Pejman Niloofar pejman, University of Marvdasht, Iran
  • Javad Torkamani Javad torkamani, University of Marvdasht, Iran
  • Nematollah Mousavi Nematollah mousavi, University of marvdasht, Iran

Keywords:

symmetry, asymmetry, price transfer, saffron, Iran.

Abstract

The market margin presents the difference between the price offered by supplier and consumer and it is very important in supplying agricultural products especially when the effect of supplier offered price increase (reduction) is not symmetric on the price offered by the consumer. The main purpose of this research is to study the procedure of price transfer (symmetric or asymmetric) in saffron market of Estahbanat. The research data have obtained from monthly prices of saffron retail and wholesale during 2005-2010 by the agricultural Jihad organization. The price transfer test, Hook and asymmetric error modification models were used for determining saffron transfer price from wholesale to retail. The tractions obtained from hook method show the effect of price increase and decrease in farms price separately. If the time series variable is convergent but not static, (i.e. there is a balance and long-term relation between the variables), then the Hook method can not be applied and instead error correction model should be used. In this condition, the acceptance of null hypothesis shows the price transfer symmetry, while non-acceptance shows the asymmetry in price transfer. The results suggest that although the price transfer from supplier to wholesale be asymmetric in short time, this is symmetric in long time. In addition, the price transfer from wholesale to retail is asymmetric in long term. There is a reasonable relation between the supplier price and wholesale price and vice versa.

Therefore, establishing the supply cooperatives especially agricultural marketing once including farmers, wholesalers, and even dealers is recommended for solving these problems. This results in making closer the relation between the farmers and wholesalers and eliminating unnecessary dealers in one hand and more benefits of final price for the farmers.

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Published

2017-05-30

How to Cite

Pejman, N., Torkamani, J., & Mousavi, N. (2017). The Study of transmission of price from farm to retail Shops in Saffron Market (case study of Estahbanat). American Scientific Research Journal for Engineering, Technology, and Sciences, 32(1), 119–131. Retrieved from https://asrjetsjournal.org/index.php/American_Scientific_Journal/article/view/3022

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