Akademik Veri Yönetim Sistemi
2024 Agricultural & Applied Economics Association (AAEA) Annual Meeting, Louisiana, Amerika Birleşik Devletleri, 28 - 30 Temmuz 2024
Shocks and Resilience in
Food Supply Chains: Evaluating the Impact of COVID-19 on Türkiye’s Red Meat
Markets
Background
The onslaught of the COVID-19 pandemic has created unprecedented
challenges for public health systems and economies across the globe. One sector
that experienced the pandemic's reverberating effects is the food industry,
particularly in terms of food security and the stability of supply chains. In
Türkiye, akin to global trends, the red meat markets faced significant
distresses as the pandemic induced both demand-side and supply-side shocks.
With over 17 million confirmed cases and 101.4 thousand deaths as reported by
the World Health Organization (WHO, 2023) as of December 8, 2023, the country
has had to grapple with not only the public health crisis but also with the
economic fallout impacting the agricultural sector, production costs, and the
intricate workings of the supply chain. The supply chain structure of the meat
markets in Türkiye, characterized by the dominant position of retailers over
wholesalers and farmers, exacerbates the vulnerability to such shocks (Özertan,
Saghaian, and Tekgüç, 2015). The deceleration in meat production growth and the
dwindling number of live animals due to increased slaughter point to a
possibility of a substantial shift in market dynamics, necessitating a thorough
investigation.
Objectives
This study is the first to delve into the impact of the COVID-19 pandemic
on the vertical market integration of red meat markets in Türkiye's major
consumption regions: Istanbul, Ankara, and Izmir. We set out to answer several
research questions: How has the COVID-19 pandemic affected price transmission
across the beef sector in these regions? Are the pandemic-related shocks to the
beef sector ephemeral or enduring? What is the extent of market integration in
the face of such disruptions? Addressing these queries is pivotal in understanding
the resilience of meat markets to disruptive shocks and in informing policy
interventions for market stabilization.
Data
and Methodology
The
analysis draws upon an extensive dataset of monthly wholesale and retail meat
prices observed in the regional markets of Istanbul, Ankara, and Izmir from
January 2008 to December 2022. This period allows for a comprehensive
evaluation of the pre-pandemic market conditions, the immediate impacts of the
pandemic, and the subsequent recovery or adjustment phase. The selection of
this time frame is determined by the availability of data from the Turkish
Statistical Institute's (TurkStat) price database.
Our empirical strategy employs a combination of linear and threshold
vector error correction models, alongside the generalized impulse response
function (GIRF) methodologies. In a novel approach, we utilize the stringency
index, sourced from Our World in Data (2023), as the threshold variable to
capture the intensity of Turkish government’s lockdown measures (e.g., measures
such as school and workplace closures, public event cancellations, and travel
bans), offering a more nuanced understanding of policy impacts on market
dynamics. To identify and account for potential structural shifts during the
pandemic, we employ the Maki (2012) cointegration method, adept at handling
multiple structural breaks within the data.
Findings and Discussion
The empirical findings illuminate the dynamics of price movement within
the red meat markets of the analyzed regions. In Istanbul, there is evidence of
long-term price alignment between wholesale and retail markets, suggesting a
robustness to shock-induced disruptions. However, the shock's impact does not
dissipate within the first 10 months, pointing to a medium-term adjustment
process after COVID-19. This contrasts with the markets in Ankara and Izmir,
where the absence of cointegration relations between wholesale and retail
prices implies a breakdown in the error correction mechanisms, indicating a
more protracted and possibly permanent alteration of market structures due to
the pandemic.
The enduring nature of COVID-related market shocks in
Ankara and Izmir calls for a critical examination of governmental intervention
strategies. The Turkish Meat and Milk Board (ESK)'s role becomes paramount in
enacting measures to alleviate the adverse effects of the pandemic. It is
imperative that a structured approach be developed to ensure the healthy
functioning of the meat and dairy markets. The establishment of a regulatory
authority, with a presence at every stage of the supply chain, could prevent
disproportionate market power accrual by any single market actor. Interventions
must be carefully calibrated to support market processes without introducing
new disruptions (Ramsey et al., 2021).
In conclusion, our study contributes to the literature
by providing an empirical assessment of market integration and shock resilience
in Türkiye's red meat markets during the COVID-19 pandemic. The findings offer new
insights into the effectiveness of market structures and the critical role of
policy interventions in safeguarding market stability during periods of
profound crisis.
REFERENCES
Maki,
Daiki. 2012. “Tests for cointegration allowing for an unknown number of
breaks”. Economic Modelling. 29(5): 2011-2015. https://doi.org/10.1016/j.econmod.2012.04.022.
Özertan,
Gökhan, Saghaian Sayed, and Hasan Tekgüç. 2015. “Dynamics of price transmission
and market power in the Turkish beef sector”. İktisat İşletme ve Finans. 30(349): 53-76.
Ramsey,
A. Ford, Barry K. Goodwin, William F. Hahn, and Matthew T. Holt. 2021. “Impacts
of COVID‐19 and price transmission in US meat markets”. Agricultural Economics. 52(3):
441-458. https://doi.org/10.1111/agec.12628.
Turkish
Statistical Institute (TurkStat). Animal product prices. https://biruni.tuik.gov.tr/medas/?locale=tr.
Turkish
Statistical Institute (TurkStat). Consumer commodity prices. https://biruni.tuik.gov.tr/medas/?locale=tr.