Research Article
A Analysis of Import Demand for Meat and Meat Product in Turkey
Department of Agricultural Economics, Gaziosmanpasa University, 60240 Tokat, Turkey
Meat and meat production sector is a sector in agro-food industry. Therefore, meat and meat sector depend on agricultural sector. The share of agricultural production in gross national product (GNP) is 13.5% while employment share of agriculture in the total civilian employment is 35.8% in Turkey. The agriculture sector is estimated to shrink by 5.8% in 2001. Although the importance of agriculture is diminishing within the economy, an important part of the population still depends on agriculture as the means of subsistence (SPO, 2002).
Import demand was examined in previous studies, too. For example, (Karkacier, 2000), analyzed the impacts of economic factors on import demand for dairy products in Turkey. (Hatirli et al., 2002) examined factors affecting import demand for sunflower and soybean oil of Turkey. (Veeman et al., 2004) focused on the demand for meat and the market vulnerabilities that apply to four selected Asian markets that are of potential importance to meat exporters. The markets identified for this purpose are Japan, South Korea, Indonesia and Singapore. (Miljkovic et al., 2002), estimated that Japanese import demand for US beef and pork products and the effects on domestic livestock prices. (Schmitz and Seale, 2002), analyzed the import patterns of Japan's seven most popular fresh fruits by implementing and testing a general differential demand system that nests four alternative import demand specifications.
The aim of this study is to determine the factors affecting import demand for meat products of Turkey during the period 1984-2004. Furthermore, the study aims to examine the import value of meat and meat production in last years. In addition, to determine the factors affecting import demand can aid policy makers interesting this sector.
Table 1: | Value import and export of meat and meat products in Turkey |
Source: SIS, 2005. |
Value import and export of meat and meat products in Turkey were showed in Table 1.
Table 1 showed that Turkeys import of meat and meat products decreased in 2001 and 2002 years because of Turkeys 2001 economic crisis and devaluation. Import value increased later from 2002 year.
This study is based on yearly data for the period 1984 -2004. Data of Import value, domestic prices and gross national product per capita were obtained from the State of Institute Statistics (SIS, 1990; 1995; 1998; 2003; 2005). Data of Turkish lira-US dollar exchange rate was obtained from Central Bank of the Republic of Turkey (CBRT, 2005).
In this study import demand model was proposed and the parameters were estimated. Time series data was used in the regression analysis. The response model was discussed. Turkeys import demand for meat and meat products is specified as domestic prices, gross national product per capita, Turkish lira-US dollar exchange rate, lagged import and trend factor.
The response model is expressed as:
(1) |
Where:
Idt | : | The variable represents import demand value of meat and meat products. (Thousand $) |
GNPt | : | The variable represents gross national product per capita ($). |
PMt | : | The variable represents reel domestic prices of meat and meat products (1981=100 index was used for exchange reel prices). |
EXt | : | The variable represents Turkish lira-US dollar exchange rate (TL/USD) |
IDt-1 | : | The variable represents import demand value of meat and meat products for previous year. (Thousand $) |
T | : | The variable represents trend factors (1,2,3, Y,20). |
The functional form was chosen double log-linear as specified in Equation 2:
(2) |
Where , ln = natural log (i.e., log to the base e and where, e = 2.718).
The relationship between a dependent variable and some explanatory variables x1, x2, x3....xk is the specification of the functional relationship between the variables. For example, two alternatives that are commonly considered are a linear relationship (Judge et al., 1988).
(3) |
and a double log-linear relationship,
(4) |
One important feature of the double log-linear model, which has made it popular in applied work, is that the slope coefficient ai measure the elasticity of y with respect to xi, that is percentage change in y for given (small) percentage change in xi (Judge et al., 1988; Gujarati, 1995).
Table 2: | Analysis of the effects of factors on import demand of estimated model |
*and **indicate the significance level of 5% and 10%, respectively |
The objective of the study was to determine the effect of factors on import demand for meat and meat production. Coob-Douglas production function was used for determine the effect of factors. Coob-Douglas production function has some advantage. Coefficients of this function represent elasticities. The double log-linear functional form was chosen for the response function.
Since time series data were used in this study, autocorrelation might be a potential concern and therefore needed to be tested, using the Durbin-Watson test. Durbin-Watson statistic value was calculated as 1.92. This value showed that there was no autocorrelation problem at 1% significance level in the estimated model. (dl: 0,633 and du: 1,712 Thus d>du). The R-square (R2) values were calculated as 86.8. This value showed that 86.8% of the variability in the import demand for meat and meat productions was explained by estimated model (Table 2).
Gross national product per capita (GNPt) and reel domestic prices of meat and meat products (PMt) variables coefficients were not statistically significant. Turkish lira-US dollar exchange rate variable (EXt) was statistical significant at the 5% level and it had got negative sign. This sign indicate that import value of meat decrease with the increase of US/TL parities. The negative sign is natural because of increases foreign exchange decreases amount of import. Results indicate a very strong relationship between exchange rate and import demand. Factor elasticity for (EXt) was calculated as-0.8564. If exchange rate is increased one unit, the meat and meat import demand will decrease by 0.8564 units.
Lagged import variable (IDt-1) was statistical significant at the 10% level and it had got positive sign. The sign show that import value of meat increase with the increase of lagged import value. Factor elasticity for lagged import variable (IDt-1) was calculated as 0.4349. If previous years import value is increased one unit, the meat and meat import demand will increase by 0.4349 units.
Trend variable represents the change which preference of consumers in the time (Karkacier, 2000). Trend factors variable (T) was statistical significant at the 5% level and it had got positive sign. This sign indicate that import value of meat increase with the increase of trend. In addition, the positive sign indicates that Turkish consumers would rather purchase import meat and meat products than purchase domestic meat and meat products gradually. Results indicate a very strong relationship between trend variable and import demand. Factor elasticity for (T) was calculated as 3.280. If trend variable increase one unit (one year), the meat and meat products import demand will increase dollar of 26 000.
DISCUSSION
This study analyzed the impacts of economic factors on import demand for meat and meat products. In addition, the relationship between import demand for meat and meat products and the factors (gross national product per capita, reel domestic prices of meat and meat products, exchange rate, import demand value of meat and meat products for previous year, trend factors) was explored using functional models.
The results of the regression indicate that there is a very strong relationship between dependent variable (IDt) and independent variables (exchange rate, previous import value, trend factor). The elasticity for exchange rate (EXt), previous import value (IDt-1), trend factor (T) were calculated as -0.8564, 0.4349 and 3.280 in the period, respectively.
This study can draw the following conclusions: exchange rate (EXt), previous import value (IDt-1)and trend factor (T) are important determinants in import demand. Furthermore, this variables marginal coefficient are calculated as -0.8564, 0.4349 and 3.280, respectively. This coefficients are founded by Karkacier (2000) as 0.44, -0.47 and -0.66, respectively for dairy products in Turkey. (Hatirli et al., 2002) calculated lagged oil of sunflower import and lagged oil of soybean import as -16.13 and 7.26, respectively.
The results show that exchange rate, lag values of import demand for meat products, trend factor are statistically significant variables but per-capita income, reel domestic prices of meat products, are not in determining import demand for meat products. Consequently, exchange rate has negative effect, lag value of import demand and trend factors have positive effect on factor demand for meat products. This finding can aid for policy maker interesting meat sector.