Supply response and price volatility in the Greek pork industry

This paper examines the supply response of the Greek pork market. A GARCH process is used to estimate expected price and price volatility, while price and supply equations are estimated jointly. In addition to the standard GARCH model, several different symmetric, asymmetric and nonlinear GARCH models are estimated. The empirical results indicate that among the estimated GARCH models the quadratic NAGARCH model seems to describe better producers’ price volatility, which was found to be an important risk factor of the supply repose function of the Greek pork market. Furthermore, the empirical findings show that feed price is an important risk factor of the supply repose function and that high uncertainty restricts the expansion of the Greek pork sector. Finally, the model provides forecasts for quantity supplied, producers’ price and price volatility.