A Study On Market Integration Of Hog In China

Pork meat is the main source of animal food and one of China's major livestock products for urban and rural residents. In recent years, the volatility of pork prices had a significant impact on people's lives, the huge price fluctuations between 2007 and 2008 even led to national concern. Therefore the analysis on structure and operation of the hog market is very important.In a market-oriented economy, the information conveyed by price mechanism is the key factor which could determine commodity circulation, production, consumption and market decisions making. Market integration refers to the influence of a market when price of another market get changed, the research concentrate on price information flow among different regions or marketing channels and market structure, market integration is closely related to the free movement of goods transfer efficiency, so the market integration analysis has become a measure to weigh market efficiency. The higher degree of market integration, the more important role market mechanism play, the efficiency of resource allocation is also much higher. Market isolation will affect the healthy development of the market, low market efficiency will cause losses to society as a whole. In addition, the market integration analysis can provide important government decision-making basis, the results of market integration analysis can help policy makers understand the operation of the market situation and decide whether to intervene the market directly.In this paper, cointegration test method is used to analyze market integration situation between the main production areas and sales areas in China. This paper also estimates current market efficiency.The main findings are as follows: At present there is a long-term integration relationship among the main hog producing areas, the producing areas are highly integrated with sales aranalyzeeas in the long term; short term integration is also found. This indicates that in hog market, the market mechanism has played a fundamental role, the market efficiency is also improving and a national market is gradually forming.The error correction speed is quite different among different markets. The shortest is 2 months, the longest is 10 months. This conclusion indicates that although the overall efficiency of pig market has been greatly improved, but the gap of regional differences on market development still exists, particularly between the western and eastern, cetral areas.Changes in hog prices in China is mainly characterized by supply-oriented transmission path, it means that price changes in producing areas are often the causes of price changes in sales areas, it is consistent with the actual situation of China's hog production, so the key to stabilizing the hog market is to keep supply stable.