A Simulation Analysis of A Buffer Fund Scheme for Hogs in Taiwan

189 p.Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1981.Pork is an important commodity in Taiwan and its production is characterized by complex adjustment processes. The purpose of this dissertation is to study the economic implications of policies designed to stabilize prices and revenue in the hog-pork industry in Taiwan.A dynamic econometric model of the hog-pork industry is developed. Specification of major behavioral relationships is initially based on theoretical considerations of the rational behavior of microeconomic units. But the theoretical relationships does not give useful information about the expected behavior in the system. Moreover, most economic time series data are happenstance, thus, a certain amount of experimental modeling with an econometric model is conducted. The model consists of four equations, they are the slaughter number, retail pork supply, retail demand and marketing margin equations. The retail pork supply equation is an identity equation. All other equations combined the preinformation which is generated by time series analysis with the economic model specified on the basis of economic theory. The retail demand and marketing margin equations are a simultaneous system. Both 2SLS and 3SLS estimation methods are used.The simulation of the buffer fund scheme in this study is assumed to be an automatic mechanism for setting the stabilization price, and all schemes tested are assumed to be self-balancing and not to discriminate between export and domestic markets. The base simulation used a 36-month moving average of the past market prices as the stabilization price, and price band width is 10 percent of the stabilization price.By using a dynamic model with stochastic fluctuations in supply and demand, the variations of hog price and farmer's revenue have been reduced in the base simulation, but the levels of effective price and farmer's revenue are also decreased relative to the free market. Consumers are better off with the higher pork supply, lower pork price and expenditure than those of the free market. These results are consistent with the arguments of Blandford and Currie, who state that if the producers are assumed to be risk averse, then the effects of the buffer fund scheme as to whether producers and consumers will be better off or indifferent depends on the level of the stabilization price. But these benefits and costs of different groups are sensitive to different formulae and mechanisms for determining the stabilization price.U of I OnlyRestricted to the U of I community idenfinitely during batch ingest of legacy ETD