Agris on-line Papers in Economics and Informatics

Faculty of Economics and Management CULS Prague, Kamýcká 129, 165 00 Praha - Suchdol

The international peer-reviewed scientific journal, ISSN 1804-1930


Consequences of BSE disease outbreaks in the Canadian beef industry

J. Stephen Clark, L. Čechura

Agris on-line Papers in Economics and Informatics, No 1 /2011, March

Abstract

This study examines farm to wholesale prices spreads to measure the impact of the BSE disease outbreak on the Canadian beef industry. The study uses structure break tests developed by Gregory and Hansen (1996) and Hansen (1992) examine possible breaks within co integrating relationships. The study finds evidence that the industry began realignment as a result of the UK BSE disease outbreak, and the Canadian BSE disease outbreak was simply the largest realignment of the process beginning with the UK disease outbreak. However, the only statistically significant break was the BSE disease outbreak itself in May 2003. Stability was not restored until the border was reopened in 2005. Specific results indicated that the processing sector exploited the border closure in May 2003 to enhance its market power and that the system returned to a competitive one after the border re-opened in July 2005.

Keywords

Beef industry, price transmission, BSE, market power, parameter instability, cointegration with structural break

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ISSN 1804-1930
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