Agricultural Market Model

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Some reasonable work has been done on agricultural market models. The component of the market model approach developed by Labys (1973) is the basic structure models in the analysis of agricultural commodity markets .the model according Labys (1973) suggests that for a particular commodity, four equations supply, demand, price and stock (commonly used as an identity to reveal the market clearing condition) are used simultaneously. However as noted by Abdel Hameed et al. (2009) more complex structures of the market behaviour have been developed from these basic model with other variable been included such as import ,and export. , these basic market models can be tailored and reformulated. Literatures reveals that various researchers have…show more content…
In the case of palm oil the following have carried out studies in Malaysia, : Shamsudin et al., 1988; Yusoff (1988), Au and Boyd (1992); Shamsudin and Arshad, 1993; Abdullah, Amiruddin and Ibrahim (1993); Shamsudin et al., 1994; Lubis, 1994; Jani and Abdullah (1999) and Talib and Darawi, 2002, Ernawati, 2004, Amna Awad, 2005; Alias, Shri Dewi and Ali (2006 ) Shri Dewi et al. (2009b and 2010). For rubber (e.g. Yusoff ,1978 and 1988a) and cocoa market (Rosdi, 1991, Remali Yusoff et al., 1998 , Kox, 2000, and Abdel Hameed et al.2009), just to mentioned a few. Let us consider briefly the following…show more content…
The models were estimated using annual time series data. Each model consists of supply, demand and price equations, with stock as the identity. His results show that domestic cocoa prices are determined by prices prevailing in the world market. Domestic stock change is not significant. The world market itself, stock and consumption are the main factors that influence the behaviour of cocoa prices. World consumption and export demand are significantly influenced by the production index of the industrial nations and price of cocoa. On the supply side, cocoa production is determined by cocoa price lagged by the gestation period. This implies that investment decision on cocoa three to five

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