An analysis of slaughter hog pricing mechanisms in the Prairie Provinces, 1951-1980

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Pearson, Charles Leo
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Major structural changes have occurred in the marketing mechanisms used to establish prices for Canadian slaughter hogs during the period 1951 through 1980. These changes were mainly the result of producer concerns about the ability of the market to establish slaughter hog prices which accurately relect regional supply and demand conditions. The adoption of alternative marketing mechanisms such as the teletype Dutch auction, Dutch clock and formula pricing were due to swine producers attempts to improve the competitiveness of the slaughter hog market. The overall objective of this thesis was to examine the influence of slaughter hog marketing mechanism changes in the provinces of Manitoba, Saskatchewan, Alberta and Ontario as to market performance. Univariate residual cross-correlation analysis was selected as the appropriate methodology. Average weekly slaughter hog prices established on the Winnipeg, Saskatoon, Edmonton and Toronto markets for the period 1951 through 1980 were used, as were average weekly slaughter hog prices for the seven central United States markets for the years 1973 through 1980. The analysis was conducted for two of the markets at a time with the data separated into appropriate time periods reflecting changes that had occurred in marketing mechanisms. Results show changes have occurred in the lead lag relationships between markets during the study period. The strongest relationship between Canadian market price changes occurred at zero lag (less than one week) during all periods, indicating an efficient transfer of pricing information. Toronto price changes tended to occur instantaneously with or lead price changes on the three western markets. The analysis, however, did not hold true for the Edmonton-Toronto markets during the time prior to Alberta establishing a compulsory marketing mechanism. During these two periods, the Edmonton and Toronto markets exhibited a feedback relationship. For the years 1973 through 1980, results indicated slaughter hog prices on the seven central United States markets changed instantaneously with Toronto and Winnipeg, while price changes on the Saskatoon and Edmonton markets tended to lag the United States.