The price transmission in white-leg shrimp export supply chain in Vietnam

Abstract

In the trade integration process of an agricultural sector, price transmission in export supply chains is an essential issue that needs attention. This paper analyses price transmission from export prices to farm-gate prices of white-leg shrimp production in Vietnam. Monthly series data on both farm-gate prices and export prices were collected from January 2015 to October 2020. The cointegration test indicated that in the long run, the farm-gate prices integrated with the export prices. The causality test also revealed that farm-gate prices were led by export prices. The Engle-Granger’s two-stage estimation results showed an incomplete price transmission from export prices to farm-gate prices with rather a high level of transmission in the long run, and a relatively slow rate of price transmission in the short run. In addition, the asymmetric error correction model using the Houck and Ward approach demonstrated that the price transmission was symmetric in the short run as well as the long run. The findings of this study are useful for farmers in developing production and business strategies. Symmetric price transmission is a positive signal for farmers to invest in sustainable production approaches and to meet the stringent standard requirements of the export market.