Meat List is a service of FAO's Trade and Markets Division<http://www.fao.org/economic/est/est-commodities/meat/en/>

Dear Emanuele and list members, I think the price index should be based on trade prices and not internal prices, that can be distorted by many factors. Trade prices give us a reasonable idea about price changes in world markets, which is what we are interested in. What becomes very relevant is what products should be included in the index.
Also, at the end of the day, internal prices of relevant traders will be reflected in trade prices, as has happened in 2014, when the surge in US prices due to the herd building phase influenced trade prices very significantly. The only explanation for the increase of the beef index during 2014 is what happened in the US domestic market.
Best regards,
Roberto Vazquez Platero




Meat List is a service of FAO's Trade and Markets Division<http://www.fao.org/economic/est/est-commodities/meat/en/>

Hello David,

Thank you for your comment.

Yes, as you write, the FAO meat index provides an indication of the movement of international prices.  It is easy to imagine situations where domestic prices may not follow the same trend.

One issue to bear in mind is that all the base prices used for compiling the index are converted into USD before any calculations are made.  Therefore, domestic prices may rise in local currency terms, but fall when converted into USD.  This may be one element in explaining the discrepancy you note in the case of Australia.

In other cases, differences in market access and the degree of competition between a particular domestic market and those prevailing international may cause prices to move in different directions.  Here I'm thinking of import tariff barriers, preferential quota access, the relative size of a given country's domestic market to its export sales and export restrictions (as applied in Argentina until recently).

As there are would potentially be so many domestic prices which might be of interest, it would not be within the scope of the current FAO Index to include them. Perhaps the most utility is gained by having the FAO Index as a point of reference which can then be used by those with an interest in a particular domestic market to make comparisons (as you have done in the case of Australia) and draw conclusions.

Best regards,

Michael

From: Meat-Moderator
Sent: 25 November 2016 10:46
To: [log in to unmask] <[log in to unmask]<mailto:[log in to unmask]>>
Subject: Comment: Meat Price Index

Meat List is a service of FAO's Trade and Markets Division<http://www.fao.org/economic/est/est-commodities/meat/en/>


Hi Emanuele,

The FAO meat list provides and interesting perspective of international prices. But domestically it seems to me there can be another picture. I have just taken a brief look at the bovine prices in your index which shows a decrease from 231 in 2014 to 213 in 2015 and 192 in October this year. Over this same period domestic beef and veal prices in Australia have increased almost 10% in every quarter since 2014, as measured by Australian Bureau of Statistics. The FAO Index uses Australian cow export meat prices to the US. I am wondering whether or not domestic prices could be included in the FAO index and how difficult it would be?

Regards
David Michael


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