CHICKEN PRICE TRANSMISSION ELASTICITY IN SÃO PAULO STATE MARKET

After implementation of the Real Plan in July 1994 by the Brazilian government, the industrial chicken was established in consumer preference causing change in their spending habits. This change was attributed in great part due to their affordability to the consumer. This article aims to analyze the price transmission elasticity of poultry in the state of Sao Paulo market and identify which market level focuses on the greatest power of pricing, either at the producer level, wholesale and retail. By studying Sao Paulo’s poultry market, we intend to provide information to support decision making by managers of the production chain. Furthermore, Sao Paulo is the largest poultry consumer market in the country. Therefore, it is used in the treatment of poultry price data at the producer level, wholesale and retail the econometric model of Vector Autoregressive (VAR). The results found by analyzing the variance decomposition of forecast errors demonstrate that the producer has a high power setting of prices of poultry in the Sao Paulo’s market, having direct influence on the formation of prices both at wholesale as well as retail.