Study on Price Transmission of Inputs in the Market of Some Agricultural Commodities

The main purpose of this study is to examine the transfer price of agricultural inputs to the prices of some agricultural commodities (tomatoes, potatoes, and onions) using Markov-switching model and quarterly data in the years 1991-2018. The results of BDS test showed the Markov-switching model is more suitable than the linear model. Also, it showed the price index of agricultural commodities are classified into two regimes called low price growth rate regime and high price growth rates regime. The main results showed that there is a significant difference between the coefficients of variables of each regime, which is important sign that the mechanism of transfer price of input to the selected agricultural commodities price is asymmetric. The prices of seeds, fertilizers, and pesticides have impacted agricultural commodities price. Also, for all three product the Probability of stability in the second regime is higher. Therefore, based on the asymmetry of price transfer in this market, an important policy recommendation of this study is that economic policymakers to stabilize prices should take appropriate plan to monitor the supply and storage of agricultural inputs. In addition, they should consider asymmetry transfer price in their policies and plans in the agricultural market.