Document Type : Research Paper
Authors
1 Department of Agricultural Economics, Tarbiat Modares University, Tehran, Iran. E-mail: vahid.kalantar@modares.ac.ir
2 Corresponding Author, Department of Agricultural Economics, Tarbiat Modares University, Tehran, Iran. Email: hamed_najafi@modares.ac.ir
3 Department of Agricultural Economics, Tarbiat Modares University, Tehran, Iran. Email: shamosavi@modares.ac.ir
Abstract
Objective: As a primary source of dietary protein, chicken meat represents a major component of household consumption in Iran. This study investigates the economic and spatial drivers of provincial chicken supply and demand, aiming to provide a robust framework for regionally targeted policy formulation. The analysis covers the period between 2002 and 2024
Method: Utilizing provincial panel data, this study models supply and demand functions via traditional panel techniques and spatial econometric frameworks. Based on rigorous specification and diagnostic testing, a fixed-effects estimation approach was adopted. The model incorporates key explanatory variables, including producer prices for live chickens (supply determinants), retail chicken prices (demand determinants), input costs, exchange rates, household income, and red meat prices as a substitute. Furthermore, the analysis computes historical price elasticities to track longitudinal changes in consumer price sensitivity.
Results: Following the preliminary diagnostic tests, the fixed-effects panel model was determined to be the most appropriate framework for analyzing chicken meat supply and demand dynamics. The results indicated that the price of live poultry exerted a significant positive impact on supply. Conversely, while the retail price of chicken meat negatively affected demand, the price of red meat showed a positive correlation with chicken demand, reflecting a substitution effect. Furthermore, spatial analysis confirmed that provincial supply and demand were significantly influenced by spatial dependencies. The identification of positive spatial autocorrelation in supply and negative spatial autocorrelation in demand suggests divergent geographic distribution patterns for these two variables.
Conclusions: This study applied spatial econometric approaches to examine how regional interactions shape Iran’s chicken meat market. The findings showed that both supply and demand were determined not only by within-province economic conditions but also by developments in neighboring provinces, confirming the presence of significant spatial interdependence. The estimated supply function indicated that live chicken prices positively affected supply, whereas higher input costs and exchange rate fluctuations adversely influenced production. On the demand side, household income and the price of red meat, as a substitute good, exerted positive effects on chicken consumption, while the price of chicken meat itself negatively affected demand. Compared with earlier studies that estimated the price elasticity of chicken meat at approximately −0.93-0.93−0.93, the present study found a substantially lower elasticity of about −0.25-0.25−0.25. This finding suggests that chicken meat has increasingly become a necessity in the food basket of Iranian households, with consumers exhibiting lower sensitivity to price changes. As a result, price adjustments in this market are likely to face limited consumer responsiveness. The observed substitution effect between chicken and red meat further indicates that rising red meat prices encourage households to shift their consumption toward chicken. Spatial analysis also revealed convergence in supply, implying that production levels in one province tended to influence those of neighboring provinces. More broadly, the spatial econometric models confirmed that variables such as input prices, exchange rates, and household income played significant roles in shaping provincial supply and demand patterns. Overall, the results underscore the importance of designing region-specific policies that account for spatial linkages rather than relying solely on uniform national interventions. Despite limitations related to data availability and model specification, this study highlights the critical role of spatial factors in formulating more effective, balanced, and context-sensitive policies for Iran’s chicken meat market.
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