Pork Market Price Transmission During the Covid-19 Pandemic: The Lithuanian Case

The COVID-19 pandemic had a severe impact on the EU economic system and showed the vulnerability of the food system. The paper investigates spatial price transmission patterns of the Lithuanian pork market during the COVID-19 pandemic. The methodological framework of research is based on linear and nonlinear autoregressive distributed lag models, error correction model, and Wald test that allow describing price relations and detecting the asymmetric price behavior. The spatial price transmission analysis is focused on the role of the selected main producing countries (Poland, Germany, France, Denmark, Spain, and the Netherlands) in price development of the small market. Results suggest that the pandemic period does not introduce a fundamental shift in the behaviour of the Lithuanian market and domestic prices are explained by the price evolution in main producing countries. Indeed, the role of foreign markets in price setting differs. In case of Lithuania, the main price leading countries are Poland, Germany, and the Netherlands. During the COVID-19 pandemic, test results for the main producing countries confirm long-term symmetry, but some countries demonstrate asymmetric price behaviour in the short-term dynamics. The dependence of the small market on price changes of countries with lower pork prices than the EU average makes domestic pig farming vulnerable and puts prospects of business development at a disadvantage.