The candeal wheat price index influence in the dry pasta value chain in Chile
This study is part of a series of working papers that analyze relevant agrifood value chains in Chile using time series analysis and cointegration methods.
This paper presents a complete characterization of the dry pasta value chain in Chile. Upstream, the agents that participate in commercialization of durum wheat, their accessibility to international trade and the degree of linkage with the wheat price index as a referential indicator established in Chile since 2013 based in international wheat prices, and used by large processors to buy to local producers of the grain. Likewise, this analysis extends downstream, to the dry pasta manufacturing industry, since durum wheat is the main raw input for these foods.
A review of the main exporting countries is carried out, both for durum wheat and pasta and spaghetti, to assess the influence of international markets that could be relevant in determining the prices from foreign trade operations.
Subsequently, an assessment of the price index for durum wheat consider the objectives defined in its initial design, namely: increased transparency for the agents that participate in the purchase process and if it corresponds to the formation of a competitive market price. In this section, national and international prices of durum wheat, pasta and spaghetti are used to assess the degree of linkage between them, testing the existence of an integrated global market for these products. The hypotheses proposed are (i) that the referential indicator of national durum wheat does not reflect the international price of the grain, (ii) that there is an international market for durum wheat integrated into prices; (iii) that the price of products derived from durum wheat (pasta and spaghetti) have a structural relationship with the price of the raw material and, (iv) that the international market for pasta and spaghetti disciplines the internal prices of these products.
Econometric techniques are applied to the price series stochastic processes to evaluate linear associations between them and non-stationary time series cointegration tests are performed to determine the plausibility of the hypotheses.
Finally, a discussion is presented on alternative sources of market information to support the national commercialization of durum wheat for local producers.
Full citation: Farías P., Claudio; Fernández B., Gastón; Espinoza H., Álvaro. Santiago, Chile: Bureau of Agricultural Studies and Policy (ODEPA), Market Analysis Department.