The development of the global pork production
has been very dynamic in recent decades. Between
1990 and 2004, global meat production
increased from 180 million tons to almost 260
million tons, and the contribution of pork to
global meat production was about 38% in 2005. The objective of this paper is to explore the
supply response in the pork industry. Several
parameters, such as expected pork producer
price, price volatility, and cost factors, are used
to specify the appropriate supply response
model and describe producers’ risk. The empirical analysis used the GARCH process to model producers’ expectations
about expected price and expected
price volatility and the supply response equation
estimated jointly with the price equation
using the FIML econometric approach. It was found that price uncertainty appears to have a strong
negative effect on Greek pig producers, which
might be an important constraint in their attempt
to expand their farm size and invest in
more productive technologies. Also, it seems that pork industry in a small
country like Greece faces serious problems to
adapt successfully to open market conditions
and achieve high level performances in an increasing
level of international competition. Therefore, the
Greek government should further assist pork
producers to participate in specialized investment
programs, financed jointly by the Greek
government and the EU, providing them with
subsidized capital appropriate for modernization
and growth.