Economic analysis of bean market grain in Mexico

Abstract

Introduction. The grain bean is a traditional key agri-food product in the Mexican diet due to its, price and for being an important source of protein. Objective. The objective of this work was to determine and analyze econometrically the factors that affect the grain bean market; as well as measuring the effect that the different price levels have on this one in Mexico from 1980 to 2016. Materials and methods. In this work, a model of simultaneous equations was estimated with annual information from 1980 to 2016; composed of five regression equations and an identity. Results. The results indicated that in the short term the consumption and production of grain beans in Mexico, responded inelastically (-0,2996% and 0,4151%) withchanges of 1% in the corresponding prices. The changes in the factors that most affected consumption are the national income available for per capita consumption, the price of the egg and the price of the corn tortilla, with price-cross elasticities of -0,8797, -0,8594 and -0,7101; and to the production are the price of rice, the price of corn and the price of fertilizer with price-cross elasticities of -0,7005, -0.5545 and -0,3474. The effect of the international price and the transport cost in Mexico, affected the wholesale price of beans at a level of 0,27 and 0,23%, for each unit percentage change in the first. Conclusion. Since the price elasticity of bean consumption in Mexico is more inelastic in absolute terms, compared to the corresponding production elasticity; It suggests that the consumer surplus is greater than that of the national producer when participating in the bean market and implies that a subsidy policy for this grain would encourage production.