Spatial Spillover Effects of Hog Price Volatility: Empirical Analysis Based on Moran's I Index and SAR Model

Hog prices fluctuate dramatically has always been a major risk issue for any country live hog industry. This study aimed to reveal the spatial characteristics and the effects hog price volatility taking China as an example. This article introduced the monthly volatility of hog prices: P=∣(Pt 1-Pt)∣/Pt*100%, to measure the fluctuation degree of hog price, using the Global Moran I Index to indicate the correlation degree of economic variables adjacent or close to each other in space and using Local Moran I Index to analyze the local spatial difference of economic variables. On this basis, we calculated the effect of spillover using the SAR model. It was found that there was a significant spatial spillover effect in hog prices in China. With the comprehensive comparisons of the direct effects and indirect effects of each explanatory variable, it was present that the hog price fluctuation of a region was affected not only by the changes in the explanatory variables in the region, but also by that of the neighboring regions. We suggest that livestock farmers in the production decision-making, not only need to control production cost, but also to pay close attention to the current situation of pig price fluctuations in neighboring areas and the measures taken by stakeholders.