Greek Beef Supply Response and Price Volatility under CAP Reforms

This study examines the supply response of the Greek beef market and the possible effect of the European Union’sCommon Agricultural Policy (CAP) on the Greek beef sector during the period 1993-2005. A GARCH process is used to estimateexpected price and price volatility while several different symmetric, asymmetric and nonlinear GARCH models are estimated.The empirical results show that price volatility and feed price are important risk factors of the supply repose function, while thenegative asymmetric price volatility which was detected implies that producers have a weak market position. Furthermore, theempirical findings confirm that the annual premium paid by EU to beef producers had a positive impact on the production leveland that the change of the EU price support regime after 2006 will have negative effects on the beef production level in Greece.