Food price dynamics and regional clusters: machine learning analysis of egg prices in China
China Agricultural Economic Review
ISSN: 1756-137X
Article publication date: 8 September 2022
Issue publication date: 2 May 2023
Abstract
Purpose
The study uses machine learning techniques to cluster regional retail egg prices after 2000 in China. Furthermore, it combines machine learning results with econometric models to study determinants of cluster affiliation. Eggs are an inexpensiv, nutritious and sustainable animal food. Contextually, China is the largest country in the world in terms of both egg production and consumption. Regional clustering can help governments to imporve the precision of price policies and help producers make better investment decisions. The results are purely driven by data.
Design/methodology/approach
The study introduces dynamic time warping (DTW) algorithm which takes into account time series properties to analyze provincial egg prices in China. The results are compared with several other algorithms, such as TADPole. DTW is superior, though it is computationally expensive. After the clustering, a multinomial logit model is run to study the determinants of cluster affiliation.
Findings
The study identified three clusters. The first cluster including 12 provinces and the second cluster including 2 provinces are the main egg production provinces and their neighboring provinces in China. The third cluster is mainly egg importing regions. Clusters 1 and 2 have higher price volatility. The authors confirm that due to transaction costs, the importing areas may have less price volatility.
Practical implications
The machine learning techniques could help governments make more precise policies and help producers make better investment decisions.
Originality/value
This is the first paper to use machine learning techniques to cluster food prices. It also combines machine learning and econometric models to better study price dynamics.
Keywords
Acknowledgements
The authors sincerely thank the two anonymous reviewers for the precious comments. The authors acknowledge the funding support from the National Natural Science Foundation of China (Fund ID: 71933004).
Citation
Liu, C., Zhou, L., Höschle, L. and Yu, X. (2023), "Food price dynamics and regional clusters: machine learning analysis of egg prices in China", China Agricultural Economic Review, Vol. 15 No. 2, pp. 416-432. https://doi.org/10.1108/CAER-01-2022-0003
Publisher
:Emerald Publishing Limited
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