PRICE TRANSMISSION ON MILK MARKET IN POLAND  BETWEEN 2004 AND 2017

We investigate the price dynamics between retail milk price and raw milk price in the Turkish fluid milk market. The study uses monthly fluid milk prices for 14 years between January 2003 and December 2016. We analyze the price adjustment in the fluid milk market through an asymmetric error correction model with threshold co-integration. We find that the transmission between the two prices has been asymmetric in both the long term and short term period. Differences between the farm milk prices and retail milk prices may exist due to marketing costs across the supply chain and pricing policies associated with the market structure. Results of the long-run analysis indicate a significant market power in the fluid milk market. Therefore, in this asymmetric case, the deviations are likely to be the reason for the market power of the processors/retailers and the reason for the oligopolistic market structure in the sector.

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Asymmetric price transmission in the Slovak liquid milk market

Agricultural Economics (Zemědělská ekonomika) ◽

10.17221/150/2012-agricecon ◽

2013 ◽

Vol 59 (No. 11) ◽

pp. 512-524 ◽

Cited By ~ 4

Author(s):

T. Weldesenbet

Keyword(s):

Error Correction ◽

Market Price ◽

Price Transmission ◽

Causality Test ◽

Long Run ◽

Cointegration Tests ◽

Retail Prices ◽

Producer Prices ◽

Liquid Milk ◽

Milk Market

The divergence in liquid milk price trends has raised concern about the efficiency of the milk market price transmission in Slovakia. The paper provides empirical evidence on the price transmission among the producer, wholesale, and retail markets of liquid milk in Slovakia, using the monthly data from 1993 to 2010. The empirical analysis is based on the Granger causality and the Johansen cointegration tests and on the asymmetry tests (Houck approach and error correction model approach). The causality test results show that the changes in producer prices cause changes in the wholesale and retail prices; there is a feedback from the retail to producer prices. Moreover, the direction of causality between the wholesale and retail prices flows in both directions. The long-run elasticities of price transmission are, as expected, greater than the short-run elasticities. The cointegration results indicate that the wholesale and producer prices as well as the retail and producer prices are cointegrated, but there is no evidence of cointegration between the wholesale and retail prices. The results of an asymmetric error correction models suggest that the price transmission in the Slovakian liquid milk market is asymmetric both in the short- and long-runs.

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Food scare crisis: the effect on Serbian dairy market

International Food and Agribusiness Management Review ◽

10.22434/ifamr2015.0051 ◽

2017 ◽

Vol 20 (1) ◽

pp. 113-127 ◽

Cited By ~ 5

Author(s):

Rade Popovic ◽

Boris Radovanov ◽

James W. Dunn

Keyword(s):

Price Change ◽

Price Transmission ◽

Aflatoxin M1 ◽

Vector Error Correction ◽

Long Run ◽

Food Scare ◽

Spatial Price ◽

Dairy Market ◽

Milk Market ◽

The Impact

The increasing trend of food scandal crises is not well followed in recent studies of spatial price transmission. This paper analyses the impact on the domestic market of an Aflatoxin M1 outbreak in the Serbian dairy sector during 2013/2014 using a spatial price transmission approach. Monthly farm milk prices in Serbia for the period 2007/2014 were contrasted with leading dairy exporting countries New Zealand, USA and Germany, which did not have a food scare in their dairy sectors. To estimate the impacts a Markov-switching vector error-correction model was utilized. For all four dairy markets the model identified two price change regimes: standard and extreme. Although it was predictable, an extreme regime was not identified during the Aflatoxin M1 crises in Serbia because of some specific characteristics of its dairy production. The results suggest that the Aflatoxin M1 outbreak ‘froze’ the Serbian dairy market and temporally disconnected it from the world milk market. Farmer’s prices fell below their long-run equilibrium levels. The total loss of the Serbian farm-level dairy sector during the crisis reached up to 96.2 million EUR. These ‘missed opportunity’ significantly slowed investment in the dairy sector.

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