Agric. Econ. - Czech, 2021, 67(5):163-172 | DOI: 10.17221/22/2021-AGRICECON

Asymmetric price transmission and farmers' response in the Czech dairy chainOriginal Paper

Tamara Rudinskaya, Iveta Boskova*
Agricultural Market Department, Institute of Agricultural Economics and Information, Prague, Czech Republic

The standard economic price theory of working with efficient source allocation is being confronted with a series of empirical findings of asymmetric price responses. The objective of the research was to examine whether the distribution of prices within the dairy chain in the Czech Republic was fair and whether farmers progressed in a collective approach to strengthen their position in the supply chain. We used the pre-cointegration and cointegration approach to test for asymmetry in the transmission of farm milk prices throughout the supply chain. Furthermore, we measured the development of market concentration by means of the Herfindahl-Hirschman index and discussed the background of the figures with producer organisation representatives. The results proved there were asymmetric price transmissions. In response, farmers consolidated and concentrated their milk sales. The concentration should not yet be understood as a goal but as a means to the next steps.

Keywords: cooperation; market power; market structure; producer organisations; supply chain

Published: May 20, 2021  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Rudinskaya T, Boskova I. Asymmetric price transmission and farmers' response in the Czech dairy chain. Agric. Econ. - Czech. 2021;67(5):163-172. doi: 10.17221/22/2021-AGRICECON.
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Bakucs Z., Fałkowski J., Fertő I. (2013): Does market structure influence price transmission in the agro-food sector? A meta-analysis perspective. Journal of Agricultural Economics, 65: 1-25. Go to original source...
    2. Bain J.S. (1956): Barriers to New Competition. Cambridge, Harvard University Press: 12-41. Go to original source...
    3. Biely K., Mathijs E., van Passel S. (2019): Causal loop diagrams to systematically analyze market power in the Belgian sugar value chain. AIMS Agriculture and Food, 4: 711-730. Go to original source...
    4. Blažková I. (2016): Convergence of market concentration: Evidence from Czech food processing sectors. AGRIS on-line Papers in Economics and Informatics, 8: 25-36. Go to original source...
    5. Boskova I., Ahado S., Ratinger T. (2020): The effects of the participation in producer organisations on the performance of dairy farmers in the Czech Republic and future challenges. Agricultural Economics - Czech, 66: 345-354. Go to original source...
    6. Cechura L., Zakova Kroupova Z., Hockman H. (2015): Market power in the European dairy industry. Agris on-line Papers in Economics and Informatics, 7: 39-47. Go to original source...
    7. Cechura L., Sobrova L. (2008): The price transmission in pork meat agri-food chain. Agricultural Economics - Czech, 54: 77-84. Go to original source...
    8. COM (2009): Analysis of Price Transmission Along the Food Supply Chain in the EU. Comission Staff Working Document. Brussels, Belgium, European Commission: 1-69.
    9. Cox A., Sanderson J., Watson G. (2001): Supply chains and power regimes: Toward an analytic framework for managing extended networks of buyer and supplier relationships. Journal of Supply Chain Management, 37: 28-35. Go to original source...
    10. Czech Statistical Office (2020a): Agricultural Prices (Ceny v zemědělství). [Dataset]. Prague, Czech Republic, Czech Statistical Office. Available at https://vdb.czso.cz/vdbvo2/faces/index.jsf?page=statistiky#katalog=31785 (accessed Dec, 2020). (in Czech)
    11. Czech Statistical Office (2020b): Animal Production. [Dataset]. Prague, Czech Republic, Czech Statistical Office. Available at https://www.czso.cz/csu/czso/zem_ts (accessed Dec, 2020).
    12. Dudova B., Becvarova V. (2015): The character of price transmission within milk commodity chain in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 63: 887-892. Go to original source...
    13. European Commission (2018): Proposal for a Regulation of the European Parliament and of the Council Establishing Rules on Support for Strategic Plans to Be Drawn up by Member States under the Common Agricultural Policy (CAP Strategic Plans) and Financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and Repealing Regulation (EU) No 1305/2013 of the European Parliament and of the Council and Regulation (EU) No 1307/2013 of the European Parliament and of the Council. Brussels, Belgium, European Commission: 1-143.
    14. Fernandez Amador O., Baumgartner J., Cuaresma J.C. (2010): Milking the prices: The role of asymmetries in the price transmission mechanism for milk product in Austria. Proceedings WIFO, Working Papers, 378: 1-17.
    15. Hassouneh I., Holst C., Serra T., von Cramon-Taubadel S., Gil J.M. (2015): Overview of price transmission and reasons for different adjustment patterns across EU Member States. In: McCorriston S. (ed.): Food Price Dynamics and Price Adjustment in the EU. New York, Oxford University Press: 51-64. Go to original source...
    16. Hoehl S. (2020): Modelling milk supply in agricultural economics literature: An overview. (Die Modellierung des Milchangebots in der agrar-ökonomischen Literatur: Ein Überblick). Berichte über Landwirtschaft, 98: 1-16. (in German)
    17. Jurkènaitè N., Baležentis T. (2020): The 'pure' and structural contributions to the average farm size growth in the EU: The index decomposition approach. Ecological Indicators 117: 1-2. Go to original source...
    18. Lechanova I., Novak P. (2006): The price transmission analysis in Czech milk commodity chain. Annals of the Polish Association of Agricultural and Agribusiness Economists, 8: 108-112.
    19. Lipczynski J., Wilson J., Goddard J. (2005): Industrial Organization, Competition, Strategy, Policy. 2nd Ed. Harlow, England, Pearson Education Ltd.: 659-688.
    20. Lloyd T., McCorriston S., Morgan W., Rayner T. (2003): The impact of food scares on price transmission in interrelated markets. In: Proceedings of the 25th International Conference of Agricultural Economists (IAAE), South Africa, Aug 16-22, 2003: 547-559.
    21. Lütkepohl H., Krätzig M. (2004): Applied Time Series Econometrics. New York, Cambridge University Press: 88-105. Go to original source...
    22. McCorriston S. (2002): Why should imperfect competition matter to agricultural economists? European Review of Agricultural Economics, 29: 349-371. Go to original source...
    23. Meyer J., von Cramon-Taubadel S. (2004): Asymmetric price transmission: A survey. Journal of Agricultural Economics, 55: 581-611. Go to original source...
    24. Mikhalkina E., Maitah M., Sredl K. (2015): Measuring market structures in the dairy market in the Czech Republic. Asian Social Science, 11: 306-315. Go to original source...
    25. MoA (2011): Report on the State of Agriculture of the Czech Republic for 2011 "Green Report" (Zpráva o stavu zemědělství ČR za rok 2011 "Zelená zpráva). The Ministry of Agriculture of the Czech Republic. Available at http://eagri.cz/public/web/mze/zemedelstvi/publikace-a-dokumenty/zelene-zpravy/zelena-zprava-2011.html (accessed Jan, 2021). (in Czech)
    26. MoA (2019): Report on the State of Agriculture of the Czech Republic for 2019 "Green Report" (Zpráva o stavu zemědělství ČR za rok 2019 "Zelená zpráva). The Ministry of Agriculture of the Czech Republic. Available at http://eagri.cz/public/web/mze/zemedelstvi/publikace-a-dokumenty/zelene-zpravy/zelena-zprava-2011.html (accessed Jan, 2021). (in Czech)
    27. Nelson R., Winter S.G. (1982): An Evolutionary Theory of Economic Change. Cambridge, Massachusetts and London, England, Belknap Press of Harvard University Press: 163-194.
    28. Neuberger D. (1997): Structure, conduct and performance in banking markets. Thuenen-Series of Applied Economic Theory, Working paper, 12: 1-29.
    29. Peltzman S. (2000): Prices rise faster than they fall. Journal of Political Economy, 108: 466-502. Go to original source...
    30. Polat O., Kalayci Berk C., Bílgen B., Topaloglu D. (2019): An integrated mathematical model for the milk collection problem. Pamukkale University Journal of Engineering Sciences, 25: 1087-1096. Go to original source...
    31. Reziti I. (2014): Price transmission analysis in the Greek milk market. SPOUDAI Journal of Economics and Business, 64: 75-86.
    32. Rumankova L. (2016): Evaluation of market relations in soft milling wheat agri-food chain. AGRIS on-line Papers in Economics and Informatics, 8: 133-141. Go to original source...
    33. Serra T., Goodwin B.K. (2003): Price transmission and asymmetric adjustment in the Spanish dairy sector. Applied Economics, 35: 1889-1899. Go to original source...
    34. Sezen B. (2008): Relative effects of design, integration and information sharing on supply chain performance. Supply Chain Management: An International Journal, 13: 233-240. Go to original source...
    35. State Government Intervention Fond (2020): Dataset of Farmers-, Marketing Organizations- and Processors Number and Sales. [Unpublished data]. Prague, Czech Republic, State Government Intervention Fond.
    36. Tapatta M.E. (2009): Rockets and feathers: Understanding asymmetric pricing. RAND Journal of Economics, 40: 673-687. Go to original source...
    37. Tweeten L.G., Quance C.L. (1969): Positivistic measures of aggregate supply elasticities: Some new approaches. American Journal of Agricultural Economics, 51: 342-352. Go to original source...
    38. van Donk D.P., Akkerman R., van der Vaart T. (2008): Opportunities and realities of supply chain integration: The case of food manufacturers. British Food Journal, 110: 218-235. Go to original source...
    39. Vavra P., Goodwin B.K. (2005): Analysis of price transmission along the food chain. OECD Food, Agriculture and Fisheries Working Paper, 3: 1-58.
    40. von Cramon-Taubadel S., Loy J.-P. (1996): Price asymmetry in the international wheat market: Comment. Canadian Journal of Agricultural Economics, 44: 311-317. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content