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Retail Dairy Prices Fluctuate with the Farm Value of Milk

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  • Stewart, Hayden
  • Blayney, Donald P.

Abstract

Farm milk prices in the United States fluctuated throughout the 2000-2009 decade. Dairy farmers, industry pundits, and policymakers all reacted with much alarm. One point of concern has been the response of retail prices to farm price volatility. This study investigates farm-to-retail price transmission for two major dairy products – whole milk and Cheddar cheese – in the 2000s. Results show that price shocks at the farm gate were transmitted asymmetrically to retail. However, in order to best identify the nature of the transmission process, it is important to fit alternative model specifications.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 60947.

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Date of creation: 2010
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Handle: RePEc:ags:aaea10:60947

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Keywords: dairy prices; error correction models; price transmission; Demand and Price Analysis;

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  1. Bailey, DeeVon & Brorsen, B. Wade, 1989. "Price Asymmetry In Spatial Fed Cattle Markets," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(02), December.
  2. Escribano, Alvaro, 2004. "Nonlinear Error Correction: The Case Of Money Demand In The United Kingdom (1878 2000)," Macroeconomic Dynamics, Cambridge University Press, vol. 8(01), pages 76-116, February.
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  7. Barry K. Goodwin & Matthew T. Holt, 1999. "Price Transmission and Asymmetric Adjustment in the U.S. Beef Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 630-637.
  8. Mainardi, Stefano, 2001. "Limited arbitrage in international wheat markets: threshold and smooth transition cointegration," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(3), September.
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  10. Lass, Daniel, 2005. "Asymmetric Response of Retail Milk Prices in the Northeast Revisited," Research Reports 149026, University of Connecticut, Food Marketing Policy Center.
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  13. Titus O. Awokuse & Xiaohong Wang, 2009. "Threshold Effects and Asymmetric Price Adjustments in U.S. Dairy Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(2), pages 269-286, 06.
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Cited by:
  1. Loy, Jens-Peter & Holm, Thore & Steinhagen, Carsten, 2012. "Vertical Price Transmission In Differentiated Product Markets: A Disaggregated Study For Milk And Butter," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123284, Agricultural and Applied Economics Association.
  2. Holm, Thore & Loy, Jens-Peter & Steinhagen, Carsten, 2012. "Bio Auch Bei Der Preissetzung: Konsummilch In Deutschland," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137159, German Association of Agricultural Economists (GEWISOLA).

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