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Analysis of economic issues relating to the dairy sector, with emphasis on price transmission

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  • Popovics, Peter Andras

Abstract

The dramatic decline in consumption after 1990 was an important problem during the analysis of the sector. Even today, consumption is still below the degree that was before the political change, and significantly lags behind the EU level. The importance of this topic is emphasized by the fact that surplus milk could be marketed through the increased domestic consumption; this would create a more stable and calculable situation for farmers. Therefore, I considered it important to reveal what factors and by what shares influence the consumption of milk and dairy products. The relationship, time series and cross-sectional analysis based on national and international databases demonstrate the relationship between the consumption of milk and dairy products and the other determining factors of consumption in Hungary and in the EU-25 through diagrams. I draw the conclusion that there is a medium correlation between the development of the economy, the higher income level and the consumption of milk and dairy products. Just before our EU accession, the dairy sector was one of the most critical industries of Hungarian agriculture, which is why I chose this for my analysis. I regard as a new scientific result the econometric analysis of the asymmetric market conditions in the price transmission approach within our dairy sector between 1995 and 2003. I confirmed and quantified that the market is under an oligopoly and defined the direction of price adjustment. Furthermore, I regard as a new result in the price transmission analysis (also published in the article published with Dr. József Tóth), that the three possible dimensions (elasticity, asymmetry relations, lag) are analysed simultaneously. Therefore, a more sophisticated picture is given on price transmission. The theoretical advantages and disadvantages are verified by an example of a vertical coordination based on the horizontal cooperation in the dairy sector (Alföldi Tej Ltd).

Suggested Citation

  • Popovics, Peter Andras, 2008. "Analysis of economic issues relating to the dairy sector, with emphasis on price transmission," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 2(1-2), pages 1-10.
    • Handle: RePEc:ags:apstra:48338
    DOI: 10.22004/ag.econ.48338
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    References listed on IDEAS

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    1. Cotterill, Ronald, 2003. "Fluid Milk Market Channel Pricing: Monopolistic Pricing by Retailers Hurts Processors, Farmers, Consumers, and Federal Market Order Pricing," Issue Papers 169498, University of Connecticut, Food Marketing Policy Center.
    2. Ronald W. Cotterill, 2003. "Fluid Milk Market Channel Pricing: Monopolistic Pricing by Retailers Hurts Processors, Farmers, Consumers, and Federal Market Order Pricing," Issue Papers 40, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
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    Cited by:

    1. Lajdová, Zuzana & Bielik, Peter, 2013. "Vertical price transmission analysis: The case of milk in the slovak dairy sector," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 7(4-5), pages 1-8.
    2. Szabó, Gábor G. & Popovics, Péter, 2009. "Possible Ways of Market Coordination and Integration in the Hungarian Dairy Sector," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(1), pages 1-20.

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