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Vertical Price Transmission in Serbian Wheat-to-Bread Supply Chain during the Global Commodity Price Peaks 2007/2008 and 2010/2011

  • Djuric, Ivan
  • Gotz, Linde
  • Glauben, Thomas

We analyze how the governmental market interventions during the commodity price peaks 2007/2008 and 2010/2011 have affected the transmission of price changes along the wheat-to-bread supply chain in Serbia. We aim to investigate if consumers benefitted from the wheat and flour export restrictions or if other members along the supply chain were able to gain advantage. Our analysis of price dynamics between wheat and flour prices within a Markov Switching Vector Error Correction Model suggests that the mills increased their margin and thus profits in the aftermath of the food crisis. The simulation of bread production costs makes evident that bakeries and even more retailers profited substantially from the crisis policy. We find that consumers benefitted from the governmental interventions only to a limited degree and experienced overall welfare losses. Compared with laissez-faire policy, the bread price increase was dampened by the governmental market interventions only at the beginning of the crisis. The additional strong bread price increase in April 2008 indirectly resulted from the governmental wheat purchases from the Serbian market.

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File URL: http://purl.umn.edu/126775
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Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126775.

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Date of creation: 2012
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Handle: RePEc:ags:iaae12:126775
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