Market concentration in U.S. milk processors and his influence at price paid to cow milk producers

Abstract

In this paper, we analyzed the influence of the four American biggest milk processors into the price paid to producers from 2002 to 2013. Also, we tried to identify the parameters to explain the change in prices paid to producers. The results suggest a moderate concentration. Besides, the industrial concentration of four biggest firms shows a causal flow on the milk’s national price in short time (one year) and that the causal flow in the opposite direction in two years, evidently due to the milk’s production cycle, i.e., the insertion of new milk plants producing in the production cycle will have an impact after a relatively long time, which explains the short-term inelasticity. In other hand, we can see that the international prices have an important influence to U.S. prices paid to producers, indicating some auction characteristics of this product, too confirmed by the influence of the variation of industrial concentration of the four biggest milk processors in this country.