Abstract
Analyses of spatial market integration contributes to the knowledge about market efficiency and provides information to policymakers, as the spatial integration of markets contributes to competitiveness and economic development. Although the integration of agri-food markets is widely discussed in the economic literature, research on the dairy sector is relatively limited. This paper fulfils the research gap with an in-depth investigation of spatial milk and dairy product market integration between two neighboring countries—Poland and Czechia—using regional data, and including both production and processing levels. The econometric analysis of time series covering the period 2001–2021 reveals that only long-run milk and skimmed milk powder (SMP) price relationships are between the Czech Republic and Poland. The results of the study confirm that the factors influencing spatial price relationships between the Czech Republic and Poland are: strong trade ties, the common moment of accession to the EU, a close distance between markets, and region specialization.
Highlights
Spatial Market Integration: A CaseThe dairy sector is one of the major contributors to the agri-food economy in the European Union (EU)
This paper empirically explores the linkages existing between the Polish and Czech milk and dairy product markets, i.e., between markets that are characterized by geographic proximity; this proximity leads to significant foreign trade flows in a homogeneous raw material such as milk, and in homogeneous dairy products
The coefficient in the long-run relationship in the model with a limited trend and an unlimited constant is 0.67, which indicates that, in the long-run relationship, a 1% increase/decrease in milk prices in the Czech Republic is reflected by 0.67% increase/decrease in milk prices in Poland
Summary
Spatial Market Integration: A CaseThe dairy sector is one of the major contributors to the agri-food economy in the European Union (EU). According to Eurostat (2021a), milk production represents 14% of total agricultural output and the manufacture of dairy products contributes 18% to the total food production value and 17% to the total food industry turnover (Čechura and Kroupová 2021). Poland is one of the five major European milk producers, accounting for. Since supply exceeds consumption in the Polish dairy market, Poland is one of the European member states considerably contributing to the EU dairy export (Ministry of Agriculture, Nature and Food Quality 2018). Polish exports are mainly oriented towards the European market and among member states; Germany, with. 19% of the Polish dairy export value, the Czech Republic (6%), and Italy (5%) are the main recipients of Poland’s dairy products For the Czech Republic, imports of Polish milk and dairy products account for 25%
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