Vertical price transmission in Swiss dairy and cheese value chains

Judith Hillen

doi:10.1186/s40100-021-00187-3

Abstract

In Switzerland, there are separated value chains for dairy and cheese products, which differ in terms of industry concentration, value chain governance, and product characteristics. We analyze how milk prices are passed on along these different value chains. Using detailed price data on farm gate, wholesale, export, and retail levels, we apply asymmetric vector autoregressive and vector error correction models to study vertical price transmission in Swiss dairy and cheese chains. Contrary to most existing literature, we find almost no long-run price relationships and no significant asymmetries between the different stages and products and discuss the potential reasons.

Highlights

Vertical price transmission in milk markets has received considerable research attention in the past decades, as prices are a main link between different market levels and are an important factor for agricultural efficiency (Serra and Goodwin 2003)
We found no convincing evidence for long-run vertical price transmission, neither in dairy nor in cheese chains
We found almost no evidence of long-run price transmission and no significant asymmetries for most price pairs

Summary

Introduction

Vertical price transmission in milk markets has received considerable research attention in the past decades, as prices are a main link between different market levels and are an important factor for agricultural efficiency (Serra and Goodwin 2003). Swiss dairy market organizations and agricultural consultants have given some attention to how more value can be retained by producers (SBV 2013; Reviron et al 2017). The relationships between prices at different stages of the dairy and cheese value chains have not yet been analyzed systematically and quantified. This study analyzes vertical price transmission in the Swiss milk market. Numerous studies have examined the price relationships in different milk and dairy markets. While the specific focus differs among these studies, the majority finds long-run price transmission elasticities (2021) 9:13

Methods

Results

Discussion

Conclusion