Price Transmission of the Hungarian Dairy Sector From 2004 to 2018

Izsó, József – Kovács, Krisztián

Keywords: price analysis, price transmission, Hungarian dairy sector, milk price , Q11, Q13

In the case of the domestic milk sector, in addition to the expanding milk market output according to the current trend, there is a slight decrease in domestic consumption, and it can be seen that producers and farmers can be considered the most vulnerable in the supply chain. In the vertical chain of a typically small numbers but capital-intensive large companies and generally foreign-owned concentrated retail, multinational companies in the processing segment, the vulnerability of producers can be assumed. The aim of the research is to support these findings with statistical methods. The required secondary data source was provided by the database of AKI and CSO, which was analysed with the Microsoft Excel.
The analysis used price information for producer raw milk, processed milk, butter, cottage cheese, sour cream and cheese, and consumer milk, butter, cottage cheese, sour cream and cheese from January 2004 to December 2018, broken down on a monthly basis. Divided into five-year periods, we characterized the data of the time series with descriptive statistical values (mean, standard deviation, relative standard deviation), which showed that the prices of the producer and processing stages produced higher volatility than the prices of the consumer stage.
Based on price transmission analyses, a positive asymmetric price transmission relationship between product chain levels can be assumed, according to which the increase in the input side is reflected in a larger proportion in the output side prices, while the decrease in the input side is reflected in a smaller proportion in the output side prices.
Examining the margins, it can be seen that the margins of processors and consumers of milk, butter and sour cream increased, while the margins of cottage cheese and cheese decreased. Based on the linear regression function, the statistical relationship between producer raw milk and processing and consumer margins can be found to be moderate and significant on average. The results show that the increase in producer raw milk prices reduced the size of the margin available at a higher level in all cases.

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