Evaluation of the price transmission in the commodity chain of milk and butter in the Czech Republic

Jana Lekešová and Ivana Blažková

Abstract: The paper deals with the price transmission within the milk commodity chain in the Czech Republic. The aim of the paper is to assess the price transmission within the commodity vertical of the semi-skimmed long-life cow’s milk (1.5% fat) as a product with low added value, and of butter as a higher added value product. The dataset consists of monthly prices on the sub-markets of the analysed commodity chain with the period of January 2002 to August 2020 that were retrieved from the Czech Statistical Office and the Ministry of Agriculture of the Czech Republic. Methodologically, the analysis is based on the elasticity of price transmission (EPT) coefficients used in both supply and demand direction, on the correlation of price differences, and on the evaluation of the time-lag changes in output prices in case of changes in input prices. The results show imperfections in the transmission of price changes between individual levels of the commodity chain. Time delays of price transmission are not obvious in the case of these commodities due to the perishability of these products. Finally, several suggestions for further research are given.

Keywords: agribusiness; commodity chain; dairy product; milk; price transmission

Date published: 2022-02-16