Tag: elasticity

There are problems in the functioning of the food supply chain related to price transmission and value-added distribution. Vertical price transmission analysis is an important research area in the aspect of the assessment of impact on the welfare at the producer, processor and retailer levels. The paper investigates vertical price transmission along the whole milk supply chain after the end of European Union milk quotas in the Slovak market using a vector error correction model. Monthly farm-gate, processor and retail prices in the Slovak Republic covering the period from 2010 to 2016 were used in the analysis. Using the Johansen co-integration technique, empirical evidence has been found for two co-integration equations between farm-gate, processor and retail prices. We show that short-term and long-term bilateral causal relationships exist between prices at different market stages. The estimation of the price transmission elasticity supports the assumption that price changes are not transmitted efficiently from one level to another. However, symmetric price transmission exists between farm-gate and processor prices for whole milk in the long term. The perfect price transmission may also be due to recently emerging and strengthening the producer organisations that enable producers support their bargaining position in the supply chain.

A study of the agricultural factor markets that support the farm economy of the southeastern United States aids the understanding of how farmers change the mix of factors as product and factor prices change. Factor demand elasticities were estimated for capital, land, labour, chemicals, energy and other intermediate inputs. On average; labour accounted for USD 0.410 of every USD 1 spent on agricultural inputs followed by other intermediate inputs, which accounted for USD 0.255. The demands for farm labour and other intermediate inputs were inelastic. The demand for farm chemicals was elastic, which indicates a lack of pricing power by companies that sell them. A substantial reduction in the use of farm chemicals could be achievable by increasing their price. Most of the factors are substitutes with the exceptions of capital and energy, and land and chemicals; which were found to be complements.

The accession of Hungary to the European Union (EU) in 2004 was expected to lead to price convergence to the EU levels. The influence of national and EU policies on Hungarian producers and consumers is important as they were facing a new situation. Consumers’ welfare depends on the constantly altering world- and common market, and political actions. The purpose of this study is to analyse welfare changes and distributional impacts on Hungarian food consumers. The paper focuses on Laspeyres index, compensating variation and elasticities of demand.