Can Family Farms Depend on Price Information? Testing Butter and Curd Price Integration in Poland

Anna M. Klepacka, Wojciech J. Florkowski and Cesar Revoredo-Giha
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Anna M. Klepacka: Institute of Economics and Finance, Warsaw University of Life Sciences, 02-787 Warsaw, Poland
Wojciech J. Florkowski: Department of Agricultural and Applied Economics, University of Georgia, Griffin, GA 30223-1797, USA

Agriculture, 2021, vol. 11, issue 5, 1-16

Abstract: This study examines the integration of regional dairy markets in Poland, which is a major European dairy producing country. The analysis of prices is important, as many dairy farmers are members of dairy processing cooperatives, and their incomes are affected by the prices of two popular products: butter and curd. Moreover, the period of study included significant fluctuations in the world market and the termination of the milk quota system in the European Union (EU). The price records used in this study are from the two main milk-producing regions in the country: Northern and Central. The data were tested for stationarity and Granger causality before estimating a Vector Error Correction (VEC) model. Estimation results show that the removal of the milk quota lowered prices of butter and curd in the two regions. The relationships of the prices in both regions for butter markets were nearly perfect during the period January 2010–November 2017, but curd prices were found unintegrated. Impulse response analysis showed that the effect of shocks was mostly absorbed in a two-week period and prices returned to full equilibrium in about four to five weeks. This fast price adjustment indicates that both markets operate properly and no market participant can obtain gains above those offered at equilibrium.

Keywords: milk quota; dairy market integration; butter price; curd price; Vector Error Correction; price shock (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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