Regional Milk Market Integration: Evidence from Central Europe

Roman Monika (), Kroupová Zdeňka Žáková () and Trnková Gabriela ()
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Roman Monika: PhD, Department of Logistics, Institute of Economics and Finance, Warsaw University of Life Science; Nowoursynowska 166, 02-787 Warszawa, Poland
Kroupová Zdeňka Žáková: PhD, Assoc. Prof., Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences Prague; Kamýcká 129, 165 00 Prague, Czech Republic
Trnková Gabriela: PhD, Department of Economics, Faculty of Informatics and Management, University of Hradec Králové; Rokitanského 62, 500 03 Hradec Králové, Czech Republic

Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics, 2024, vol. 381, issue 4, 23-49

Abstract: A well-integrated agricultural market is a precondition for the sustainability of agri-food systems since it contributes to optimal resource and product allocation and encourages specialization according to comparative advantage. The aim of the paper is to assess the processes of spatial price transmission in the milk market of Central European countries. This paper extends previous studies on the spatial integration of the milk market by providing a regional analysis of four Central European countries by examining the effects of distance, borders, and specialization on price transmission. Germany as the main milk producer in the European Union (EU) and the original member of the EU represents the base country for our analysis. The econometric analysis of the regional monthly raw milk prices reveals that the German regions, with the leading position in milk prices formation in Central Europe, together with the Czech and Slovak regions, can be regarded as a single milk market where prices tend to converge in the long run. In contrast, the Polish regions are still poorly integrated internally and externally. The perishability of the commodity coupled with the small size of the Polish farms means that farmers cannot easily switch to other, e.g., foreign buyers. This hinders price adjustment and is reflected in the economics of Polish dairy farms, whose profitability is low. Policymakers should, therefore, aim to equalize the market powers of agricultural producers and milk processors, e.g., by supporting the integration of dairy farms into producer organizations and sales cooperatives.

Keywords: milk market; price analysis; cointegration; border. (search for similar items in EconPapers)
JEL-codes: Q02 Q17 R10 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:zerpae:v:381:y:2024:i:4:p:23-49:n:1002

DOI: 10.30858/zer/194139

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