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Retail Dairy Prices Fluctuate with the Farm Value of Milk

Published online by Cambridge University Press:  15 September 2016

Hayden Stewart  and
P. Blayney Don
Hayden Stewart
Affiliation:
Food Markets Branch, Food Economics Division
P. Blayney Don
Affiliation:
Animal Products and Cost of Production Branch, Market and Trade Economics Division, of the Economic Research Service, U.S. Department of Agriculture (USDA), in Washington, D.C.
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Abstract

Farm milk prices tend to be volatile. Dairy farmers, industry pundits, and policymakers further tend to react to price volatility with alarm. One point of concern is the response of retail prices. This study investigates farm-to-retail price transmission in the 2000s for whole milk and Cheddar cheese. Results show that price shocks at the farm gate are transmitted with delay and asymmetry to retail. Differences in the nature of price transmission for whole milk and Cheddar cheese prices are also identified.

Keywords

asymmetric price transmissioncointegrationdairy priceserror correction models
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 40 , Issue 2 , August 2011 , pp. 201 - 217
Copyright
Copyright © 2011 Northeastern Agricultural and Resource Economics Association 

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