Retail Dairy Prices Fluctuate with the Farm Value of Milk

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 chees...

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Bibliographic Details
Published in:Agricultural and resource economics review 2011-09, Vol.40 (2), p.201-217
Main Authors: Stewart, Hayden, Don, P. Blayney
Format: Article
Language:English
Subjects:
Agricultural economics
Agriculture
Asymmetry
Contributed Papers
Dairy industry
Dairy products
Error correction & detection
Expected values
Milk
Price increases
Retail stores
Volatility
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Summary: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.
ISSN:1068-2805
2372-2614
DOI:10.1017/S1068280500008017