Examination of market structure in selected livestock agri-food chains in the Czech Republic

Abstract

This paper deals with a description of the most important livestock agri-food chains in the Czech Republic and an evaluation of their vertical price transmission. The paper examines the pork, beef, poultry, and milk agri-food chains generally from May 2004 to June 2011. The time series of selected variables contain biweekly, monthly or annual data and, according to data availability, contain a different number of observations within the selected period. The first part of the paper is focused on a descriptive analysis of the selected agri-food chains. Long-term developments and short-term fluctuations in production, supply and consumption, being the main factors which influence price level, are examined in particular. The second part of the paper is focused on vertical price transmission in the selected agri-food chains; specifically, the relationship between farm-gate price and wholesale price is examined and explained. For this purpose multivariate time series analysis is employed, namely the VAR and VECM models. Based on the empirical analysis, it could be concluded that the assumed long-term relationship was not confirmed for all analyzed agri-food chains. On the other hand, imperfect competition was confirmed; even its form may differ among the analyzed agri-food chains. However, generally speaking, one could say that wholesalers have a stronger position than farmers.

Keywords

• time series
• VAR
• VECM
• vertical price transmission
• livestock
• agri-food chain