World prices and domestic food price spikes

In this paper we aim to assess the mechanics of the global food price increases experienced in the recent years, most profoundly during the 2007-2008 food price spikes. At this stage, we aim to test, whether there is an empirically assessable relationship between World agricultural commodity prices, World oil prices and Hungarian producer and consumer food prices. After briefly discussing the background of the food price surge, and some studies empirically assessing it, we estimate a Vector Error Correction Model (VECM) with two long-run relationships, modelling vertical and horizontal price relationships (price transmissions). Preliminary results express (as somewhat expected for a small open economy as Hungary) that global developments have direct and significant effects upon price levels in Hungary regardless whether a vertical or horizontal price dimension is used. Further research will focus on determination of the magnitude, speed of occurrence and duration (needed to return to equilibrium) of the abovementioned global shifters express upon domestic agricultural and food price levels

Mezőgazdasági árak = Agricultural Prices

Jelen kutatás azt vizsgálja, megfigyelhető-e a piaci erő alkalmazása a magyar sertéshús szektorban. A kutatás hiánypótló, mivel ellentétben az eddigi kutatásokkal, ahol jellemzően általános és nem-teljes ártranszmissziós modelleket becsültek, jelen kutatásban egy strukturális piaci modellt vezetünk le, majd becsülünk meg. Az elemzést, a termék vertikum első lépcsőjén, a vágásra szánt élő sertések keresletének és kínálatának szintjén végeztük. A kutatás legfontosabb eredménye, hogy ezen a szinten nem mutatható ki a piaci erő alkalmazása. Ezt az első látásra meglepő eredményt a magyar sertés tenyésztés, vágás és feldolgozás strukturális tulajdonságainak az elméleti vizsgálata is megerősítette. Megjegyzendő, hogy a sertésvertikumnak csupán az első szintjét elemeztük. Annak ellenére, hogy ezen a szinten nem mutattuk ki, a piaci erő jelen lehet a további piaci szinteken. A szupermarket láncok növekvő fontossága és piaci részesedése, valamint a kiskereskedelemben megnyílvánuló gyors koncentrációs folyamat a piaci erő kiskereskedelemben való jelenlétére utalhat. | This study investigates the existence of market power in the Hungarian pork chain. Doing this, it contributes to filling a gap in the literature. Contrary to many other studies, not an incomplete price transmission model but a structural market model is derived and estimated. The analysis is restricted to the demand and supply of pigs and thus the first stage of the Pork chain. The hypothesis of market power had to be rejected. The lack of market power result is also emphasised by the theoretical inspection and description of the structural characteristics of pork production, slaughtering and processing. Furthermore, only a small part of the total chain was analyzed. The lack of evidence on market power in the first stage, does not imply that market power is absent in downstream sectors as well. The growing importance of supermarket chains, and the rapid concentration processes in retailing suggest that market power might be present in retailing

Monetary impacts and overshooting of agricultural prices in a transition economy

This research focused on the time adjustment paths of the exchange rate and prices in response to unanticipated monetary shocks. Johansen’s cointegration test along with a vector error correction model was employed, to investigate whether agricultural prices overshoot in a transition economy. The empirical results indicate that agricultural prices adjust faster than industrial prices to innovations in the money supply, affecting relative prices in the short run, but strict long-run money neutrality does not hold

What causes asymmetric price transmission in agro-food sector? : meta-analysis perspective

There now exists a large literature on price transmission in agro-food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not allow investigating the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations for why we should expect (a)symmetry. In response to this, this paper tries to uncover the reasons for asymmetric price transmission in the agro-food chain. To do so, we use meta-analysis drawing on the existing studies from this area. Our focus is on the organizational and institutional characteristics of the agro-food supply chain. Our findings suggest that asymmetric price transmission in farm-retail relationship is more likely to occur in sectors/countries with more fragmented farm structure, higher governmental support and more restrictive regulations on price controls in retail sector. On the other hand, more restrictive regulations on entry barriers in retail sector and relative importance of the sector in question tend to promote symmetric farm-retail price transmission. The latter is also more likely in the presence of strong processing industry

Empirical tests of sale theories : Hungarian milk prices

The paper tests various predictions of the sale theory literature, using the retailer specific price data in Hungary. Besides being set in a New Member State, characterised by rather different history of retailing than the established market economies, one of the main innovations of this paper is the comparative assessment of price promotions of two homogenous, every-day products different only with respect to their perishability: one litre boxed and one litre durable fluid milk. Using a battery of empirical techniques from the simple summary statistics, the distribution analysis to the discrete choice models and the co-integration, there is concluded that competing theory predictions on price distributions are not accepted. Also the Hypothesis that manufacturers determine timing of sales is rejected. The results do not confirm that durable goods should have a qualitatively different pricing pattern than perishable products. When the temporal order of sales is considered, the estimations support the Hypothesis of alternate sales. In sum, the predictions of the existing retail sales models only partly confirm certain empirical aspects of price promotions

Élelmiszerár volatilitás az új tagországokban

Több évtizedes relatív stagnálás után 2008 - ban és 2011 - ben a mezőgazdasági alapanyagok és élelmiszerek árai hirtelen az égbe szöktek, megnövelve a tudományos igényt a mezőgaz dasági árak volatilitásának elemzésére és visszahozva a témát a magas szintű politikai kérdé sek körébe. A cikk az élelmiszerárak volatilitását vizsgálja a 2004 - ben és 2007 - ben az Európai Unióhoz csatlakozott tagországok példáján, havi Eurostat adatok alapján, leíró statisztikákkal, majd a változások okait igyekszik feltárni. Eredményeink szerint az új tagországokban 2005 - höz képest folyamatosan nőttek az élelmiszerárak, noha a relatív szórás értékei jól azonosítják a 2008 - as és 2011 - es kiugró értékeket. A relatív szórás értékek és a 10%- os ársáv eredmények alapján az új tagországok alapvetően két csoportra bonthatók: magas és alacsony élelmiszerár volatilitással rendelkező országokra. A változások alap vetően nemzetközi tendenciát eredményei, ám a cikk azonosít néhány regionális sajátosságot is

Contractual relationships in the Hungarian milk sector

In this paper we present an empirical analysis of farmers' contracting choice in the Hungarian milk sector using 2005 milk producer survey data, employing transaction cost economics. We focus on analysing some key determinants of farmers' contracting choices: type of contracts, duration, number of contractors, incentives provided in the contract and business history of farmers and buyers. Some of the main results include the importance and effect of farm size, quantity of milk delivered, planned short and long run or contract related investment on farm, the possibility of farmer to influence prices on the contracting choices. --transaction costs,contracts,milk products,Hungary

Does market structure influence price transmission in the agro-food sector?

There exists a large literature on price transmission in agro-food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not investigate the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations of why we should expect (a)symmetry. In response, this paper investigates the reasons for asymmetric price transmission in the agro-food chain, using meta-analysis of exist- ing studies. Our focus is on the organizational and institutional characteristics of the agro-food supply chain. Our findings suggest that asymmetric price transmis- sion in farm – retail relationships is more likely to occur in sectors/countries with more fragmented farm structure, higher governmental support and more restrictive regulations on price controls in the retail sector. On the other hand, more restric- tive regulations on entry barriers in the retail sector and the relative importance of the sector tend to promote symmetric farm – retail price transmission. The latter is also more likely in the presence of a strong processing indust