Price transmission in the agri-food value chain - from a farmer perspective

Abstract

Price transmission in the agri-food value chain - when changes in one price cause another price downstream to change - is an important issue for farmers, markets and the economy as an efficient market price setting is crucial for all market players. However, there are numerous examples of price transmission in the agriculture value chain not working optimally, and there are several different forms of incompleteness and imperfection. There are a number of possible causes, but it is difficult to document on the basis of empirical data.
The aim of this article is therefore to document the presence of imperfect price transmission, to determine some of the underlying causes and driving forces behind the phenomenon as well as highlight farmers’ interests, role and opportunities in connection with ensuring more effective price transmission.
On the basis of an example of a grain-bread value chain, it is apparent that the price increases downstream occur relatively quickly and are significant, while the price decreases become smaller and significantly slower as one moves forward in the value chain. Both lags and asymmetric price transmission are present. The example also shows that bread prices increase far more than can be explained by the increase in the price of grain. Bread prices have, therefore, overreacted to the increase in the grain price.
Farmers can move downstream in the value chain via their cooperatives and in this way contribute to the creation of improved price transmission, while at the same time, gain access to segments with higher margins and greater market power.
Original languageEnglish
Title of host publicationHealthy agriculture for a healthy world : proceedings
EditorsHeather Watson, Mathieu Lipari, Sophie Gendron, Marie-Claude Bouchard, Suzanne Couture, Nathalie Nadeau
Number of pages9
Volume1
Place of PublicationQuébec
PublisherInternational Farm Management Association
Publication date2015
Pages129-137
ISBN (Electronic)978-2-7649-0495-4
Publication statusPublished - 2015
Event20th International Farm Management Congress: Healthy Agriculture for a Healthy World - Laval University, Québec, Canada
Duration: 12 Jul 201517 Jul 2015
Conference number: 20

Conference

Conference20th International Farm Management Congress
Number20
LocationLaval University
Country/TerritoryCanada
CityQuébec
Period12/07/201517/07/2015

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