Can Family Farms Depend on Price Information? Testing Butter and Curd Price Integration in Poland

This study examines the integration of regional dairy markets in Poland, which is a major European dairy producing country. The analysis of prices is important, as many dairy farmers are members of dairy processing cooperatives, and their incomes are affected by the prices of two popular products: butter and curd. Moreover, the period of study included significant fluctuations in the world market and the termination of the milk quota system in the European Union (EU). The price records used in this study are from the two main milk-producing regions in the country: Northern and Central. The data were tested for stationarity and Granger causality before estimating a Vector Error Correction (VEC) model. Estimation results show that the removal of the milk quota lowered prices of butter and curd in the two regions. The relationships of the prices in both regions for butter markets were nearly perfect during the period January 2010–November 2017, but curd prices were found unintegrated. Impulse response analysis showed that the effect of shocks was mostly absorbed in a two-week period and prices returned to full equilibrium in about four to five weeks. This fast price adjustment indicates that both markets operate properly and no market participant can obtain gains above those offered at equilibrium.

Leading properties of GDT auctions for dairy prices

PurposeProfessionals from the dairy sector commonly believe that the results of Global Dairy Trade (GDT) auctions are a good leading indicator for prices of dairy commodities. The purpose of this paper is to test that hypothesis for prices of key dairy commodities (skimmed milk powder (SMP), whole milk powder (WMP), butter and cheddar) in the main dairy markets (the US, EU and Oceania).Design/methodology/approachThe leading properties of the GDT auctions are investigated using vector error correction models (VECM).FindingsThe results show that prices at GDT auctions may be treated as a benchmark for global prices of WMP and SMP as they affect prices in all considered markets. However, in case of EU market the relationship with the GDT is bidirectional. GDT prices reveal some leading properties also in cheddar market, however price relationships in this market are much more complex. In case of butter market, GDT can be regarded as a benchmark only for Oceania.Practical implicationsThe results of this paper improve knowledge on price transmission in dairy markets, show the role of the GDT auctions in the price setting process, and thus may help professionals from the dairy sector to formulate their price expectations more precisely.Originality/valueDespite the fact that many professionals from the dairy sector treat GDT auctions as a benchmark, so far their leading properties have not been scientifically proven.

Destabilizing intervention in EU dairy markets

Butter and skimmed milk powder (SMP) are considered to be primary dairy commodities as they enable storage of fat and protein. The spread between butter and SMP prices in the European Union (EU) has been stable for many years. However, in 2016, butter prices suddenly increased to reach extremely high levels while SMP prices remained low. As a consequence, the price spread between milk fat and protein has surged, leading to severe imbalance in the EU dairy market. Some professionals argue that the main reason for this occurrence are large intervention stocks of SMP accumulated by the European Commission (EC) which weigh on prices. Nevertheless, no one has yet proved the existence of a causal relationship between the intervention stocks accumulated by the EC and the butter/SMP price spread. Hence, the purpose of this paper is to test that hypothesis. The causality between the EC intervention stocks and the butter/SMP price spread was tested using the Granger causality approach. The results show that the difference between butter and SMP intervention stocks accumulated by the EC Granger-causes the butter/SMP price spread while there is no causality in the opposite direction, which supports the hypothesis tested.

DEANIMALISATION PROCESSES IN THE POLISH CARPATHIANS – PRODUCTION, ECONOMIC AND ECOLOGICAL ASPECTS

This paper addresses a current issue regarding the increasing problem of a decreasing cattle population in the Polish Carpathians. The problem exacerbated after 1990, as a result of changes in prices of the means of production and agricultural products. It intensified even further after Poland joined the EU. The decrease in cattle population is observed in all districts in the Carpathians. This article includes a diagnosis of four such districts: two with the highest decrease (Łańcut: -67.0% and Sucha: -52.6%) and two with the smallest decrease in cattle population (Bieszczdy: -8.1% and Wadowice: -11.5%). Expert assessments were used to this end. The article includes a definition and analysis of the deanimalisation process and an indication of the consequences of this process in agriculture, in the local environment and in the broadly understood ecological context. It follows from the research that favourable natural conditions, good for breeding ruminants, largely determine high cattle density but, at the same time, these conditions do not impact the decrease in the cattle population to such an extent. The decrease is related to the low concentration of herds, generational changes and the disappearance of local dairy markets. As a result of progressing deanimalisation, abandoned meadows and pastures, as well as part of arable lands, are being permanently lost. Instead, these lands become overgrown with invasive plant species and shrubbery.

Zmienność światowych cen żywności w latach 2000-2018

The aim of the paper is to present the main direction of change in global prices of farm and food products during 2000-2018, determination of the level of change and indication of the reasons for these phenomena. The main source for the data was average annual indices of food prices from the FAO. The analyses showed that in 2011 global food prices reached a level over two and a half times higher than in 2000, but during the period under investigation they increased by 85%. The greatest increase was in the price of vegetable oils due to the development of biofuels. The largest fluctuations in prices were noted in the sugar and dairy markets, and the smallest in the meat market. It was concluded that during longer periods demand had the greatest influence on global food prices, while during shorter periods it was drastic changes in supply.