Price Discovery in the United States Dairy Industry

The organized Exchange spot (cash) cheese market is a private industry institution that has historically performed a primary price discovery function in the U.S. dairy industry. In addition to affecting cheese prices in contract cheese market, the Exchange spot cheese prices have influenced prices paid for milk at the farm level that are set within the system of Federal Milk Marketing Orders (FMMOs). The effects that the Exchange spot cheese market has on FMMOs milk pricing attract increased attention in light of the recent concerns about increasing milk price volatility and its effect on the dairy farm profitability. While the design of milk pricing within FMMOs has evolved over the last three decades, the effects of the Exchange spot cheese prices on FMMOs milk pricing have intensified. The research analyzes the conduct and performance of the Exchange spot cheese market during three FMMOs milk pricing regimes (Minnesota-Wisconsin price regime, Basic Formula Price and modern Multiple Component Pricing regime), with a particular focus on the Exchange spot cheese price behavior.

Tendencje na rynku masła i serów na świecie i w Polsce w latach 2001-2017

Changes in production and trends in shortages / market surpluses of butter and cheese in the world and in Poland in 2001-2017 were presented. Market surplus of butter increased in New Zealand, EU and Belarus, and decreased in Australia and Ukraine. Shortages grew in China, Mexico, Iran and Turkey, and decreased in Russia and Canada. Relatively balanced production and consumption occurred in India, Pakistan, the USA and Brazil. On the cheese market, surplus grew in: EU, USA, New Zealand, Argentina and Belarus, and decreased in Australia and Ukraine. The shortages grew in: Russia, Brazil, Mexico. In Poland, there were surpluses in butter and cheese production, which resulted in growing exports, directed mainly to EU countries. Prices of butter and cheese in EU countries and on the world market were characterized by convergence. At the beginning of the analyzed period, butter prices in the EU were 134% higher than on the world market, and cheese prices were higher by 92.6%, and in 2017 these differences were respectively 6% and 0.6%.

Channel Concentration and Retail Prices: Evidence from the Traditional Cheese Market of Cyprus

This study examines the impact of channel concentration on retail prices in the traditional cheese market of Cyprus. The analysis is based on a panel data model for retail prices and a non-linear simultaneous equations model for the estimation of market power. Our results suggest that retail cheese prices tend to be positively related to producer concentration and negatively related to channel concentration. We provide explanations for these results based on the structure-conduct-performance and countervailing buyer power models in published industrial organization studies.

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 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.