DT 12/21 - Incidencia del mercado internacional y de la estructura del mercado doméstico en la transmisión de precios de la cadena láctea: evidencia desde Uruguay

The dairy chain in Uruguay is very important from economic, social and decentralization standpoints. The analysis of the main links of the chain through the study of price transmission contributes to providing greater transparency in price formation in a context of enhanced volatility and uncertainty. In this line, the price transmission relationships between the export industry and the international market and between the national industry and the dairy producers were estimated and quantified using Error Correction Vectors Models (ECVM). In the first relationship, it was estimated that an increase of 1% in the international price would translate into an increase in the export price of the industry of 1,36%. While the terms of trade between the industry and the dairy producer was 1,9%. A 1% increase in the industry sales price is transmitted by 1,9% to the producer price. For the analysis of the market functioning Threshold Cointegration (TAR) and Momentum Threshold Cointegration (MTAR) models were estimated, as there could be asymmetries between the price received by the producer and the price of the industry, identifying plausible exercises of market power by the industry. Results indicated that there exist asymmetries in the price transmission. The main company establishes a minimum value in the price of the raw material that the other companies must follow and take as a reference. As producers have an important position in the company, they can react more quickly when their price is below the long-term equilibrium. In other words, there is a positive influence on the price paid to dairy producers which may be due to the market structure in which a dominant position is held by a farmer’s cooperative.