Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile

Abstract

Since 1990 row milk production has exhibited a rapid increase from 890 million liters in 1990 to 1818 million in 2006. The excess production has allowed for the expansion of the export sector, converting Chile in a net exporter in 2001. A relevant question in this new market scenario is how this structural change can affect milk prices paid to producers in Chile. The consequences of this structural change were explored in this study using a Vector Error Correction (VEC) model and cointegration analysis. The results indicated that the domestic, CIF (Cost, Insurance, Freight) and FOB (Free On Board) prices were cointegrated, implying that changes in the import and export prices are transmitted to the domestic market affecting the milk price paid to producers. Prior to 2001, the import price (CIF) was the relevant reference dictating the movements of the domestic price. After 2001, the export price (FOB) became the reference, whereas the CIF price was no longer significant. The parameters of the VEC model suggest that the cointegrating relation between CIF and domestic prices for the first period under analysis (1990-2000) was clearer than that between FOB and domestic prices for the second period (2001-2007/3). The price elasticity for the FOB-domestic price vector had a large confidence interval, which is why it is difficult to draw strong conclusions regarding the impact of future FOB fluctuations on the milk price paid to producers in Chile after 2001.

Transmisión De Precios Internacionales en El Mercado Lacteo Chileno

“…Algunas de las respuestas son la calidad de la leche y la estacionalidad de la producción a lo largo del año. Pero, además, tal como lo establece la teoría económica, en una economía abierta los precios internacionales son un referente para la fijación de precios internos de economías pequeñas, que no influyen en el precio mundial, pero que si actúan como tomadores de precio como es el caso de Chile (Engler y Nahuelhual, 2008).…”

“…En estudios previos que analizan la transmisión de precios de commodities, tanto en Chile como en otros países, son ampliamente utilizados los precios nacionales, así como los precios internacionales, entendidos estos últimos como los precios de importación y/o exportación (Engler y Nahuelhual, 2008;Newton, 2016;Labra et al, 2017). Con estas variables se estiman las relaciones de cointegración entre las series de precios, es decir, si siguen una relación de largo plazo común.…”

Brechas de rentabilidad económica en pequeñas unidades de producción de leche en el altiplano central mexicano

“…As an indicator, EP quantifies the exchange relationships between the dairy farms and the market; in other words, it reflects the balance between labor and input costs, and the product price paid to milk production chain participants (7,8) . This indicator is also sensitive to agroecological resource availability, market distortion from subsidies, hoarding, national price controls, and international prices for milk products, inputs and milk substitutes (9)(10)(11)(12) . Economic profitability is therefore best evaluated by calculating the quantity of internal factors, including those not actually spent or received, using a net cost-benefit ratio (NCB) (13,14) and total value-added (VA) by employed population or producing cow (7,15,16) .…”

“…Economic profitability is therefore best evaluated by calculating the quantity of internal factors, including those not actually spent or received, using a net cost-benefit ratio (NCB) (13,14) and total value-added (VA) by employed population or producing cow (7,15,16) . In addition to being subsidios, acaparamiento, control nacional de precios y por los precios internacionales que alcanzan los lácteos, insumos y sustitutos de leche (9)(10)(11)(12) ; por lo que es conveniente evaluar la RE calculando el monto de los factores internos, aun cuando estos no hayan sido erogados o recibidos de forma real, por medio de la relación beneficio costo neto (BCN) (13,14) y el valor agregado total (VA), por población ocupada o por vaca en ordeño (7,15,16) . Además de asociarse a la productividad de las UPL, la RE es un indicador cuantitativo de su competitividad, entendida como una medida multidimensional del éxito para concurrir al mercado con características adecuadas de precio, calidad y disponibilidad de sus productos lácteos (16,17) .…”

Price Transmission within selected Agricultural Markets of Latin America

“…Other papers concentrate their analysis on one country, especially on Chile and Brazil, probably because of the availability of data. For example, , and Engler and Nahuelhual (2008) worked on the dairy sector in Chile. Margarido and Lima (2009) and Anguiar and Santana (2002) studied price transmission of farm prices in Brazil.…”