Price Discrimination and Pricing-to-Market Behavior of Black Sea Region Wheat Exporters

Abstract

Abstract. Substantial changes in the world wheat market have resulted in a shift in the market shares of the main wheat exporting countries. Since 2002, Kazakhstan, Russia, and Ukraine (KRU) have become important wheat exporters on the world market, and their pricing behavior has become a vital issue. By applying the pricing-to-market model to wheat exports, this study analyzes the price-discriminating behavior of KRU wheat exports from 1996 to 2012. The results demonstrate that KRU are able to exercise price discrimination in some importing countries, but in most they either face perfect competition or set common markups in imperfectly competitive markets.

Pricing‐To‐Market Analysis: The Case of EU Wheat Exports

“…These countries are substantial net importers of wheat and they are also attractive markets for major competitors such as Canada, Russia, Ukraine and the US, limiting opportunities to price discriminate. In this regard, our results on the absence of PTM in EU wheat exports for such destination markets mirror those for ex‐Soviet rivals (Pall et al ., ; Gafarova et al ., ). Overall, there is also little evidence of PTM in exports to regular, lower volume destination markets such as Albania which already imports most of its wheat from Russia, Serbia and Montenegro (ACIT, ).…”

“…Third, there are variable volume importers such as Belarus. For instance, in the latter case trade is often very thin but in some periods sales are substantial, reflecting instabilities in supply from Russia and Ukraine (Belarus's main wheat suppliers) due to weather related factors and intermittent trade restrictions (Gafarova et al, 2015). Finally, there are intermittent importers where there are periods for which the EU records no sales and these are therefore excluded from the time-series analysis conducted here.…”

“…In recent years, the increased role of Russia and other ex-Soviet countries as key players on the world wheat market, led to several new PTM studies such as Pall et al (2013), Uhl et al (2016) and Gafarova et al (2015). Pall et al (2013) 2002-2011 and 2006-2011 (with high world wheat prices) using a firm-level dataset.…”

“…Their results show a high degree of PTM with price discriminating behaviour by Russian firms in 25 of 61 destination markets during the longer period and 14 of 49 export markets for the shorter period. Gafarova et al (2015), who examine price discriminating behaviour of exporters in Kazakhstan, Russia and Ukraine in response to bilateral exchange rate fluctuations during 1996-2012, find that there is evidence of PTM behaviour, though this is the exception rather than the norm. The authors attribute this to the relative weakness of ex-Soviet countries in international wheat markets, stemming from production being highly weather dependent, of undifferentiated quality and periodically affected by export restriction policies.…”

“…Initial research has been criticised for being based on insufficient disaggregation of product categories (Lavoie and Liu, 2007) and for failing adequately to examine the time-series properties of data. More recent studies investigate PTM in agricultural trade, and examine wheat exports from Canada (Pick and Carter, 1994;Carew and Florkowski, 2003;Lavoie, 2005;Jin, 2008), the US (Pick and Park, 1991;Pick and Carter, 1994;Carew and Florkowski, 2003) and Russia or other ex-Soviet countries (Pall et al, 2013;Gafarova et al, 2015;Uhl et al, 2016). However, there is a lack of PTM analysis for EU wheat exports, which is surprising given its importance in this market.…”