Price transmission and relationships between agri-food value chains in Australia and Colombia

Abstract

Sharp fluctuations in agricultural prices have raised questions about asymmetry in vertical price transmissions in agri-food value chains. Farmer and export prices of banana, beef cattle and sugar cane for Australia and Colombia for the period from 1970 to 2010 were analysed, with results indicating cointegration between farmer and export prices in both countries, with the exception of sugar cane in Colombia. Asymmetric error correction models for each value chain identified vertical price transmission, relationships between farmer prices of related value chains in both countries and asymmetries in price transmission, where positive price shocks are more quickly transmitted to farmers.