Vertical Price Transmission and Spillovers between Agri-Food Chains

Abstract

Price transmission has been used as an indicator of market integration to assess competitiveness of agri-food chains and margins captured in rural areas. However, spillovers between farmer prices have been neglected as a way to improve price transmission and revenue distribution in related agricultural products. This manuscript compares vertical price transmission, effects of marketing input prices and spillover effects between three agri-food chains in three countries, using asymmetric error correction models. Results identified spillover effects between farmer prices, differences between countries in the speed of price transmission and effects of marketing input prices on prices paid tomfarmers. Accordingly, agricultural policies should consider these spillovers between farmer prices when designing interventions to raise incomes in rural areas.