HORIZONTAL PRICE TRANSMISSION OF THE MILK MARKET IN THE CENTRAL EUROPEAN UNION COUNTRIES

The prices of agricultural commodities have been volatile in the last years and dairy sector has not been an exception. Milk producers were affected by price transmission not only in vertical chain but also horizontally. Our paper aims to assess the linkage and patterns between the prices of cow's raw milk in Slovakia and other central European countries. For this purpose the price transmission methodology, such as unit root tests, cointegration tests, error correction models, and Granger causality tests are used. We apply monthly data for producer prices of raw milk in the following EU member states Slovakia, Czech Republic, Poland, Hungary during the period from January 2005 to June 2017. Our results confirm the existence of the Law of one price when milk producer prices in different locations are co-integrated. (C) 2017 The Authors. Peer-review under responsibility of the Organizing Committee of GSCMEM 2017.