Empirical analysis of price relations along the Finnish supply chain of selected meat, dairy, and egg products: A dynamic panel data approach

Abstract This study uses a panel cointegration and Error Correction Vector Autoregressive (EC‐VAR) approach to examine the long‐ and short‐run dynamics as well as the direction of causality between agricultural product prices, producer prices and consumer prices along the Finnish meat (i.e., beef, pork, and poultry), dairy (i.e., fresh milk, other milk products, cheese, and yoghurt) and egg supply chains for the period of 2005:01–2014:12. This study also examines the “cost‐push” and “demand‐pull” theories. The results indicate the presence of cointegration among the three price series for each of the eight food chains. The “demand‐pull” factors are found to have a stronger impact along the food supply chain than the “supply‐push” factors. The short‐run causality results show bidirectional causal relations among the three prices, whereas the long‐run causality findings support the assertion that consumer prices dominate the other two prices, implying an attempt by retailers to exert control over the pricing mechanisms along the Finnish food supply chain. The impulse response functions show that the agricultural product prices experience higher and more prolonged fluctuations around the long‐run equilibrium than the other two prices. [EconLit citations: Q11, C32, C33].