Vertical price transmission along the potato supply chain in Lithuania

LTReikšminiai žodžiai: Žemės ūkis; Tiekimo grandinė; Integracija; Bulvės; Kainų reguliavimas; Agriculture; Supply chain; Cointegration; Potato; Price transmission.

ENPotato sector is one of the competitive areas of the European Union (EU) agriculture. Although Eurostat declared that in 2015 Lithuanian share in the EU-28 harvested production was modest and composed only 0.7%, according to Food and Agriculture Organization of the United Nations (FAOSTAT), this crop remained on the list of top 10 commodities by net production value in Lithuanian agriculture. However, over the past decades the Lithuanian potato sector survived undesired transformations. The aim of this paper is to analyse the changes of the main indicators, related to the potato sector, and vertical price transmission among the chain of potatoes in Lithuania. The conducted research indicates the most important development trends of the potato sector and applies econometric techniques to investigate if there is any long-run relationship between the farm and retail prices of potatoes for the period of 2010 to 2016. Although the statistics show the shrinking production and domestic consumption of potatoes in Lithuania, the analysis of the vertical price transmission does not provide evidence of market inefficiencies. The Johansen cointegration test confirms the existence of a long-run relationship between the farm and retail prices, while the Granger causality test shows that there is a bidirectional causality between the examined series. The M-TAR model does not provide evidence of the farm and retail price asymmetry in the long run. [From the publication]