Market Structure of the Feed Industry in Germany: Causing Asymmetric Spatial Price Transmission?

Schulte Hinrich () and Oliver Musshoff
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Schulte Hinrich: Department of Agricultural Economics and Rural Development, Georg-August-Universität Göttingen, Platz der Göttinger Sieben 5, Göttingen, Germany

Journal of Agricultural & Food Industrial Organization, 2019, vol. 17, issue 1, 11

Abstract: Over the last couple of years, the production amount of feed and the market concentration of the feed industry vastly increased in North-Western Germany. This development might lead to asymmetric price transmission of feed between regions in Germany because feed markets in other regions grow slower and therefore decline in relative volume and importance. To analyze this development, the objective of the study was to quantify price relationships of pig, hens and calves feed prices between Western Lower Saxony, Eastern Lower Saxony and Westphalia. Assuming Western Lower Saxony as the central market and using monthly price observation from 2007 until 2017, the results show that the feed prices were co-integrated across regions and type of feed. The results show a tendency of asymmetric price transmission for pig feed between Western Lower Saxony and Eastern Lower Saxony but this was not statistically significant at the 5 % level. Furthermore, we also tested the influence of the feed scandals dioxin in pig feed and mold in imported maize from Serbia, but we could not estimate a pattern of price adjustments between regions according to the feed scandals. Summarizing the results, we came to the conclusion that feed prices might be perfectly transmitted across regions and independently from feed scandals and type of feed.

Keywords: market concentration; feed industry; asymmetric price transmission (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/jafio-2018-0007

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