Determinants of the Farm-to-Retail Milk Price Spread

摘要

The farm-to retail milk spreads increased significantly during late 1990 and early 1991 as farm prices decreased while retail prices either stayed the same or else went down more slowly. In the report, farm-level fluid milk prices and processor costs are estimated from USDA's Agricultural Marketing Service data and from film-level data acquired from a private cost-accounting company for the period 1974-91. Comparisons of the fluid milk price spread with other food price spreads indicate that the milk price spread had lagged behind other food price spreads since 1986 but then caught up in 1990 and 1991. A study of price transmission between 1983 and 1990 indicates that retail prices react more quickly and completely to farm price increases than to farm price decreases.