Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile

Since 1990 row milk production has exhibited a rapid increase from 890 million liters in 1990 to 1,818 million in 2006. The excess production has allowed for the expansion of the export sector, converting Chile in a net exporter in 2001. A relevant question in this new market scenario is how this st...

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Autores principales:	Engler,Alejandra, Nahuelhual,Laura
Lenguaje:	English
Publicado:	Instituto de Investigaciones Agropecuarias, INIA 2008
Materias:	milk market international trade vector error correction persistence profiles
Acceso en línea:	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-58392008000200006
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spelling	oai:scielo:S0718-583920080002000062018-10-01Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in ChileEngler,AlejandraNahuelhual,Laura milk market international trade vector error correction persistence profiles Since 1990 row milk production has exhibited a rapid increase from 890 million liters in 1990 to 1,818 million in 2006. The excess production has allowed for the expansion of the export sector, converting Chile in a net exporter in 2001. A relevant question in this new market scenario is how this structural change can affect milk prices paid to producers in Chile. The consequences of this structural change were explored in this study using a Vector Error Correction (VEC) model and cointegration analysis. The results indicated that the domestic, CIF (Cost, Insurance, Freight) and FOB (Free On Board) prices were cointegrated, implying that changes in the import and export prices are transmitted to the domestic market affecting the milk price paid to producers. Prior to 2001, the import price (CIF) was the relevant reference dictating the movements of the domestic price. After 2001, the export price (FOB) became the reference, whereas the CIF price was no longer significant. The parameters of the VEC model suggest that the cointegrating relation between CIF and domestic prices for the first period under analysis (1990-2000) was clearer than that between FOB and domestic prices for the second period (2001-2007/3). The price elasticity for the FOB-domestic price vector had a large confidence interval, which is why it is difficult to draw strong conclusions regarding the impact of future FOB fluctuations on the milk price paid to producers in Chile after 2001.info:eu-repo/semantics/openAccessInstituto de Investigaciones Agropecuarias, INIAChilean journal of agricultural research v.68 n.2 20082008-06-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-58392008000200006en10.4067/S0718-58392008000200006
institution	Scielo Chile
collection	Scielo Chile
language	English
topic	milk market international trade vector error correction persistence profiles
spellingShingle	milk market international trade vector error correction persistence profiles Engler,Alejandra Nahuelhual,Laura Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile
description	Since 1990 row milk production has exhibited a rapid increase from 890 million liters in 1990 to 1,818 million in 2006. The excess production has allowed for the expansion of the export sector, converting Chile in a net exporter in 2001. A relevant question in this new market scenario is how this structural change can affect milk prices paid to producers in Chile. The consequences of this structural change were explored in this study using a Vector Error Correction (VEC) model and cointegration analysis. The results indicated that the domestic, CIF (Cost, Insurance, Freight) and FOB (Free On Board) prices were cointegrated, implying that changes in the import and export prices are transmitted to the domestic market affecting the milk price paid to producers. Prior to 2001, the import price (CIF) was the relevant reference dictating the movements of the domestic price. After 2001, the export price (FOB) became the reference, whereas the CIF price was no longer significant. The parameters of the VEC model suggest that the cointegrating relation between CIF and domestic prices for the first period under analysis (1990-2000) was clearer than that between FOB and domestic prices for the second period (2001-2007/3). The price elasticity for the FOB-domestic price vector had a large confidence interval, which is why it is difficult to draw strong conclusions regarding the impact of future FOB fluctuations on the milk price paid to producers in Chile after 2001.
author	Engler,Alejandra Nahuelhual,Laura
author_facet	Engler,Alejandra Nahuelhual,Laura
author_sort	Engler,Alejandra
title	Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile
title_short	Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile
title_full	Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile
title_fullStr	Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile
title_full_unstemmed	Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile
title_sort	implications of the structural change in dairy products trade on milk price paid to producers in chile
publisher	Instituto de Investigaciones Agropecuarias, INIA
publishDate	2008
url	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-58392008000200006
work_keys_str_mv	AT engleralejandra implicationsofthestructuralchangeindairyproductstradeonmilkpricepaidtoproducersinchile AT nahuelhuallaura implicationsofthestructuralchangeindairyproductstradeonmilkpricepaidtoproducersinchile
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Implications of the Structural Change in Dairy Products Trade on Milk Price Paid to Producers in Chile

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