Milk price distribution and factors in value adding chain
2010
Krievina, A., Latvia Univ. of Agriculture, Jelgava (Latvia);Latvian State Inst. of Agrarian Economics, Riga (Latvia)
The paper deals with establishing of the main milk price factors and the evaluation of distribution of the milk price among the actors of Latvian dairy supply chain. The evaluation of distribution of milk price is based upon the calculation of margins. The analysis of development of the margins shows the increasing bargaining power of retailers, in contrast to small bargaining power of farmers in relation to processors, especially at the time of falling prices and demand by the market. The available data indicate on reasons for concern both for liquid milk and cheese in terms of sharing the value added because the margins have shown a great fluctuation. Considering the main factors affecting the price, generally more concentrated farms is one of the preconditions for receiving higher price and better conditions for delivered milk. Concentration and vertical integration are also instruments that can help improve the sustainability of the supply chain and increase the value added that is achieved by higher entrepreneurial efficiency at each value adding stage.
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