Modeling of the factors influencing the dairy market in Ukraine

Abstract

Purpose. The present article aims to identify main determinants influencing development of demand at the dairy market in Ukraine (the average volume of milk consumption per capita), to evaluate their impact on the demand, to assess dependencies between the factors and the partial elasticity coefficients for their further use in forecasting. Methodology / approach. In the research, the authors used information from the State Statistics Service of Ukraine concerning dynamics of the volume of milk consumption per capita and supply of milk to processing enterprises in Ukraine, as well as dynamics of the main factors influencing the mentioned indicators in 2006–2020. The factors, which were analyzed in the work, included milk production by farms of all categories, volume of produced dairy products, the average price of milk and number of cattle. The multicollinearity was studied by applying the Farrar-Glauber test separately for each of the factors influencing the above-mentioned resulting characteristics. To develop the econometric model, the authors used the least squares method, identified density of connection, the model adequacy by the F-test, available autocorrelation and heteroscedasticity, statistical significance of the model parameters. Results. According to the results of conducted research it is determined that all conditions of adequacy of the economic-and-mathematical model are satisfied to assess the dependency of milk consumption per capita on the supply of milk to processing enterprises, dependency of the supply of milk to processing enterprises on the average price of milk, and dependency of the supply of milk to processing enterprises on the number of cattle. These models can be used for the further analysis of the corresponding economic processes at the dairy market of Ukraine. Calculation of the partial elasticity coefficients confirms that the factors’ impact on the resulting characteristics is characterized by low elasticity, particularly the growth of the supply of milk to processing enterprises by 1 % causes the increase of milk consumption per capita by 0.209 %, whilst the raise of the average price of milk by 1 % results in reduction of the supply of milk to processing enterprises by 0.562 %, and the increase in the number of cattle by 1 % causes the growth of the supply of milk to processing enterprises by 0.546 % under other similar conditions. By using the developed models, the authors calculated the expected volume of milk consumption per capita under increasing prices of milk and reducing number of cattle and the optimistic scenarios of agriculture development under martial law. Originality / scientific novelty. The obtained results provide a deeper study of the methodology of modeling and forecasting the main indicators influencing performance of the market of milk and dairy products in Ukraine. The authors identify the main factors influencing the demand for dairy products that enables forecasting their prospects depending on the change of some factors of the macro environment of milk processing enterprises. In addition to the above mentioned factors influencing milk consumption per capita, milk processing enterprises can partially influence the indicator by activating commercial promotion of consumption of the milk and dairy products of factory production and expanding the range of supplied products. Practical value / implications. Findings of the research can be used as an information basis to evaluate marketability of milk processing enterprises in Ukraine based on forecasting the level of the demand for milk. Moreover, the results of the research also confirm reasonability of joined efforts of milk processing enterprises to implement marketing communications in order to increase the demand for milk and dairy products of factory production. The research findings can be also used to make forecast of the conjuncture of milk and dairy market that will identify the directions of the state regulation of its development.