Price interrelationships in the EU cow milk markets

Abstract

This work evaluates the integration of cow milk markets in the European Union (EU) using monthly wholesale prices from 16 member states over 2003 to 2017 and rank-based cointegration techniques. The empirical results suggest that the degree of spatial market integration is high since the prices in 13 of the 16 national markets move to a large extent in sync with the average EU price for cow milk. Exceptions are the prices in Poland, Portugal and Lithuania. It appears that the differences in price dynamics may be associated with the time of accession to the EU, with Eurozone membership and with country-specific factors such as the availability of substitute commodities.