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Ronald W. Cotterill - One of the best experts on this subject based on the ideXlab platform.
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The Need for New Milk Pricing Policies
2009Co-Authors: Ronald W. Cotterill, Adam RabinowitzAbstract:Good morning. Thank you for inviting us to speak to you today. My name is Adam N. Rabinowitz and I am a Ph.D. Candidate and Graduate Research Assistant in the Food Marketing Policy Center, Department of Agricultural and Resource Economics at the University of Connecticut. Unfortunately, Dr. Ronald W. Cotterill could not be here to speak with you today because he is testifying as an expert economist in a United States Federal Court on issues pertaining to Puerto Rico dairy regulations. Since 2002, Dr. Cotterill and I have done extensive research on Milk pricing in southern New England, documenting the relationship between retail, wholesale, and farm Prices in the Milk marketing channel. Today I am going to discuss Milk Prices and margins at various levels of the marketing channel as well as the need for a market based pricing policy in Connecticut.
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Outline of a Fair Share Milk Pricing Policy Program As Requested by Carolyn Orr, Council of State Governments after the February St. Albans, Vermont Meeting on Dairy Policy and Prices
2006Co-Authors: Ronald W. CotterillAbstract:The basic proposition of a fair share Milk pricing policy program is the following: Retail Milk Prices during the low phase of the raw Milk price cycle and possibly during the entire raw Milk price cycle are high relative to raw Milk Prices. The large marketing spread is not due to excessive processor margins. It is due to excessive retailer margins. The fair share pricing program will redress the imbalance in Prices in the market channel and eliminate part or all of the pricing inefficiency that comes from the exercise of market power by retailers. This pricing inefficiency harms consumers; however, it also harms farmers that receive a price that is below the long run supply price, and it harms processors because they process less Milk. The farm level pricing problems of farmers in the Northeast is exacerbated by inter regional distortions in the raw Milk price surface as explained in University of Connecticut Food Marketing Policy Issue Paper No. 48 (http://www.fmpc.uconn.edu). Throughout the raw Milk price cycle farmers in the upper Midwest and far West are advantaged under current federal Milk pricing policies and the activities of state’s in their regions. Hoard’s Dairyman mailbox Prices show that farmers in the upper Midwest routinely receive higher Prices for raw Milk than farmers in the Northeast. This is a price inversion because raw Milk should be higher valued in areas of the country where fluid utilization is higher. Such areas include the Southeast and the Northeast.
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retail oligopoly power dairy compact and boston Milk Prices
Agribusiness, 2005Co-Authors: Benaissa Chidmi, Rigoberto A. Lopez, Ronald W. CotterillAbstract:This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid Milk Prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail Milk price, translating into approximately a little less than $0.75|gallon. We also estimated that only around two-thirds of the raw Milk price changes were passed forward to consumers. This helps explain why consumer Prices have come down only little after elimination of the NEDC. In fact, the new Milk income-loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw Milk Prices that have generated substantial benefits to Milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers. lJEL classification: L66, L11, L13r. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 477-491, 2005.
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Retail Milk Prices in New England, New York, and Seattle: An Unresolved Issue
2004Co-Authors: Adam Rabinowitz, Matthew Schwane, Ronald W. CotterillAbstract:Last November, the Food Marketing Policy Center conducted a survey of retail Milk Prices in Connecticut, Massachusetts, Rhode Island, and parts of southeast New York (Cotterill, et al., 2002). That look at the price distribution over space aided in answering several questions regarding Milk pricing in the region, such as whether Prices varied amongst states, channels, chains, and types of Milk. Results of The November study indicated that Milk Prices in New England were high relative to Prices in New York, raw Milk Prices, and estimated costs of processing and distribution. In November 2002, supermarket chains in New England, which dominate grocery store sales, charged an average of $3.01 per gallon of Milk (Cotterill et al., 2002 p. 11). Milk sold in convenience stores, wholesale clubs (Sam’s Club, BJ’s, and Costco), and limited-assortment stores (Price Rite, Save-A-Lot, and Midland Farms) was less expensive than in supermarkets, but compared to New England stores, New York supermarket Prices were even lower. Chain supermarkets in New York charged $2.42 on average (Cotterill et al., 2002 p. 8). Clearly, differences in processing and handling costs amongst channels and states could not account for all of this pricing discrepancy. While it was originally believed that both processors and retailers are exercising market power, processing cost information obtained from Diary Technomics in March 2003 indicates that retailers are the ones who are charging consumers unconscionably excessive Prices for Milk. (Cotterill, et al., 2003a).
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Retail Oligopoly Power, Dairy Compact, And Boston Milk Prices
The research reports, 2004Co-Authors: Benaissa Chidmi, Rigoberto A. Lopez, Ronald W. CotterillAbstract:This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid Milk Prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail Milk price, translating into approximately a little less than $0.75/gallon. We also estimated that only around two-thirds of the raw Milk price changes were passed forward to consumers. This helps explain why consumer Prices have come down only little after elimination of the NEDC. In fact, the new Milk income loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw Milk Prices that have generated substantial benefits to Milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers.
Rigoberto A. Lopez - One of the best experts on this subject based on the ideXlab platform.
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Energy Price Transmission and Retail Milk Prices
2015Co-Authors: Rigoberto A. LopezAbstract:This paper estimates the pass-through between diesel fuel and retail Milk Prices at the product brand level, based on a random coefficient logit demand model along with a market channel marginal cost function in order to estimate energy price pass-through rates to the consumer. It takes into account the partial and net impact of energy Prices through the multi-market effects on other inputs. It also exploits a natural experiment of energy hyperinflation and the great recession in 2008. Empirical results show that energy Prices (e.g., diesel price) significantly impact the retail Prices of Milk products and are, therefore, an important determinant of food price inflation. Pass-through rates are estimated to be in the range from 0.15 to approximately 0.50 before March 2008 and from 0.09 to 0.19 after March 2009, with an average of 0.26. This indicates that a $1.00 per gallon increase in diesel Prices would on average result in a 26¢ per gallon increase in the retail price of Milk. Statistical test indicates pass-through rates before March 2008 are significantly higher than that after March 2008. Interestingly, private label brands have the lowest energy (diesel) pass-through rates, implying that compared to manufacturer brands, private label Prices are more insulated from energy price shocks.
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is wal mart good for competition evidence from Milk Prices
The research reports, 2007Co-Authors: Rebecca Cleary, Rigoberto A. LopezAbstract:This article examines the impact of Wal-Mart Supercenters’ entry on incumbents’ pricing behavior and demand. Using a structural model and Milk data from the Dallas/Fort Worth supermarket chains, empirical results show that an expansion of Supercenters caused incumbents to price Milk significantly more competitively, dropping on average 22.5% between 1996 and 2002, in spite of declines in their Milk demand. Furthermore, consumer gains exceeded incumbent losses, lending further support to the notion that Wal-Mart is good for competition and consumers.
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Private Label Expansion and Supermarket Milk Prices
Journal of Agricultural & Food Industrial Organization, 2005Co-Authors: Alessandro Bonanno, Rigoberto A. LopezAbstract:This article investigates the impacts of private labels (PLs) on fluid Milk Prices and price differentials using 2,759 supermarket-level observations from 10 cities. Non-parametric results reveal that although PL Milk Prices decrease as PL Milk shares expand, eventually the effect is to increase the Prices of manufacturers brands as well as the price gap between private labels and manufacturers brands. Econometric results further reveal that supermarkets exert some degree of price discrimination through controlling the brands of Milk sold.
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retail oligopoly power dairy compact and boston Milk Prices
Agribusiness, 2005Co-Authors: Benaissa Chidmi, Rigoberto A. Lopez, Ronald W. CotterillAbstract:This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid Milk Prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail Milk price, translating into approximately a little less than $0.75|gallon. We also estimated that only around two-thirds of the raw Milk price changes were passed forward to consumers. This helps explain why consumer Prices have come down only little after elimination of the NEDC. In fact, the new Milk income-loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw Milk Prices that have generated substantial benefits to Milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers. lJEL classification: L66, L11, L13r. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 477-491, 2005.
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Private Labels, Retail Configuration, and Fluid Milk Prices
The research reports, 2004Co-Authors: Alessandro Bonanno, Rigoberto A. LopezAbstract:This paper investigates the impacts of store brands (i.e., private labels) and retail characteristics (scanners, deli, bakery, and pharmacy departments, ATMs, restaurant and store size) on fluid Milk Prices using 1,740 supermarket-level observations from four cities. Non-parametric results reveal that although private label Milk initially exerts a procompetitive effect on Milk Prices, eventually the effect is to raise the Prices of both manufacturers' brands and private labels. Econometric results further reveal that price differentials are larger for reduced-fat Milk than for whole Milk and that the more enhanced the retail configuration is, the higher Milk Prices are. Overall, the results attest to some degree of price discrimination by retailers through controlling the brand of Milk sold and providing one-stop shopping convenience.
Benaissa Chidmi - One of the best experts on this subject based on the ideXlab platform.
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retail oligopoly power dairy compact and boston Milk Prices
Agribusiness, 2005Co-Authors: Benaissa Chidmi, Rigoberto A. Lopez, Ronald W. CotterillAbstract:This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid Milk Prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail Milk price, translating into approximately a little less than $0.75|gallon. We also estimated that only around two-thirds of the raw Milk price changes were passed forward to consumers. This helps explain why consumer Prices have come down only little after elimination of the NEDC. In fact, the new Milk income-loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw Milk Prices that have generated substantial benefits to Milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers. lJEL classification: L66, L11, L13r. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 477-491, 2005.
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Retail Oligopoly Power, Dairy Compact, And Boston Milk Prices
The research reports, 2004Co-Authors: Benaissa Chidmi, Rigoberto A. Lopez, Ronald W. CotterillAbstract:This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid Milk Prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail Milk price, translating into approximately a little less than $0.75/gallon. We also estimated that only around two-thirds of the raw Milk price changes were passed forward to consumers. This helps explain why consumer Prices have come down only little after elimination of the NEDC. In fact, the new Milk income loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw Milk Prices that have generated substantial benefits to Milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers.
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RETAIL OLIGOPOLY POWER AND FLUID Milk Prices IN BOSTON
2003Co-Authors: Benaissa Chidmi, Rigoberto A. Lopez, Ronald W. CotterillAbstract:This paper assesses the independent and joint impacts of oligopoly power of market intermediaries and the Northeast Dairy Compact (NEDC) on fluid Milk Prices in Boston. Empirical results reveal that price increases due to oligopoly power far outweighed those caused by the NEDC by more than 10 times. In fact, markups are estimated at approximately 33% of the retail Milk price, translating into approximately $1/gallon overcharge at 2002 Milk Prices averaging around $3/gallon.
Andrew M. Novakovic - One of the best experts on this subject based on the ideXlab platform.
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An Analysis of Retail Milk Pricing in the Eastern United States
Journal of food distribution research, 2016Co-Authors: Yuliya Bolotova, Andrew M. NovakovicAbstract:An analysis presented in the article evaluates the behavior of retail fluid Milk Prices, farm-level Milk Prices and farm-to-retail margins during the period of 2000-2010 in six cities located in the Eastern United States: Boston, MA; Syracuse, NY; Philadelphia, PA; Louisville, KY; Atlanta, GA; and Miami, FL. The empirical evidence presented in the article supports empirical findings reported in the existing literature: retail fluid Milk Prices tend to increase at a higher rate than farm-level Milk Prices and there is a presence of asymmetries in the farm-to-retail price transmission process. Furthermore, there is empirical evidence that may suggest that the patterns of behavior of fluid Milk Prices and farm-to-retail margins are different in the states with resale Milk price control regulations (New York State and Pennsylvania) and states without resale Milk price control regulations. In the former case, the pattern of changes in retail fluid Milk Prices is similar to the pattern of changes in farm-level Milk Prices. In the latter case, changes in the retail fluid Milk Prices do not necessarily reflect changes in the farm-level Milk Prices, which often causes farm-to-retail margin to increase.
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The Impact of the New York State Milk Price Gouging Law on the Price-Transmission Process and Supermarket Pricing Strategies in the Fluid Whole Milk Market
SSRN Electronic Journal, 2011Co-Authors: Yuliya Bolotova, Andrew M. NovakovicAbstract:The paper analyzes the effect of the New York State Milk Price Gouging Law 200% rule (June 1991-October 2008) on the nature of price-transmission process and supermarket pricing strategies in the fluid whole Milk market. This rule established that the retail Prices of fluid Milk products were not to exceed 200% of the Class I fluid Milk Prices that Milk processors paid to dairy farmers. The enforcement of this law significantly affected the nature of the Class I fluid Milk price transmission process and the whole Milk pricing strategies of supermarkets in the five largest cities in New York State: New York City, Albany, Syracuse, Buffalo and Rochester. During the pre-law period, supermarkets used the retail price-stabilization strategy; a presence of the asymmetric Class I fluid Milk price transmission process was evidence of this type of pricing strategy. In contrast, supermarkets used the retail profit stabilization strategy during the law period, which was reflected in the symmetric response of retail Prices and marketing margins to increases and decreases in the Class I fluid Milk Prices. The analyzed design of retail Milk price control actually created an institutional environment that facilitated cooperative conduct of supermarkets acting in an oligopolistic market environment, which caused a shift away from the retail price stabilization strategy in the pre-law period to the retail profit stabilization strategy in the law period.
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The Effect of the New York State Milk Price Gouging Law on the Performance of Fluid Whole Milk Market: An Empirical Analysis
SSRN Electronic Journal, 2011Co-Authors: Yuliya Bolotova, Andrew M. NovakovicAbstract:The paper analyses the effect of the NYS Milk Price Gouging Law 200% rule (June 1991-October 2008) on the behavior of retail Prices and marketing margins of fluid whole Milk products sold in the largest New York State cities (New York City, Albany, Syracuse, Buffalo and Rochester). This rule established that retail Prices of fluid Milk products were not to exceed 200% of Class I fluid Milk Prices that Milk processors paid for raw Milk to dairy farmers. The law was enforced by the NYS Department of Agriculture and Markets (NYSDAM) by announcing the maximum retail price thresholds on a monthly basis. The empirical evidence presented in the paper may suggest that this particular design of retail Milk price control, in conjunction with publicly announced government-set Class I fluid Milk Prices, actually created an institutional environment that facilitated interdependent conduct of supermarkets operating in the oligopolistic market environment. Retail Prices, marketing margins and the estimated supermarket profit tend to be higher during the law period as compared to the pre-law period. Supermarkets were pricing at the NYSDAM maximum retail price threshold level, if it was profitable for them. This was the case of fluid whole Milk sold in half-gallon containers in all analyzed cities and fluid whole Milk sold in gallon containers in New York City.
Malte Mueller - One of the best experts on this subject based on the ideXlab platform.
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VARIATION IN FARM GATE Milk Prices AND THE COOPERATIVE YARDSTICK REVISITED – PANEL EVIDENCE FROM THE EUROPEAN DAIRY SECTORS
2012Co-Authors: Markus Hanisch, Jens Rommel, Malte MuellerAbstract:With an average market share of about 57%, the European dairy industry is dominated by cooperatives. Large diversity exists in the importance of cooperatives across the EU-27. The cooperative yardstick school of thought suggests that agricultural cooperatives drive competition towards efficiency and “fair” Prices. We revisit this argument by analyzing, whether the relative strength of cooperatives in dairy, as measured by market share, explains price variation in average national farm gate Milk Prices in the EU-27. Our panel data analysis shows that Milk Prices increase with member states´ market share of cooperatives, when controlling for GDP, fodder Prices and new member states. We relate these findings to the policy debate on agricultural cooperatives and conclude that policies promoting cooperatives have the potential to increase farmer welfare.
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variation in farm gate Milk Prices and the cooperative yardstick revisited panel evidence from the european dairy sectors
52nd Annual Conference Stuttgart Germany September 26-28 2012, 2012Co-Authors: Markus Hanisch, Jens Rommel, Malte MuellerAbstract:With an average market share of about 57%, the European dairy industry is dominated by cooperatives. Large diversity exists in the importance of cooperatives across the EU-27. The cooperative yardstick school of thought suggests that agricultural cooperatives drive competition towards efficiency and “fair” Prices. We revisit this argument by analyzing, whether the relative strength of cooperatives in dairy, as measured by market share, explains price variation in average national farm gate Milk Prices in the EU-27. Our panel data analysis shows that Milk Prices increase with member states´ market share of cooperatives, when controlling for GDP, fodder Prices and new member states. We relate these findings to the policy debate on agricultural cooperatives and conclude that policies promoting cooperatives have the potential to increase farmer welfare.