Dominance in the milk supply chain in Goiás state

Abstract

Despite the evidence that the Brazilian dairy sector tends toward an increase of the concentration of productive activity, unlike other states with prominence in the national production Goiás experienced an increase in the number of rural establishments producing milk between 2006 and 2017. Aiming at investigating the presence of a dominant link in the milk production chain in the state of Goiás, which may benefit from the process of asymmetric price transmission (ATP), we carried out an ATP analysis using the following models: threshold autoregressive (TAR), momentum-TAR (MTAR), consistent TAR (CTAR), consistent MTAR (CMTAR), and asymmetric error correction with thresholds. Asymmetries were detected only by the CTAR and CMTAR models, suggesting that the method by Chan is relevant for this type of investigation. In the long term, on one hand, wholesalers benefit from small negative price variations to producers; on the other hand, a change in the wholesale price trend toward negativity is not quickly adjusted in the prices to producers, suggesting that the wholesale link does not exert dominance in the chain. Among wholesalers and retailers, the results show that retailers benefit from ATP in the short term, but with limitations for the magnitude and direction of shocks in the long-term equilibrium. Therefore, it can be said that there is not enough evidence to characterize the presence of a dominant link in this production chain, which may have allowed these producers to remain active during the analyzed period.