Horizontal price transmission of the Finnish meat sector with major EU players

Abstract

The integration of the Finnish meat market in the EU has important implications for domestic agricultural policy. Our aim is to estimate the characteristics of the Finnish pork and beef markets in relation to those of Germany and Denmark. Our analysis uses symmetric and asymmetric threshold error correction models. Both pork and beef prices in Finland are found to have slowly cointegrated with German prices, but the cointegration relationship of the two counties is only found to be symmetric for pork prices, while it is asymmetric for beef prices. The producer price for pork in Finland is symmetrically cointegrated with the Danish price, but the Finnish and Danish beef prices show a random walk. This implies that the price transmission to the Finnish pork producer market from the EU market is smoother and more efficient than for the beef market. However, the speed of transmission is still slow compared to that between the Danish and German markets.