1. The Almon Model and the Transmission of Prices from the Dairy Farmer to the Consumer in Ireland
Charlotte Mahon1,2, Frédéric Gaspart2, Garry Mahon1, Bruno Henry de Frahan2
Eurostat Luxembourg
Université Catholique de Louvain, Belgium
AESI Early Career Researcher Seminar
Friday 19 October 2012.

2. Outline Context Series analysed The Almon model Results
Further research

3. Context In 2007, food prices rose sharply
The European Commission decided to monitor price transmission along food supply chains
The Food Price Monitoring Tool was created
The tool contains price indices for a chain at three levels: farm gate, factory and consumer
The Almon model may be used to examine the speed and amplitude of transmission of price shocks

4. Series analysed
Four series of price indices are obtained from the StatBank database of the Central Statistics Office, Ireland
Agricultural Input and Output Price Indices by Month and Agricultural Product - Milk
Industrial Price Index by Month and Industry Sector NACE Rev 2 - Dairy products
Consumer Price Index by Month and Detailed Sub Indices - Milk
Consumer Price Index by Month and Detailed Sub Indices - Other milk products

5. The Almon Model
A finite distributed lag model

6. The Almon Model
One may write:
, …
And obtain:

7. Results

8. Results Farm gate to factory Parameter Coefficient Std. error α 78.67
Farm gate to factory
Parameter
Coefficient
Std. error α
78.67
25.49 α0
20.14
51.95 α1
-44.60
127.03 α2
38.15
118.24 α3
-16.74
55.71 α4
4.140
14.594 α5
-0.584
2.153 α6
0.0438
0.1671 α7
0.0053

9. Results

10. Results Factory to consumer Parameter Coefficient Std. error α -48.22
Factory to consumer
Parameter
Coefficient
Std. error α
-48.22
23.01 α0
16.21
23.73 α1
-30.00
57.98 α2
22.65
53.96 α3
-9.092
25.42 α4
2.108
6.661 α5
-0.284
0.983 α6
0.0206
0.0024 α7
0.0053

11. Further research
The same analysis could be carried out for other European countries in order to compare the transmission of shocks in the dairy sector accross different countries.
This analysis could also be carried out for another sector of the food industry.

12. Thank you for you attention