Projects / Programmes
Analysis of price setting mechanism and the price monitoring tool for the food supply chain
| Code |
Science |
Field |
Subfield |
| 5.02.01 |
Social sciences |
Economics |
Economy sciences |
| Code |
Science |
Field |
| S185 |
Social sciences |
Commercial and industrial economics |
| Code |
Science |
Field |
| 5.02 |
Social Sciences |
Economics and Business |
food supply chain, cost pass-through, margins, market monitoring tools
Researchers (10)
Organisations (3)
Abstract
The decision maker in the area of economic and industrial policy in the developed countries are increasingly faced with the need to monitor and control mechanisms and dynamics of pricing along the food supply chain, despite the fact that pricing is one of the key autonomous decisions of business entities in the market economy.
The price ratios within the chain are primarily affected by cost factors, whereas another important determinant is also the elasticity of demand, which is significantly affected by the market structure. Moreover, also the elasticity and indirectly the market structure determine the patterns and magnitude of the price margins achieved the market agents, therefore the distribution of margins along the agro-food chain is under their profound influence. In Slovenia there is not many adequate analysis that in detail and comprehensively address this complex issue, despite a very intensive process of restructuring the agro-food chain, and frequent observation of the market conduct that point to inappropriate relationships between agro-food chain stakeholders. Therefore we can conclude that the situation can be at least partly assigned to the information and knowledge deficit in the field of analysing and monitoring adequately pricing mechanisms and price margins assessment within the agro-food chain members. Some European countries are preparing a sporadic analysis, aimed at increasing the transparency of pricing along the food supply chain, while Eurostat has set up a tool for continuous monitoring of prices along the food chain (European Food Prices Monitoring Tool).
With the proposed project the research team aims to contribute towards a more comprehensive understanding of the food supply chain in Slovenia with the central objective to build a tool or a model for continuous monitoring of prices at the reference point in the agro-food chain. The most efficient model will be selected from the set of proposed prototype models which will be based on various methodological assumptions, and for which the protocol will be made for continuous data collection and their immediate processing. Deficits in the area of price data collection which does very likely not correspond with the complexity of the dynamic agro-food chain relationships will be upgraded with the expenditure aspects within the analysis, which will allow even more precise monitoring of price margins between the agro-food chain participants. Moreover, in order to achieve wider dissemination of the constructed model results we propose to upgrade it and to adapt it to the format that would allow the direct application through the internet.
The research project was conceived to complement the activities of the Ministry of Agriculture, Forestry and Food for the improvement of the functioning of the Slovenian food supply chain. The model for continuous monitoring of price and cost will allow immediate and explicit evaluation of the impact of the commitments within the emerging “Agro-food chain Codex”. The tool could then become the reference indicator of the evolution in the agro-food supply chain relationships, and according to which it would be possible to assess the implementation of Codex commitments and corresponding economic effects at the macroeconomic (agri-food) and mezzo-economic (individual supply chain) level. Expected results of multidisciplinary research team will enable accurate and continuous monitoring of the price levels and profit margins realized at the individual stages of the agro-food chain in Slovenia. This would allow formulating the empirically-based public policy guidelines to promote balanced and long-term business relationships within the agro-food supply chain. In addition to the expected applied research results the group has also scientific ambitions by upgrading available price monitoring systems with the use of complex econometric methods.
Significance for science
The contribution of the project to economic science is twofold: 1. We developed the methodology for measurement of production cost based on microeconomic databases. Combined with existing methodologies to measure prices this allows us to study the dynamics of price mark-ups. This represents a novelty in the economic literature with a high potential for applicability in microeconomic and macroeconomic analysis. 2. The price and cost monitoring tool was applied to selected food production chains, which also represents a novelty in the field of agricultural economics. Furthermore the lecturing curricula at the Biotechnical Faculty and Faculty of Economics were supplemented with some of the findings from the research project. Indirectly, the project has also deepened the cooperation between the three research institutions (BF, EF and AIS). Team work under the project will enable further multidisciplinary cooperation among the research institutions.
Significance for the country
The price and cost monitoring tool, together a set of recommendations to policy makers, can be used to assist in managing the relations in food industry. In addition, it can serve as a methodological aid to newly established institution of the Guardian of relations in food industry. Furthermore, the results of the research project can contribute to the longterm effective and more targeted management of public policies in the field of establishing equitable and sustainable relationships in the food supply chain and strengthening its competitiveness. With the implementation of the project adequate data and analytical basis are prepared in order to support economic and policy decisionmaking process for qualified solutions. In Slovenia, these materials have been lacking so far.
Most important scientific results
Annual report
2011,
2012,
2013
Most important socioeconomically and culturally relevant results
Final report
