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The Progress of the Hungarian Dairy Prices Between 2003 and 2017
23-35Views:72There were notable changes in the dairy industry from 2012 onwards that seriously affected the Hungarian dairy market. The main events were the introduction of the Milk Package in 2012, the beginning of the Russian import ban in 2014 and the abolition of the milk quota system in 2015. These events affected the development of the domestic dairy industry, and at the same time, the Hungarian dairy sector faces long term challenges. The aim of our research is to analyse the dairy price developments between 2003 and 2017. We compare the Hungarian producer and consumer prices over time and we analyse the relationship between the domestic prices and some of the international prices as well. We calculated the coefficient of variation, price ratios and correlation for different time periods. The results indicate that there has been a strong market integration between the domestic and the international market since 2003.
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The Situation of Dairy Industry
3-21Views:79The increasing household incomes change the volume and the structure of the human consumption. There is a strong correlation between the changes in diet and the rapid urbanisation. Moving to the urban area often coincedes with a higher level of lifestyle which in turn can decrease the share of the agriculture labor force. Nowadays, more than half of the population lives in urban areas, but this share can be 70% until 2050 (FAO, 2011). Milk and dairy products are major items in the changing consumption structure. The consumers with mostly starch based diets are likely to shift to higher added value products when their income per capita increases. Majority of these products are milk and dairy or meat products. On the supply side, weather shocks can abruptly change the production volume and as a supply shock, they may increase the food price volatility. In the recent years, the gap remained constant between the production and the consumption, thus food prices have decreased (FAO, 2017). Between 1960 and 2010, the population has increased by some 230%, while the meat consumption by 450% (from 65 million tons to 290 million tons) (OECD – FAO, 2017). While the meat production and export are expected to increase moderately, the EU milk production may expand by 1% and its share from the international agricultural trade will increase in the future. The EU’s dairy sector aims to achieve a more marketoriented framework, which affects the Hungarian stakeholders as well. The processing and retail segment can be characterised with high concentration and strong bargaining power in general. Dairy sector appears to be purely demand-driven. The level of the individual stakeholders’ cost price is not taken into account during the market’s price setting, which creates strong competition. In the next years, higher market competition and further concentration are expected. Market position will be determined by one’s competitiveness and the level of cooperation among the stakeholders.
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International Market Segmentation in Dairy Market
43-54Views:104The basis and primary condition of the production level worldwide is the stability of domestic consumption, therefore the size of milk production is determined by the domestic milk consumption apart from smaller or greater exceptions. The aim of this research is to accomplish an international market segmentation based on the volume of milk product consumption. Segment forming variables were the three-year average per capita consumption volumes of liquid milk, cheese (including cottage cheese), and butter in the particular national economies. 46 national economies and the European Union (EU28) were included in the research. After completing the segmentation, our further aim was to characterize the formed segments by the following macro factors: gross domestic product (GDP) per capita, gross national income (GNI) per capita, life expectancy at birth, crude mortality rate, unemployment rate, and consumption expenditures of households as a percentage of gross domestic product. Based on our results, three clusters were identified that significantly differ from each other. The first cluster includes those countries where liquid milk, cheese, and butter consumption per capita are low. The second cluster contains those nations in which per capita consumption can be seen as medium level, Hungary is in this group. In the third cluster we can find countries with high per capita consumption compared to the sample. The formed segments show significant differences according to both GDP and GNI. In the case of segments with higher milk product consumption the means of GDP and GNI are significantly higher on purchasing power parity. In the countries where a higher proportion of gross domestic product is consumed the volume of milk product consumption is lower, while in those countries where a lower proportion of GDP is consumed, the per capita volume of milk product consumption is higher. We found a significant difference among the segments according to the life expectancy, too; life expectancy increases in line with the increase in per capita milk, cheese, and butter consumption. In case of the unemployment rate, we could not find any significant differences among the segments. To sum up, we can conclude that consumption of the examined product categories can be seen as medium in Hungary, i.e. our country belongs to the second segment. Beside Hungary, we can find seven further post-communist countries in this segment that shows the cultural similarity of the region. An important strategic task for Hungary is to increase milk product consumption by the means of communal marketing tools. The consumption of milk products can reach a stable growth path via an appropriate positioning and conscious communications. To reach this goal, the image of the category has to be put in order and healthiness and nutritional advantages of milk products have to be highlighted, then consumer misbeliefs have to be corrected.