The Determinants of Agri-Food Market Integration in the Transition Economies, Phase 2
Ref. no. 681-45
In transition economies agri-food markets are typically segmented among different vertical chains, market locations, and types of owners and between domestic and international markets. This project investigates to what extent the segmentation of agri-food markets has been overcome through reform and what kind of government policies would facilitate further market integration.
The project's analytical approach is based on the solid understanding of market institutions and fluctuations of supply and demand. It applies models of market margin determination, price transmission, and cointegration to selected commodity markets, typically pork, wheat and wheat flour, and milk and dairy products. The analysis relies on statistical data published by government and nongovernment institutions and the results of field interviews and case studies.
The first phase of the study focused on Poland, where it found that agri-food markets are reasonably well integrated. Effective market liberalization led to the emergence of a strong private sector and intensive competition--and thus relatively high efficiency--in the agri-food markets. Market risk and a market structure dominated by processors are the two primary obstacles to further market integration.
This second phase of the study extends the analysis to Hungary, Romania, and Ukraine. Preliminary results for Ukraine suggest that liquidity, rather than a state monopoly, is the primary challenge in developing an integrated agri-food market.
The findings of the first phase contributed to the Bank's agricultural sector adjustment loan operation in Poland, and the results of the second phase are expected to contribute to agricultural adjustment programs in Hungary, Romania, and Ukraine. The summary of experience in Poland should be helpful to other transition economies in developing their agri-food market systems.
The findings from the first phase were disseminated through two Bank seminars in August and October 1995, through presentations to government officials in Warsaw in January 1996, and through presentations at the 1995 American Association of Agricultural Economists Conference and the 1996 European Association of Agricultural Economists Conference.
The first phase produced an Excel database containing monthly agri-food price data for Poland for 199096.
Responsibility: Agriculture and Natural Resources Department, Sector Policy and Water Resources Division--Richard Burcroff II (rburcroff@worldbank.org) and Anning Wei. With Wladyslaw Piskorz, Waldemar Guba, Jerzy Dabrowski, Wanda Chmielewska, and Magdalena Opalka, Ministry of Agriculture and Food Economy, Poland; Yuri Nechayev and Svitlana V. Zhurova, Economic Research Center, Kiev, Ukraine; Jozsef Toth, Geza Tar, and Marton Szabo, Budapest University of Economic Sciences, Hungary; and Constantin Ciupagea and Virginia Campeanu, Institute of World Economy, Bucharest, Romania.
Completion date: June 1998.
Reports:
Guba, Waldemar, Anning Wei, Jerzy Dabrowski, and Wanda Chmielewska. 1995. "Emerging Trends in Polish Agri-Food Markets: A Report of Field Investigation." World Bank, Agriculture and Natural Resources Department, Washington, DC.
Wei, Anning, and Richard Burcroff II. 1996. "Poland ASAL: Inter-Country Agricultural Policy Performance Review." World Bank, Europe and Central Asia, Country Department III, Washington, DC.
Wei, Anning, Waldemar Guba, Richard Burcroff II, Jerzy Dabrowski, and Wanda Chmielewska. 1996. "Market Efficiency and Government Policy in the Polish Wheat Market." Paper presented at the European Association of Agricultural Economists Conference, Edinburgh, Scotland. (Also published in Polish. Forthcoming as a World Bank Discussion Paper.)
Wei, Anning, Waldemar Guba, Jerzy Dabrowski, Wanda Chmielewska, Magdalena Opalka, and Richard Burcroff II. Forthcoming. The Emergence of Integrated Agricultural Markets: Price Co-movement since Liberalization in Poland's Hog and Pork Sector. World Bank Discussion Paper. Washington, DC. (Also published in Polish.)
Wei, Anning, Waldemar Guba, and Z. Krzyzanowska. 1997. "Market Development and Government Policy in the Polish Dairy Sector." World Bank, Agriculture and Natural Resources Department, Washington, DC.
Zhurova, Svitlana V., Anning Wei, and Yuri Nechayev. 1997. "Agricultural Marketing in Ukraine: A Case Study of a Dairy Enterprise." World Bank, Agriculture and Natural Resources Department, Washington, DC.
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