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Abstract
Dairy is a highly relevant segment of the Brazilian agribusiness
economy. However, this segment has changed significantly after deregulation
Thus, it is worthwhile to know what the changes are in the spatial integration of
the market and in milk price formation at the farm level after deregulation. The
methodology is a modification of Gonzalez-Rivera & Helfand (2001), which is
compounded in extension of the market, pattern of integration, and degree of
integration. The extension of the market is determined through the measure of
self-sufficiency index, unit root test, and Johansen test. The last one is focused on
the searching for a common trend between the time series. The pattern of
interdependence is studied using the Directed Acyclic Graph (DAG). Lastly, the
degree of integration is measured by the impulse response functions derived
from the Bernanke decomposition. As a result, we found that the milk market in
Brazil is composed by Goiás, Mato Grosso, Mato Grosso do Sul, Minas Gerais,
Paraná, Rio de Janeiro, Rio Grande do Sul, Santa Catarina, and São Paulo. We also
discovered that these markets have small speed of adjustment to shocks and
there is no leader in milk price formation.