Price transmission and competition amid a series of crises: study of the Hungarian milk supply chain

Purpose A series of crises, such as the COVID-19 pandemic, the energy crisis, the Russian war against Ukraine and drought, have significantly impacted agricultural supply chains globally, resulting in high inflation. This paper examines price transmission amid these crises in the Hungarian milk supply chain. Design/methodology/approach This study employed asymmetric error correction models to analyse Hungarian milk supply chain data between 2019 and 2022. Findings The study’s results suggest that milk processors have benefited from asymmetric price transmission. This phenomenon may be attributed to an imbalance between demand and supply, with high demand driven by government subsidies when supply chains are disrupted. Consequently, processors passed on cost increases without responding to demand fluctuations. Research limitations/implications The period under investigation encompassed multiple crises, making it challenging to determine the individual impacts of each crisis. Originality/value This study provides new evidence regarding price transmission in the context of crises affecting the demand and supply of dairy products in Hungary. The incorporation of the processing sector into the analysis enables a comprehensive investigation of all stages of the supply chain.