Price analysis and competitiveness of the dairy supply chain

The dairy sector represents one of the most important branches of agriculture and food industry in Slovak Republic. However, the sector is losing its scope continuously, also production is diminishing and moreover it faces several problems affecting the sector (EU milk quota regime has come to an end in 2015, a drop in prices paid to producers and the increase in the cost of animal feeding, etc.). The production of milk belongs to the prospective sectors of the agriculture in Slovak Republic, mainly due to the natural conditions, extraordinary suitable for breeding of dairy cows thus it is crucial to restrain a decreasing trend in breeding of dairy cows. The main aim of the paper is to investigate price levels of the dairy products, vertical linkages and competitiveness of the dairy supply chain. This paper addresses the issue of vertical coordination in terms of providing information concerning the performance of dairy supply chain in Slovak Republic. More specifically, the paper examines the development of profit and loss in milk production, provides an analysis of costs of milk production and overview of performance at processor level. Additionally, it deals with consumption patterns and marketing margins in the examined sector. Evaluation of competitiveness is based on revealed comparative advantage (RCA) and indicator of comparative price level (CPL).