ŽALIO PIENO VIDAUS RINKOS STRUKTŪRA IR KONCENTRACIJA LIETUVOJE

Structure and Concentration of Domestic Market of Raw Milk in Lithuania

Abstract

The study addresses the problem of assessing raw milk market concentration on both sides – supply and demand – when researchers have very limited information on sales and purchases of milk producers (i.e. sellers), dairy manufacturers and other raw milk resellers (i.e. buyers) at the individual level. Based on abstract modelling, the normalized Lorenz curve, comparative analysis of the concentration ratio (RC) and the Herfindahl-Hirschman index (HHI) and their dynamics, a hypothetical model of structural elements of raw milk market was developed, and concentration level on Lithuanian domestic raw milk market was determined. The empirical findings show that, on the one hand, the supply of raw milk on the domestic market is deconcentrated and that unassociated cooperatives do not create real producers’ bargaining power on the market. On the other hand, high values of RC6 allow for classifying this market as oligopsony market, with an almost stable concentration of buyers (the concentration has slightly decreased after the 2009 economic crisis).