Q10 - Agriculture: GeneralReturn

The article deals with the breeding of dairy cows in organic farming systems in the Czech Republic in the years 2010-2014, an evaluation of the organic milk production and a comparison of the production economy of organic milk and milk produced in the conventional manner. The growing popularity of organic milk is reflected in the increasing number of organic dairy farmers and thereby also in increasing production of organic milk. The sad fact is that the growth of this industry is currently driven mainly by an interest occurring in foreign countries, where organic milk can be marketed as an organic product and simultaneously it is possible to achieve a better evaluation. Although the number of businesses breeding cows and the organic milk production are growing, with regards to both scale of production and economic importance, the production of organic milk can be characterised as less important. The increase of interest in producing organic milk is primarily a matter of the production economy, which is unfavourable. The market price of milk even with aid has not covered production costs. In 2014, as estimated, the production economy of organic milk improved.

Farmers earn their main income from selling agricultural commodities. Stability as well as the level of income are determined by the amount of production and market prices. Prices and price policies on the agricultural market could have a great impact on the success of programmes themselves. This paper focuses on research of relationships between prices at the regional level. The aim of this paper is to evaluate the relationship between prices at the regional level for selected regions of Bohemia and try to confirm that the Law of One Price is valid there. Agricultural prices for pork producers were used for the analysis. The data set has 157 observations in total. The first observation is from 27th June 2002 and the last observation is from 27th December 2008. No data have been published by the State Agricultural Intervention Fund since 2009. The investigated groups of regions are the Central Bohemian (CB), North-Eastern (N_E) and North-Western (N_W) regions of the Czech Republic. Econometric methods are used, and the primary tools for research are the ADF test, KPSS test, Johansen cointegration test and Vector Error Correction Model (VECM). On the basis of the VECM model, it was found that prices in the North-Eastern regions have an effect on prices in Central Bohemia. It was also discovered that prices in the Central Bohemian and North-Western regions have a mutual effect. The Law of One Price is valid with a high probability in the investigated regions. Prices in the long run are identical with a high probability. The results were elaborated as part of the research project MSM 6046070906 "Economics of resources of Czech agriculture and their efficient use in frame of multifunctional agri-food systems".