Abstract:
In 2008, two exogenous shocks changed the way milk was transacted in New Zealand and
China: the launch of Global Dairy Trade (GDT) in New Zealand, and the China melamine
milk crisis. These two events provide a good opportunity to undertake an event-study analysis
on how governance models evolve in response to structural changes in the market of raw
milk. This research capitalises on such an opportunity.
Prior to this research, empirical studies of the efficiency of agriculture cooperatives relative to
investor-owned firms (IOFs) have been largely focused on which one of these competing
governance models is superior in terms of economic efficiency. This research uses the theory
of the firm, an event-study approach and data from the New Zealand and Chinese dairy
industries to examine how market participants migrate from one preferred governance model
to another and the associated efficiency changes in response to changes in the milk market
structure brought about by these two exogenous events.
