In this paper we present a partial equilibrium model for the bovine sector (beef and dairy) in Italy, which can be used for simulation and forecasting. The structure of the model follows the vertical chain of the beef and dairy sector, allowing trade of both agricultural raw materials and final products. Since the processing and retailing stage is characterised by an imperfectly competitive structure, the model accounts for market power in modelling the price transmission mechanism. This provides further insights on the vertical transmission of shocks, both at the final level (i.e. the BSE crisis) and at the farm level (i.e. agricultural policy reform).