Producer price volatility in the german fruit and vegetable industry

Abstract

The study analyzes producer price volatility of apples, strawberries, tomatoes, and onions on the German market. For the analysis, time series (2006-2014) of weekly producer prices were used. Marketing channels under study are wholesale markets and producer organizations. Results indicate that German fruit and vegetable producers have to deal with high producer price volatility that differs between marketing channels. Selling through the wholesale market results in the lowest producer price volatility for all analyzed fruits and vegetables, except for strawberries. Therefore, producers can partially manage their price risk by deciding on a specific marketing channel. Furthermore, the results show that contrary to popular belief, there is no clear indication of an increase in producer price volatility of fruits and vegetables in the past decade. In conclusion, developing innovative instruments to manage price risk of fresh produce remains an important task for the future.