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Using market intelligence for the opportunistic shipping of fresh produce

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  • Flores, Hector
  • Villalobos, J. Rene

Abstract

The main goal of this paper is to develop an opportunistic shipment policy that increases a farmer's commercialization reach within a secondary market with minimal or no capital investment, once a base market has been established. Basically, the operation would consist of sending fresh produce items into a secondary market (from the base) whenever momentary price differentials allows two-market transactions with a high probability of profit. A theoretical model is developed that maximizes potential operational revenues based on arbitrage opportunities existent within two-market structures. Ultimately, the validity and applicability of this model is demonstrated through the application of a case-study. The results of the case-study show that using the decision-making strategy defined by the proposed theoretical model cannot only increase the long-term profits of two-market operations but can also lower the profit variability, in comparison to only commercializing in a single base market.

Suggested Citation

  • Flores, Hector & Villalobos, J. Rene, 2013. "Using market intelligence for the opportunistic shipping of fresh produce," International Journal of Production Economics, Elsevier, vol. 142(1), pages 89-97.
    • Handle: RePEc:eee:proeco:v:142:y:2013:i:1:p:89-97
    DOI: 10.1016/j.ijpe.2012.10.012
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    References listed on IDEAS

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    1. Richard J. Sexton & Catherine L. Kling & Hoy F. Carman, 1991. "Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 568-580.
    2. Bob Baulch, 1997. "Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 477-487.
    3. Liang, Chyi-Lyi (Kathleen) & Feuz, Dillon M. & Taylor, R. Garth, 1997. "Cointegration Tests of Spatial and Variety Price Linkages in Regional Dry Bean Markets," 1997 Annual Meeting, July 13-16, 1997, Reno\ Sparks, Nevada 35787, Western Agricultural Economics Association.
    4. Barry K. Goodwin & Nicholas E. Piggott, 2001. "Spatial Market Integration in the Presence of Threshold Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 302-317.
    5. Palma, Marco A. & Ribera, Luis A. & Paggi, Mechel S. & Knutson, Ronald D., 2010. "Food Safety Standards for the U. S. Fresh Produce Industry," Policy Issues 93684, Agricultural and Applied Economics Association.
    6. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    7. Carlo Morelli, 1999. "Information Costs and Information Asymmetry in British Food Retailing," The Service Industries Journal, Taylor & Francis Journals, vol. 19(3), pages 175-186, July.
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    Cited by:

    1. Hu, Ming-Che & Chen, Yu-Hui & Huang, Li-Chun, 2014. "A sustainable vegetable supply chain using plant factories in Taiwanese markets: A Nash–Cournot model," International Journal of Production Economics, Elsevier, vol. 152(C), pages 49-56.
    2. Choi, Tsan-Ming & Guo, Shu & Liu, Na & Shi, Xiutian, 2019. "Values of food leftover sharing platforms in the sharing economy," International Journal of Production Economics, Elsevier, vol. 213(C), pages 23-31.
    3. Flores, Hector & Villalobos, J. Rene, 2018. "A modeling framework for the strategic design of local fresh-food systems," Agricultural Systems, Elsevier, vol. 161(C), pages 1-15.

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