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Will Higher Shipping Costs Drive the U.S. to Source More Localized Produce?

Author

Listed:
  • Woods, Timothy A.
  • Saghaian, Sayed H.
  • Ona, Lucia Y.

Abstract

The recent wide fluctuations in diesel fuel costs and subsequent trucking costs has raised speculation within the produce industry of potential structural shifts in the location of production. Recent increases in demand for local produce seem to further support speculation toward this end. A component pricing model is used to actually examine the impact of fuel prices on farm gate and retail produce prices for strawberries, lettuce, and potatoes. The study finds that distribution costs, while significantly increasing in absolute value, have surprisingly little contribution to changes in retail prices even in markets distant to the primary production regions. These results suggest that factors other than lower distribution costs for local produce will ultimately need to drive the supply for these products.

Suggested Citation

  • Woods, Timothy A. & Saghaian, Sayed H. & Ona, Lucia Y., 2009. "Will Higher Shipping Costs Drive the U.S. to Source More Localized Produce?," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46872, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saeana:46872
    DOI: 10.22004/ag.econ.46872
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    File URL: https://ageconsearch.umn.edu/record/46872/files/produceand%20fuel.pdf
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    References listed on IDEAS

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    1. Kaufman, Phillip R. & Handy, Charles R. & McLaughlin, Edward W. & Park, Kristen & Green, Geoffrey M., 2000. "Understanding The Dynamics Of Produce Markets: Consumption And Consolidation Grow," Agricultural Information Bulletins 33747, United States Department of Agriculture, Economic Research Service.
    2. Dimitri, Carolyn & Tegene, Abebayehu & Kaufman, Phillip R., 2003. "U.S. Fresh Produce Markets: Marketing Channels, Trade Practices, And Retail Pricing Behavior," Agricultural Economic Reports 33907, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Hurley, Sean P. & McCullough, Michael P. & Noel, Jay E., 2016. "An Exploratory Assessment of Trucking Industry for Transporting California Produce," Western Economics Forum, Western Agricultural Economics Association, vol. 15(1), pages 1-7.

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    More about this item

    Keywords

    Agribusiness; Crop Production/Industries; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Marketing;
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