Date of Graduation

8-2011

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor

Michael Thomsen

Committee Member

Barbora Milotova

Second Committee Member

Bruce Ahrendsen

Abstract

This thesis examines vertical price relationships for fresh strawberries. Specifically, the focus is on three stages of the vertical chain. The first stage is the shipping point. Shipping points represent major strawberry production regions and are the closest price point to the farm. The second stage is the terminal market. Terminal markets are wholesale markets in major US cities. The third stage is the retail level. Retail level prices are measured as average supermarket prices in the same cities for which terminal market prices are available. Using weekly data, markup equations are estimated from upstream to downstream levels of the market. Findings indicate that strawberry prices at one level of the market were very responsive to the price at the next level downstream in the marketing channel. A measure of total weekly supply and controls for seasonality were also highly significant in the pricing model. Increases in shipping costs depressed shipping point prices and raised terminal market prices. This means that a portion of the increase in shipping costs is passed back towards the farm level in the form of lower prices and a portion is passed forward to the consumer in the form of higher prices at the retail level. Measures of market structure also impacted strawberry prices but not necessarily in the expected fashion. Retail concentration among brands (typically the labels of major shippers) caused small increases in price at both the shipping point and terminal market levels. Prices in both shipping point and terminal markets were lower when one specific supply region dominated the market.

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