Price Transmission Analysis in the Fresh Vegetable Supply Chain of Saudi Arabia

Price transmission studies focus on how price variation at one marketing level affects the prices at other levels, either vertically or horizontally. Price movement among farms, wholesale, and retail levels is indicative of vertical price transmission. Any change in the farmer’s price is reflected in the final consumer’s price. Asymmetric price transmission (APT) can occur anywhere along the supply chain. The objective of this study is to explore the existence of APT for selected fresh vegetable products in Saudi Arabia. This study focused on six perishable products: tomatoes, potatoes, cucumbers, squash, onions, and garlic. The Wolffram-Houck and an error-correction model were used to analyze monthly average wholesale and retail price data from January 1999 to December 2012. Granger causality tests provided the causality relationship between market levels of cucumbers and squash, which were independent. The results indicate price transmission is symmetric for tomatoes, potatoes, and garlic, while onion prices are transmitted asymmetrically