Price impacts of increased Peruvian table grape supply

In the last decade, Peru has begun to structure its economy and complete infrastructure projects to promote agricultural export growth. Bolstered by the signing of the Peru Trade Promotion Agreement (PTPA) with the U.S., table grape production has increased significantly since 2006. Peru has a climatic advantage for a quality harvest from November to March, which overlaps the end of the U.S. growing season. With this supply increase expected to continue, U.S. producers and marketers question the effect Peru will have on late-season table grape prices in North America. This thesis is a study of the effects of an increase of Peruvian table-grape supply in U.S. markets. Using an equilibrium displacement model to quantify the supply and demand interaction in the U.S., after inducing a supply shock, the relationship between Peruvian supply quantities and the price for U.S. and Peruvian grown grapes was determined. These price effects are presented based on calculated sets of elasticity scenarios determined through the Hotelling-Jureen Relation. Results are presented in two timelines, one year and three years of projected growth from Peru. Results are heavily reliant on assumptions about elasticity and time. The price of Peruvian table grapes is effected in much larger proportions than U.S. grape prices. Within the time parameters of this model, the price for late season U.S. table grapes will see slower price declines allowing producers to change production strategies safely