The study, titled “How Transport Costs Affect Fresh Fruit and Vegetable Prices” was published by the USDA’s Economic Research Service. It examines the influence of fuel and transportation costs on wholesale produce price volatility.
The report predicts the effect of changing fuel prices on wholesale prices of fruits and vegetables, said Richard Volpe, an author of the report and research economist in the Food Markets Branch of the Food Economics Division.
Among other things, the study looked at the effects to the industry if gas prices would double. While that’s a dramatic increase, he said it helps to put into perspective what effects high fuel prices would have on fresh produce. Some fresh produce items would see prices rise by 40% to 50% with a doubling of fuel costs, he said.
The study showed that a 100% increase in diesel prices would lead to a short-term average wholesale produce price increase of 20% to 28%.
That type of spike is meaningful, he said, because the effect of fuel price increases on fresh produce is higher than it is for packaged or shelf stable foods.
“It underscores the idea that more perishable foods — the foods more in line with dietary guidelines — that are more likely to face volatility as a result of input prices such as fuel,” he said.
The study demonstrates that fuel prices are a significant factor in determining the difference between domestic wholesale and farm-level produce prices. For produce shipped by truck, the price margins are increasingly sensitive to fuel prices with greater distance from the growing region.
Volpe said he was somewhat surprised by transportation technology’s effect on fuel price increases.
“Almost across the board, the commodities that were most sensitive to fuel price swings were those that were produced in the U.S. and shipped within the U.S. and shipped from state to state,” he said.
Those U.S.-produced commodities rely on truck transportation, which is more energy intensive by far than ocean carrier transportation which bring in produce from other countries.
“A lot of people have this perception that the closer to home you are for the source of your food the better in terms of being sustainable and fuel efficient and all that, but that is not obviously always the case,” he said.