Price relationships between qualitatively differentiated agricultural products: organic and conventional wheat in Germany

Würriehausen, Nadine; Ihle, Rico; Lakner, Sebastian

doi:10.1111/agec.12137

Cited by 3 publications

(6 citation statements)

References 33 publications

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“…Singerman et al (2014) test for cointegration between US organic and conventional crops between 2004 and 2009, and do not uncover evidence of any short-or long-run relationship between the series. Würriehausen et al (2015) use an asymmetric Markov-switching VECM and find three differing premium regimes for organic German wheat; the authors find that the German organic wheat premium adjust to a long-run equilibrium between 1997 and 2011, and that positive shocks to the premium were followed by organic price adjustment back to the equilibrium. No study has to date explored the relationship between prices for non-GE and conventional corn and soybeans.…”

Section: Methodsmentioning

confidence: 99%

Not All Thin Markets Are Alike: The Case of Organic and Non‐genetically Engineered Corn and Soybeans

Skorbiansky¹,

Adjemian²

2020

J Agricultural Economics

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We use time series methods to explore the relationship between prices for two different niche versions of feed corn and soybeans, and their conventional counterparts. Whereas organic versions are linearly cointegrated, and their premia are high and stable, non‐GE products – which are nonlinearly cointegrated – exhibit narrower premia that are subject to collapse. Because organics are also non‐GE, these differences point to the value of a well‐recognised and enforced USDA organic label and/or the importance consumers place on the non‐GE attributes of organic products.

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Section: Methodsmentioning

confidence: 99%

Not All Thin Markets Are Alike: The Case of Organic and Non‐genetically Engineered Corn and Soybeans

Skorbiansky¹,

Adjemian²

2020

J Agricultural Economics

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“…Their results indicated that the organic market price was dependent on the conventional market price, but the conventional price was independent of the organic market. Würriehausen, et al (2015) used German conventional and organic market wheat prices to investigate the relationship between these two quality differentiated products. They found that the organic wheat prices were related to the conventional wheat market, but they did not find price transmission from the organic market to the conventional wheat in Germany.…”

Section: Previous Literaturementioning

confidence: 99%

“…Most of price transmission studies use some version of a vector error correction model (VECM) to investigate the long-run relations between prices (Würriehausen et al 2015). Prices are usually integrated order one, I(1), and deviate from the long-run equilibrium in the short run because of random shocks.…”

Section: Model Developmentmentioning

confidence: 99%

“…Because substitutability between organic and conventional apples may be asymmetric, the MS-AVECM is a proper method to study the two quality differentiated apple price relations. Würriehausen et al (2015) also used this model to study price relations between organic and conventional wheat in Germany. They found three switching regimes for the period of the study.…”

Section: Model Developmentmentioning

confidence: 99%

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Dynamics of Price Adjustment in Qualitatively Differentiated Markets in the U.S.: The Case of Organic and Conventional Apples

Nemati

Saghaian

2016

SSRN Journal

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Production and consumption of conventional and organic apples in the U.S. have changed dramatically over the past two decades. Despite a drop in the conventional apple production, production of organic apples shows a double-digit growth. Demand for organic apples also continues to outpace growth in overall organic fruit sales. In this research, we investigate whether these changes have an impact on price adjustment dynamics between these two qualitatively differentiated products. We use a Markov-Switching Assymetric Vector Error Ccorrection model (MS-AVECM) and weekly U.S. national retail prices for the 2010-2015 period for three varieties of apples: Gala, Fuji, and Red Delicious. The MS-AVECM results indicate three Markov-Switching regimes can be defined for the three varieties during the study period. The results show there are different short-run price adjustment daynamics in each of these regimes and asymmetric price transmission behavior between organic and conventional apples. Result indicates that apple varity plays important role in the price relationship between organic and conventional apple. These findings have implications for farmers, wholesalers, retailers, policy makers, as well as consumers.

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“…Specifically, the focus will be on the organic and conventional products. Researchers argue that since organic and non-organic products are qualitatively differentiated, therefore different price dynamics can exist in each market (Würriehausen, et al, 2015). Nemati and Saghaian (2018) argue that organic market is a thin market which means there are few buyers or sellers in this market and therefore price discovery is a challenge in such a market.…”

Section: Introductionmentioning

confidence: 99%

Price Transmission Differences between Conventional and Organic Products

Darbandi¹,

Saghaian²

2018

JAEF

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In a competitive market, a rise in output prices at the wholesale level is expected to be transferred to the consumers via retailers. We have an asymmetric price transmission when an increase in the producer price transfers faster and stronger to the consumers comparing to a reduction in the producer price. The research question here is how product heterogeneity and differentiation can affect the price transmission in the carrots markets. Carrots consumption in the U.S. has been increasing significantly over the past few decades. We investigate the price linkages of carrots at terminal and retail levels for two different qualities of this product, organic and conventional. According to the VECM model results, the speed of price adjustment in the conventional carrot market is 0.354 in absolute value, while for the organic carrot market it is 0.026. This result is an indication of asymmetric price transmission with respect to speed. It shows that the price adjustment in the organic carrot market is relatively slow, pointing to inefficiency in this market. These results have important policy implications, especially in case of price shocks, there could be differential welfare consequences for both consumers and producers.

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Price relationships between qualitatively differentiated agricultural products: organic and conventional wheat in Germany

Cited by 3 publications

References 33 publications

Not All Thin Markets Are Alike: The Case of Organic and Non‐genetically Engineered Corn and Soybeans

Not All Thin Markets Are Alike: The Case of Organic and Non‐genetically Engineered Corn and Soybeans

Dynamics of Price Adjustment in Qualitatively Differentiated Markets in the U.S.: The Case of Organic and Conventional Apples

Price Transmission Differences between Conventional and Organic Products

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