Is Stabilization of Potato Price and Supply Effective? Empirical Evidence from Idaho

Abstract

High potato price volatility, decreasing demand for fresh potatoes and prices below the cost of production led to a decision of a number of Idaho potato growers to organize the United Fresh Potato Growers of Idaho, a marketing cooperative. The programs and strategies of the cooperative target both production and marketing of fresh potatoes. To evaluate the effectiveness of the programs implemented by the cooperative, we examine the level and volatility of fresh potato prices during two periods: before the cooperative was organized and when the cooperative is in the market. We find empirical evidence suggesting that fresh potato prices were higher and less volatile during the period when the cooperative was in the market.

Keywords: agricultural markets, antitrust, collusion, GARCH, price variance, potato industry

JEL Classification: L1, L2, L4, Q1