Sarigumba, Resmar Jay I.

Marketing margin analysis : price transmission and net margins in the Region 11 carrot industry / Resmar Jay I. Sarigumba - 88 leaves

Thesis, Undergraduate (BS Agribusiness Economics) -- U. P. in Mindanao

The general purpose of this study was examine the price transmission and net margins in marketing carrots in Region XI. To do so, the study conducted analyses on the carrot industry, the price transmission elasticities, and the net margins of each carrot supply chain level. In the industry analysis performed, secondary and primary data on trends of prices, volume of production, yield, area planted, demand and supply conditions, and production and marketing issues for the carrot/vegetable industry in Region 11 and in the Philippines were collected in order to derive insights on the performance of the industry. For the price transmission analysis, the study used monthly secondary data, from 2003 to 2006 on the farm, wholesale, and retail prices and the production (fertilizer and pesticide prices) and handling (fuel prices and wage rates) costs. These data were utilized to estimate the empirical models which would provide the price transmission elasticities needed to examine the efficiency of the chain. And as for the net margins analysis, a case study was performed on 3 traditional carrot supply chains in order to gain data on prices, costs, and practices in marketing carrots. Net margins, which provide a way to assess the benefit distribution in the supply chain, were computed from these data. Results for the price transmission analysis showed that prices across the chain moved together since the price transmission elasticities computed were all positive. The positive elasticities are one indication of an efficient market for carrots in the region. The activities and value-adding services provided by the different actors of the chain were comprehensively stated. Net margins analysis showed that there is an uneven benefit distribution in the chain, wherein farmers derive most of the benefits. But this observation could have been brought only by the supply and price conditions during the study period. Lastly, cost structures have shown that the cost incurred in fertilizer application comprises the biggest chunk for the total cost in the farm level, while the buying price of carrots comprises the biggest chunk of the total cost in both the wholesale and retail levels.