Abstract

This study examines supermarket retailer behavior in the procurement of iceberg lettuce from California and Arizona, vine-ripe and mature-green tomatoes from California, and mature-green tomatoes from Florida. The analysis relies upon both a reduced-form specification of farm-retail price spreads and a structural model of procurement for a perishable commodity with inelastic supply. The evidence supports a conclusion that buyers have been able to exercise oligopsony power in procuring iceberg lettuce from grower-shippers in California and Arizona. The evidence regarding buyer market power is more mixed for fresh tomatoes. The apparent success of the Florida mature-green tomato industry in enforcing a price floor and capturing a significant share of the surplus in excess of the price floor demonstrates the potential benefits to producers from coordinated behavior.

Submitted: July 30, 2004 · Accepted: December 22, 2004 · Published: February 24, 2005

Recommended Citation

Sexton, Richard J.; Zhang, Mingxia; and Chalfant, James A. (2005) "Grocery Retailer Behavior in Perishable Fresh Produce Procurement," Journal of Agricultural & Food Industrial Organization: Vol. 3 : Iss. 1, Article 6.
Available at: http://www.bepress.com/jafio/vol3/iss1/art6