Transportation costs are driving up the prices of fruits and vegetables.

March 10, 2023

Consumers can have access to a wider variety of healthier food choices throughout the year, but as items are grown farther away from final consumers, there are barriers that defined the cost of fruit and vegetables like transportation cost is driving up the food prices.

Fuel prices, which are widely regarded as a primary factor can have a significant impact on food price levels and volatility. This element in determining the price difference between domestic farm-level produce and wholesale prices. As the distance travelled from the growing source lengthens, these price margins for produce shipped by truck become increasingly sensitive to fuel prices.

Fuel price effects for commodities with multiple growing sources, strong imports, and weak seasonality are significant but vary across geographic markets and seasons. Fuel price effects are more consistent for commodities with distinct growing seasons and few major import sources, with a discernible relationship between price increases, seasonality, and transportation distance.

The most likely pathway for fuel price effects on produce prices is through truck transport rates, which rise along with fuel prices. In general, truck rates’ sensitivity to fuel prices rises linearly with distance travelled. However, route length is not the only factor that affects truck transportation costs. For example, the distance between the San Joaquin Valley and Dallas is less than half that between the Valley and Boston. The average truck rate, however, is greater than half.

According to the study, higher fuel prices generally have a greater impact on wholesale prices the further away you are from the produce source. However, the magnitude of that impact is determined by the mode of transportation, importation and seasonality issues, and perishability.

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