SPATIAL AND TEMPORAL LINKAGES IN U.S. POTATO PRICES

In recent years regional weather patterns have had an unusually strong effect on potato production and prices across the country in all marketing seasons. The quantitative impact of changes in potato production in one marketing region on prices in others is not currently known. These linkages, however, are quite important for decision makers in the industry in planning marketing strategies. This study examines the relationships among prices and quantities of potatoes across regions and seasons.Own- and cross-price flexibilities are estimated using Pooled Time Series and Cross-Sectional methods for winter, spring, summer as well as eastern, central, and western fall potato production. Significant impacts of own-regional production on prices are found. Price responses to changes in own-production differ among seasons and regions, and important linkages are found as well. Of the fall producing regions, central and western production changes are found to have a dominant impact on prices in their own and other regions and seasons. Production changes in the minor seasons are found to be less important in determining prices in regions and seasons other than their own.These price flexibility results are used to estimate the impact of the 1990 increases in fall potato acreage on regional fall and subsequent seasonal prices. Although the largest percentage acreage increase and price decrease occur in the western fall region, central fall and summer prices are estimated to also experience percentage decreases in price greater than the percentage increase in western fall production.