Towards better understanding of vegetable market functioning: The Lithuanian cases of fresh tomatoes and cucumbers

Abstract

The efficiency of the European Union vegetable market depends on the ability of Member States to identify and solve market functioning problems of particular agricultural commodities. The goal is to investigate the vertical price transmission along the fresh tomato and cucumber supply chains in Lithuania. The article contributes to the scarce research on the Lithuanian vegetable market, enriching the previous studies with fresh tomato and cucumber cases. The study employs unit root tests, the Johansen and the Engle–Granger co-integration tests, describes error correction model coefficients and provides results of the Granger causality test and momentum threshold autoregressive test for asymmetry. Results of price transmission analysis show the presence of the long-run asymmetry within the studied value chains suggesting that the markets are not efficient; however, the market of cucumbers returns to an equilibrium quicker. Finally, the study confirms that in both cases, there are long-term relationships between retail and farm prices, while the causality is running from farm to retail level in both markets.