Modeling the Fluctuations in Prices for Agricultural Products in Iran: A Case Study of Cucumber, Tomato, Potato and Onion

In comparison to other commodities, prices of agricultural products have wider and more intense fluctuations. Knowing the origins of such fluctuations enables policy-makers to have appropriate policies for controlling them as well as it helps farmers to have a safe income. This study examined factors affecting the price fluctuations of chosen vegetables (potato, tomato, onion and cucumber) in major producing provinces of these products in Iran. For this purpose, the regression models with data panel were used. The results showed that origins of risks for the studied products were different and each product and its price had to be considered separately; in addition, for the four studied products, increased interest rates of bank facilities in the agricultural sector exacerbated the fluctuation of the season. A millimeter departure from the average rainfall would increase the price volatilities of cucumbers, potatoes and tomatoes and a degree of deviation of the long-term average temperature would exacerbate cucumber, tomatoes and onions volatilities in the price as well. The results indicated that guaranteed prices, though higher than farm prices, reduced the fluctuation in the season prices of potatoes and onions. So, the study suggested further emphasis on the policy of reduced interest rates of bank facilities in the agricultural sector; and the government should take action toward increasing the guaranteed prices to be particularly effective for perishable products.