From price stability to food security: what are the drivers of price volatilities in philippine vegetable markets?
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Background
Vegetable price volatility poses a serious challenge to food security and agricultural sustainability, particularly in developing countries such as the Philippines. Fluctuations in prices disrupt market efficiency, reduce producer and consumer welfare, and hinder long-term planning in the agricultural sector. This study investigates the drivers of price volatility in two key condiment vegetables—onion and garlic—which are highly traded and politically sensitive commodities in the Philippines.
Methods
Using quarterly data from 2010 to 2024, this study decomposes farm, wholesale, and retail price variances into demand, supply, and import components. A variance decomposition framework was employed, complemented by Monte Carlo simulations to test the robustness of elasticity estimates under data-scarce and uncertain conditions.
Results
The findings reveal that demand volatility is the dominant driver of price fluctuations, explaining 50–90% of total price variance across markets, followed by supply shocks (9–50%), while the influence of imports is comparatively negligible, accounting for only 0–13%. Seasonal production patterns amplify these fluctuations, while the impact of import activity is understated due to unrecorded volumes from smuggling and illegal trade. The robustness of the decomposition estimates is validated through Monte Carlo simulations for onions, whereas the wider volatility observed in garlic reflects underlying structural production challenges and import dependency. Limitations include truncated retail-price data (2021–2021) and unrecorded smuggling volumes.
Conclusion
The study underscores that domestic market dynamics—particularly demand and seasonal supply shifts—play a more statistically significant role in vegetable price instability than trade flows. Policy interventions should prioritize market modernization, investment in infrastructure, farmer capacity-building, and the strict enforcement of anti-smuggling laws. Strengthening existing agricultural legislation and aligning programs with the Philippine Vegetable Industry Roadmap are critical steps toward improving price stability and food security.
