From Price Stability to Food Security: What Are the Drivers of Price Volatilities in Philippine Vegetable Markets?

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 variability in two key seasoning 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 variability is the dominant factor influencing price fluctuations, followed by supply, with imports contributing minimally. Seasonal production patterns amplify these fluctuations, while the impact of import activity is understated due to unrecorded volumes from smuggling and illegal trade. Simulation results validate the robustness of decomposition estimates for onion but show wider variability in garlic prices, reflecting structural challenges in garlic production and market dependency on imports. Conclusion The study underscores that domestic market dynamics—particularly demand and seasonal supply shifts—play a more 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.