Fluctuations in Supply and Prices of White Potato and Tomato: Are the Triggers the Same?

Purpose – White potato and tomato just like many agricultural products are both highly perishable but agronomically, these two products are quite different with white potatoes less prone to losses because they are sturdier and less susceptible to physical damages. Tomatoes are climacteric and more temperature-sensitive depending on the stage of maturity. Both however, are internationally-traded and were reported to be among those that are frequently smuggled into the Philippines. The paper is anchored on the major hypothesis that smuggling together with other factors can trigger the changes in supply and prices of the two commodities but the magnitudes of such effects differ for each commodity due mainly to their inherent characteristics. Design/Methodology/Approach – Monthly price series data covering the period 1990, for white potato, and 1993 for tomato, up to 2017 were subjected to price analysis using the multiplicative model of the ratio-to-moving average method focusing on seasonal and irregular price variations. The double logarithmic form was identified as the most appropriate model for the multiple regression analysis. Findings – Results revealed that the white potato industry is more dependent on imports than tomato. Tomato production is generally increasing but area planted has been decreasing. Both the white potato and tomato industries are vulnerable to price instability brought by natural phenomenon and calamities. Technology and smuggling were the only factors commonly affecting the production responses of the two commodities with technology being a production booster, but technical smuggling reduces the quantity produced of both commodities. The magnitude of the effect of these two variables was greater in white potato than in tomato. Wage rate is also a negative factor for white potato production while tomato production negatively responded to palay (paddy rice prior to husking) farmgate price but benefits from the government-imposed tariff on imported tomatoes. Research Implications – Study results imply the need for stricter and more diligent implementation of Anti-Agricultural Smuggling Act (Republic Act 10845) and for policymakers to consider the nature of agricultural products in crafting policies in view of the fact that there are more vulnerable commodities vis-à-vis technological changes, incidences of smuggling and wage rate hikes that affect their quantity supplied in the market.