A report summary from the Economic Research Service

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United States Department of Agriculture

November 2013

Find the full report 

at www.ers.usda.

gov/publications/erreconomic-researchreport/err-160.aspx

What Is the Issue?

Fuel prices, understood to be a major driver of food prices in the United States, can have 

significant impacts on food price levels and volatility. Since consumer demand for fruits and 

vegetables has been proven to be price-sensitive, fuel price surges could significantly reduce 

U.S. consumption of fresh produce, at least in the short term. There has been little empirical 

research to calculate the magnitude of fuel price changes on food prices and how this effect 

might vary across markets, based on transportation distance or commodity attributes. This 

study analyzes the relationship between fuel prices and wholesale produce prices using data for 

2000-2009. Fresh produce provides particularly clear insight into the effects of transportation 

costs on food prices, because fruits and vegetables typically have few processing or other nontransport expenses and they have clear geographic origins. 

What Did the Study Find?

The study affirmed that, in general, as the distance from the produce source increases, the impact 

on wholesale prices of higher fuel prices also increases. However, the extent of that impact 

depends on the transportation method, importation and seasonality issues, and perishability.

• Fuel prices are a statistically significant factor in determining the difference between 

domestic wholesale and farm-level produce prices. For produce shipped by truck, these price 

margins are increasingly sensitive to fuel prices as the distance traveled from the growing 

source lengthens. 

• Fuel price volatility can lead to substantial geographic variation in produce prices within the 

United States. 

• Truck transport rates, which increase with fuel prices, are the most likely conduit of fuel 

price effects on produce prices. In general, the sensitivity of truck rates to fuel prices 

increases linearly with distance traveled. For example, an increase in national fuel prices 

widens the margin for California-grown produce considerably more in Boston than in Los 

Angeles. This distance/price relationship has been taken for granted, and there has been 

little attempt to establish it empirically.

• However, truck transportation rates do not necessarily vary only with route length. For 

example, the distance from the San Joaquin Valley to Dallas is less than half that to Boston, 

but the average truck rate is more than half.

Richard Volpe, Edward Roeger, and Ephraim Leibtag

Economic

Research

Service

Economic 

Research

Report 

Number 160

November 2013

United States Department of Agriculture

How Transportation Costs Affect

Fresh Fruit and Vegetable Prices

Richard Volpe, Edward Roeger, and Ephraim Leibtag

How Transportation Costs Affect Fresh

Fruit and Vegetable Prices
• A 100-percent increase in diesel prices would lead to a short-term wholesale produce price increase of 20 

to 28 percent, on average. However, this could differ across shipping routes and commodities. The impacts 

on imported produce would likely be much smaller.

• The effect of fuel price increases on wholesale produce prices varies by commodity characteristics: 

 For commodities with multiple growing sources, robust imports, and weak seasonality (e.g., grapes 

and asparagus), fuel price effects are significant but vary across geographic markets and seasons.

 For commodities with clear growing seasons and few major import sources (e.g., cantaloupes 

and oranges), fuel price effects are more constant, with a discernible relationship between price 

increases, seasonality, and transportation distance.

• The prices of commodities with larger import shares generally exhibit less fuel price sensitivity. 

This is likely because air and ship transport are considerably less energy-intensive per mile than 

truck transport.

How Was the Study Conducted?

This report uses wholesale fresh fruit and vegetable prices collected by the USDA Agricultural Marketing 

Service (AMS) for 13 wholesale (terminal) market locations. These large markets were selected to span the 

United States, providing transportation routes of varying lengths for both domestic and imported produce. 

Fuel prices and truck transportation rates were also available from AMS. The data cover 2000-2009. The 

study relies on regression analysis to identify the impact of fuel prices on transportation costs, margins, and 

wholesale prices.

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