Co-integration and leadership in the European off-season fresh fruit market

This paper tests market co-integration, market leadership and price margins in the context of the recent development of European markets for imported off-season fresh fruit from countries in the southern hemisphere. The Engle-Granger and Johansen co-integration tests show that the main European markets for off-season fresh apples and table grapes were well integrated during the 1994-97 period. The vector autoregressive - error correction mechanism (VAR-ECM) model form is used to characterise the spatial co-integrating relationships among these markets during the same period. Statistical tests on meaningful restrictions on these VAR-ECM models show that the major import market of Rotterdam significantly leads the wholesale markets for table grapes in Germany down the supply chain but does not lead the wholesale markets in France and Germany for apples. They also show higher price margins between the import and wholesale markets for table grapes than for apples. The table grape variety imported from South Africawas consistently traded at a higher price during the 1994-98 period compared to the same variety from Chile. Using an industry survey, this paper discusses the econometric results and provides recommendations.