Estimating the Impact of Rising Transportation Fuel Costs on the Competitive Position of New England Agriculture

Abstract

Transportation costs between production regions affect interregional competitive relations. Rising fuel costs have substantially changed the transfer cost function for motor truck transport. A method for estimating the direct impact on consumer and producer prices of fuel cost increases is presented. Example computations are made for long distance transport of vegetables, eggs, meat, and milk to illustrate the methodology. The implication of markup procedures by marketing firms on consumer prices is shown. Differential impacts on producers depend on the type of food product and scale of operation in New England. Impacts on consumer food budgets are suggested.