C2.4: Farm-level prices

• C2.4.1 Introduction
• C2.4.2 Approaches
  • C2.4.2.1 Survey of market actors
  • C2.4.2.2 Using data from FADN
  • C2.4.2.3 Using stock exchange data and trade platforms
• C2.4.3 Concluding remarks

Generally, the following approaches to collecting farm level price data have been identified and are described further in the following sections

• surveys of market actors
• using data from FADN
• using data from stock exchanges.

Prices can be collected from various market actors that cover a good proportion of market, such as dairies, packers, traders, millers, slaughterhouses and producers. Collection methods include standardised questionnaires that are returned by the data providers to AMI, price lists provided by traders, and telephone interviews. Producer surveys can be used to collect data on prices for some key agricultural products at farm level. However, some farmers may not want to reveal the information if they feel that their customer is giving them a particularly good price and, in some cases, may be contractually bound to not reveal such information. The disadvantage of producer survey data is the timeliness, as producer surveys data are usually conducted only once a year and thus cannot been used for direct market decisions but only for subsequent research purposes.

To get a realistic picture of market prices, it is always a good idea to ask both sides: namely buyers and sellers. Willingly or unwillingly, people will try to influence market prices with their data. For example, sellers would tend to report higher prices than buyers. Uncertainty can be reduced if price data are based on actual sales contracts. That also has the advantage of presenting the traded volume in the covered period and allowing the data to be weighted accordingly, but the approach requires good cooperation between the data providers.

Some market actors who are buying and selling on behalf of a number of producers (e.g. producer groups and co-operatives) may also carry out their own price data collection. 

All price data should be entered into a database and weighted with the size of the respective sales (either by area, by sales volume, or, for livestock slaughtered, by the number of sold animals).

• Example
  In Germany, organic producer prices have been collected since the 1990s, on a weekly or monthly basis, depending on the product. Data collection approaches are more developed than in many other countries. Experience has shown the importance of stakeholder involvement: the producer price data will only show a good level of accuracy if the majority of the market volume of the relevant products is covered.

Potentially, FADN data could also be used to obtain some farm-level price data. The advantage is the robust sampling procedure and the fact that identical procedures are used on both organic and conventional farms; making comparison and time series data possible. The main disadvantage of FADN data is the timeliness as FADN data is usually collected only once a year and published with some delay. Such data are therefore mainly relevant for research rather than for immediate marketing decisions.

Stock exchange data can be used for price comparisons as data is recorded weekly as a minimum. So far, there are only two stock exchanges in Italy (Bologna and Milano) that list organic cereals and protein crops. Furthermore, there is the stock exchange for vegetables in Emmeloord in the Netherlands that records prices for organic onions and carrots.

Usually stock exchange prices are lower than farm level prices, which should be considered when comparing them to other whole sale prices. 

• Example
  o-tx.com is a web-based  platform for pricing and trading certified organic commodities for farmers, processor and traders. The platform also allows users to review the prices as well as the price development of various organic commodities such as wheat, rye, and oats; table potatoes; hay and feed stuffs; and fruits and vegetables.

Rippin et al. (2006) recommended in the EISfOM Project to use existing conventional price data collection approaches for organic price data collection; to save on development costs and to make them comparable.

When starting a new price data collection the following aspects should be addressed.

• Purpose of the data collection.
• Which product categories/commodities are collected?
• Whether production information (variety and species) is provided in sufficient detail.
• Product quality and end use (e.g. human consumption, feed, input for processing).
• Publishing dates and frequencies.
• VAT inclusion or exclusion (and the rate of VAT where it is included).
• Whether prices are “farm-gate” or wholesales and include transport/delivery costs.
• The level of processing or packaging of the product.
• Whether origin can be included.

Priority in data collection should be given to prices from farm to wholesalers or processors; followed by all other types of prices which are from farm to direct sales level, farm to final retailer, consumer prices, and export/import prices. Wholesale/processor level is also the main sales channel in the organic market and data collected there best reflect price changes.

Panel approaches (i.e. asking the same data providers each time data is collected) have the advantage of avoiding price changes due to different compositions of sales between data providers. However, different, and potentially additional, data providers should be included at certain times to avoid “panel fatigue” and data distortion.