Economic analysis of the orange market (Citrus sinensis) in fresh in Mexico, period 1980-2018

Abstract

Objective: Identify the main factors that determine the behavior of production and demand for fresh orange (Citrus Sinensis)  in Mexico, and quantify the effects between different levels of real prices.

Methodology: A model of simultaneous equations was estimated, consisting of an equation of supply, one of demand, three of price transmission and an identity of foreign trade balance. Annual data from 1980 to 2018 were used.

Results: Orange production and demand in Mexico respond inelastically to their respective prices. With regard to price transmission, the international real price does not significantly affect the average rural price or the average real consumer price (0.2% and 0.4%, respectively); on the contrary, the real wholesale price does affect them (3.8% and 9.7%, respectively).

Limitations: Only some results are contrasted, because literature on the orange market in Mexico is scarce.

Conclusion: The factors that most affected the supply of orange in Mexico are the temperature and the real minimum wage; and the quantity demanded of orange with a year of lag and the real average price of the consumer of melon, are those that affect the demand to a greater extent.

It is recommended that policies consider the real wholesale price, because it significantly affects two main agents in the orange market (consumers and producers) through their respective prices.