Price Transmission of Tomatoes in South Africa’s Five Major Fresh Produce Markets: Vector Autoregressive Model

This study uses secondary monthly data from 2019 to 2024 to investigate the price transmission of tomato prices among five major South African fresh produce markets, namely, Johannesburg, Tshwane, Bloemfontein, Cape Town, and Durban. The Augmented Dickey-Fuller test confirmed stationarity in levels. Vector Autoregression (VAR) model was employed to analysis how the previous tomato price of one market influences the current tomato price of the other markets. The Impulse Response Function (IRF) was used to identify how one price shock in one market influences the price in another market. Diagnostic checks confirmed no autocorrelation, normally distributed residuals, and model stability. The results from the VAR model revealed Johannesburg market as a price leader, significantly influencing its own current tomato price and those in Tshwane, Bloemfontein, Cape Town and Durban markets. The Bloemfontein market’s previous tomato price was found to negatively and significantly influence not only its own current tomato prices but also those of the Johannesburg, Tshwane and Durban markets. The IRF results reveal that a price shock in Johannesburg market led to sharp and statistically significant responses, peaking at around R3000, in Bloemfontein and Durban markets within one month. These effects subsided to baseline by month five or six, indicating effective short-run correction. In contrast, smaller markets such as Bloemfontein market display weaker and more localised spillover effects. The study highlights the need for decentralising pricing systems, investment in logistics infrastructure, and regulatory upgrades, to build a more equitable, efficient, and inclusive fresh produce marketing system.