Assessing the effects of seasonal tariff-rate quotas on vegetable prices in Switzerland

TL;DR

This study quantifies the short-term impact of Swiss seasonal tariff-rate quotas on vegetable prices, revealing significant price increases during harvest times and differences based on vegetable perishability and production methods.

Contribution

It provides the first causal estimates of TRQ effects on vegetable prices in Switzerland using a novel weekly dataset and difference-in-differences methodology.

Findings

TRQs increase vegetable prices by over 20% during harvest periods

Perishable and conventional vegetables experience stronger price effects

TRQs may contribute to lower overall price volatility in Switzerland

Abstract

Causal estimation of the short-term effects of tariff-rate quotas (TRQs) on vegetable producer prices is hampered by the large variety and different growing seasons of vegetables and is therefore rarely performed. We quantify the effects of Swiss seasonal TRQs on domestic producer prices of a variety of vegetables based on a difference-in-differences estimation using a novel dataset of weekly producer prices for Switzerland and neighbouring countries. We find that TRQs increase prices of most vegetables by more than 20% above the prices in neighbouring countries during the main harvest time for most vegetables and even more than 50% for some vegetables. The effects are stronger for more perishable vegetables and for conventionally produced ones compared with organic vegetables. However, we do not find clear-cut effects of TRQs on the week-to-week price volatility of vegetables although the overall lower price volatility in Switzerland compared with neighbouring countries might be a result of the TRQ system in place.