Market chain insights created by empirical modelling of inputs to the UK nut market

Abstract

Purpose – The purpose of this paper is to characterise across all nuts UK market imports and determine the relative importance of an overall price/quantity relationship to the importance of specific relationships for individual nuts. Design/methodology/approach – Using log price/demand monthly and annual import data elasticities were determined across the total UK nut market and for individual species. These were compared to an empirical model to develop an understanding of the market. Data were principally from FAOSTAT and HMRC databases. Findings – The UK imports are 5 per cent of the global nut trade, predominantly shelled with little internal production. Across ten species and 12 years price/demand regression models (1999-2010) were significant (R2=0.75) with an elasticity of −2.06 (less import of higher cost nuts). Consistent model deviations were found for some nuts indicating non price demand effects. Macadamias were imported at 23 per cent of expectation relative to their price point. Monthly (2007-2010) and annual (1999-2010) elasticities were compared for individual nuts. Pistachio and cashew showed “normal” negative elasticities (−1.5 to −1.0) for both time scales. However, walnuts had negative (−2.2) elasticity using monthly data but positive (+1.0) using annual data. Research limitations/implications – These data suggest detailed analyses of the individual nut supply demand market and consumer preferences are needed to explain different market behaviour over time and among nut species. Practical implications – Nut importers and producers may be able to use this data to better develop value for their product in consumer eyes and hence provide an improved value chain. Originality/value – This paper demonstrates how a broad empirical elasticity modelling approach to an agrifood market may increase the understanding of market needs.