Lettuce prices rose by 34 percent in August 2008, the fourth month running that prices have risen by over 30 percent. While it is not unusual for lettuce prices to rise in winter months, the strength of recent rises has lifted prices to historic highs, reflecting poor growing conditions caused by unusually wet weather.
The graph below shows how lettuce prices used in the food price index (FPI) have tracked from June 1999 to August 2008.
Figure 1
As can be seen from the graph above, lettuce prices are more expensive in the winter months (June, July and August), peaking in either July or August. From June 1999 to August 2008, prices have been highest in July for most years, with the exception of 2002, 2003 and 2008 (year to date), when prices were highest a month later, in August.
Once the winter months are over and spring has sprung, prices for lettuce and other green vegetables become much cheaper as supply flourishes. As the graph shows, prices for lettuce usually fall sharply from their winter peaks, and are cheapest in either December or November, in time for summer salads.
How lettuce is priced
Price collectors from Statistics New Zealand gather prices for fresh fruit and vegetables from about 75 supermarkets and 30 greengrocers within the 15 main urban areas. As prices tend to change frequently, fresh fruit and vegetables are priced on a weekly basis. In most regions prices are collected on a Friday, while in a few regions it is a Thursday.
All fresh fruit and vegetables are priced on the basis of cheapest available at the time of price collection, usually with respect to variety, as long as the variety chosen is of suitable quality for most uses (that is, not damaged or spoiled).
In-store prices for most fruit and vegetable items are 'per kg', while some are 'per head', such as pineapple, broccoli, cabbage, cauliflower and lettuce. For calculation of the FPI, the price per kg for items priced per head is calculated by dividing the shelf price by the weight per head, which is recorded by Statistics NZ price collectors.
Shelf prices and reported 'per head' weights
Recent media reports, comment by industry players, and even in-store notices displayed in the fruit and vegetable sections of supermarkets and greengrocers, have mentioned the recent inclement weather impacting not only on the shelf price of a head of lettuce, but also on the quality of lettuce heads, notably the size. As lettuce prices per kg are used in the calculation of the FPI, higher lettuce shelf prices and lighter weights have a double impact. Not only do higher shelf prices directly impact on what households pay per head, the smaller size of lettuce heads results in a higher price per kg.
The table gives a comparison of the average shelf price and average weight per head for the winter months of recent years.
| Winter lettuce average shelf price and average weight per head |
|
2006 |
2007 |
2008 |
|
June |
July |
August |
June |
July |
August |
June |
July |
August |
| Shelf price |
$3.14 |
$3.28 |
$2.19 |
$1.95 |
$2.23 |
$2.14 |
$3.19 |
$3.36 |
$3.70 |
| Weight per head |
507g |
424g |
511g |
608g |
556g |
577g |
632g |
507g |
411g |
When prices rose by over one-third in August 2008 compared with July 2008, this was driven by a 10 percent rise in shelf prices and a 19 percent fall in the average size of lettuce heads. Interestingly, the August 2008 shelf prices are much higher than the previous two years' July and August months, and the weight per head is lighter.
Prices for lettuce were last at levels similar to those experienced in recent months in 2006, with the second-highest winter price peak being in July 2006 (see figure 1). The low weight per head also drove the higher price levels seen in that month.
June 2007 experienced the second-lowest winter peak price over the June 1999 to August 2008 period. This is seen above with cheaper shelf prices and larger sizes.
Figure 2 gives the recent trends in shelf prices and weights per head. There is a strong inverse relationship between the two; when shelf prices are low, weights per head are larger, and when shelf prices rise, lettuce heads are smaller. This results in the large swings in prices per kg used in the FPI – seen as the 'saw-tooth' pattern of price change in figure 1. Not surprisingly, summer months show the best shelf prices and the largest lettuces.
The peaks in lettuce prices in July 2006 and August 2008, in figure 1, can clearly be seen in figure 2 as resulting not only from peaks in the shelf prices, but also from small sized heads of lettuce. From June 2006 to August 2008, the lowest weight per head, and the highest shelf price, were both recorded in August 2008.
Figure 2
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