Solanaceous-Vegetable Price Volatility and Producer Operating Income in China: Evidence from Three Production-Side Response Indicators

Abstract

Solanaceous vegetables are fresh and perishable, are marketed in concentrated periods, and require production decisions to be made in advance; consequently, fluctuations in the price path can alter producers’ cash-flow arrangements, input schedules, and risk exposure. Using a balanced panel of 31 provincial-level regions in China from 2014 to 2025, this study matches monthly prices of tomatoes, eggplants, and green peppers with annual vegetable operating income, variable costs per unit area, and provincial production conditions. Province and year two-way fixed effects are employed to examine the conditional associations between within-province price volatility and production-side outcomes. The price-volatility indicator aggregates annual crop-specific volatility, and its measurement stability is assessed using seasonal adjustment, the CV measure, the return-volatility measure, fixed base-period weights, and lagged production weights. The results show that higher price volatility is associated with weaker vegetable operating-income conditions and greater variable-cost pressure; supplementary analyses include production structure and investment, as well as risk exposure and response pressure, as exploratory outcomes. Lagged, threshold, and spatial tests further reveal the intertemporal linkages, regime differences, and regional clustering of price risk. At the provincial annual level, this study distinguishes changes in average prices from price uncertainty. It examines the economic manifestations of market risk through operating income and production-side adjustment.