Dynamic Analysis of Date Palm Producers’ Price and Climate Variability: Shocks and Responses in Saudi Arabia

Climate change influences crop prices through its impacts on agricultural production, costs, consumer and producer behavior, and the market equilibrium. Therefore, this study aims to examine the dynamic relationship between climate variability and date palm producer prices in Saudi Arabia utilizing annual time-series data from 1991 to 2024 and applying a Vector Autoregression (VAR) method to investigate dynamic responses over shorter and longer horizons. The analysis incorporates impulse response functions (IRFs), forecast error variance decomposition (FEVD), and historical decomposition (HD). The empirical findings indicate that date palm producer prices exhibit strong persistence and are predominantly explained by their own innovations in the short run. At horizon 10, date-palm producer-price innovations account for 94.82% of the forecast-error variance, while climatic variables jointly account for approximately 5.18%. Although climate factors’ shocks exert measurable short-run effects on producer prices, these responses diminish over time, indicating that the market effectively absorbs climate-related changes while maintaining persistence. However, FEVD and HD results reveal that the contribution of temperature and relative humidity to producer price fluctuations increases steadily over time, highlighting the growing importance of climate variability in shaping long-term market dynamics. The findings highlight the relevance of considering climate-smart agricultural practices, drought-tolerant date-palm varieties, and climate adaptation and risk-management strategies in the date-palm sector. While these measures were not directly evaluated in the present model, they may contribute to strengthening the sector’s resilience to climatic variability, supporting price stability, and promoting sustainable agricultural development. Their specific effects on price volatility and food security, however, require further empirical investigation.