PRICE INTEGRATION AND TRANSMISSION OF FOOD GRAINS MARKETS IN SOUTHWEST NIGERIA (2004-2013)
The success of market reforms in developing countries depends to a large extent on the strength of price signals transmitted between different level of markets reflecting extent of market integration and extent to which markets function efficiently. Market integration is an indicator that efficiency exists within the flow of information between markets. This study examined price integration and transmission of food grains markets in Southwest, Nigeria. Time series data of rural and urban retail prices of local and imported rice, cowpea and maize between 2004 to 2013 were obtained from the Agricultural Development Programme (ADP) Offices in selected States. The degree of price transmission was analyzed within the framework of Vector Error Correction Model (VECM). The Augmented Dickey Fuller (ADF) unit root test results revealed that the price series were stationary at first difference. Johansen cointegration results showed that even though two Cointegrating Equations (CEs) exist between linear combinations, some stable long run equilibrium relationships exist among the price series. The study concluded that Rural Price of Local Rice in Lagos State (RPLRLS), Rural Price of Cowpea in Oyo State (RPCOYS) and Rural Price of Maize in Lagos State (RPMLS) occupied the leadership position in price formation and transmission. The study therefore, recommended that policy measures aimed at increasing consumption of local rice, cowpea and maize be implemented, in identifying the leader markets.
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