On the other hand, the production is totally dominated by smallholder farmers, with few exceptions of private investors. The national average of landholding of the sesame growers is just more than 2 hectare, which still makes it better compared to the average national holdings of 0.5 hectare. However, the overall farm practice by the smallholders is very traditional with total dependency on rainfall feed system and very limited application of modern farm inputs like fertilizer, high yielding seeds and tools. According to CSA (2017), during the 2016/17 crop year 756 782 growers have produced 267 867 tons of sesameseed from the total cultivated 337 927 hectares of land. During the year, the national productivity was almost 0.85 ton per hectare. Generally, the area coverage and production of sesameseed in Ethiopia have been increasing in the last two decades, mainly due to its importance as a major export commodity. There is also a vast potential to expand the production in the future through cultivation of additional new land and also enhancing the already cultivated ones through better agronomical practices and new technologies. A cursory look at the historical production trend shows that over the years 2001/02 to 2005/06, annual sesame production has remarkably showed a quadruple increment. The ever increasing lucrative international market opportunities and favorable weather conditions are mentioned as major reasons. Since the year 2005/06, the production has been growing by 8% annually, and has now stood around 270 000 tons. It is a triple increment from where it was during the benchmark five years‟ average of 91 000 tons (CSA, 2018).
The study focused on the analysis of marketintegration and pricetransmission dynamics to infer market efficiency and functionality of the Ghanaian yam markets. The M-TAR model was employed to examine the degree of spatial marketintegration among yam markets in Ghana. The pricetransmission adjustment processes were analyzed through nonlinear error correction model with threshold cointegration incorporated (TVECM). The markets for the commodity considered for the study were found to be highly integrated. The coefficients from the MTAR models revealed an asymmetric adjustment processes with mixed pattern of outcomes with respect to speed and degree of adjustments. Some of the markets exhibited faster adjustment for positive deviation than negative deviations and vice versa. We recommend that policy strategies be directed to improving market communication and infrastructure accessibility and regulating activities of middlemen since the nature of asymmetric price adjustments found in this study is associated with market power and inefficiency. These are to improve agricultural food market structure, conduct and performance which, in effect, will provide fair producer prices and value for money for producers and consumers respectively.
marketing system. The unpredictability of government intervention is often supposed as one of the major obstacle to the integration of markets. It is possible, however, that some degree of volatility of government intervention may contribute to improving the process of pricetransmission. Considering above facts, the existing poultry and its products marketing system has been functioning without concrete planning. So, it seems necessary to investigate the status and level of integration among agricultural markets of Pakistan. Recent progress in the time series analysis, particularly those related to studies in market cointegration have led to an explosion in the literature in many countries e.g. (Schroedu and Godwin, 1991; Pendell and Schroeder, 2004; Mari and Lohano, 2005; Saran and Bangwar, 2008; Sendhil et al., 2013) and in Pakistan such as (Mushtaq et al., 2007; Zahid et al., 2007; Hussain, 2010; Mehmood, 2010; Ghafoor and Aslam, 2012; Ali et al., 2016 Imran et al., 2017 and Ali et al., 2017). Most of the studies are related to marketintegration of food grains, cotton, tomato etc. But, the issue concerning market cointegration in respect of poultry products has not been dealt with adequately. Therefore, this study focused on investigating the level of market cointegration and causality between pairs of poultry products (meat and eggs) markets in the Punjab province of Pakistan and suggested remedial measures for their improvement.
In integrated markets where there exists interdependence of prices changes across spatially separated locations in the long-run, the government may increase its market regulations. The results of the co-integration tests support the view that the government intervention in poultry products markets can be rationalized in these established and integrated markets without significantly decreasing marketintegration. But this integration does not imply that markets are working fully efficiently because for market efficiency we need to investigate market dynamics of egg as well. It also seems imperative to consider some major factors affecting market efficiency and integration among these products markets like transportation cost and nature of competition. So marketintegrationanalysis considering all above mentioned facts should be carried out at national level in Pakistan to draw further inferences about market efficiency. Government should regulate these prices of poultry products so that benefits could move from big guns to small growers. Small growers associations should be established who determine the prices of products. In this regard, government should facilitate these associations in regulating their activities.
inefficient and poorly integrated. This study therefore assessed the level of marketintegration and the trend analysis of selected vegetable crops in Oyo State. It also identified the leading market between rural and urban markets in Oyo state. Secondary data on the prices of fresh tomato, onion, chilli pepper, sweet pepper, and fresh pepper (2003–2011) were obtained from Oyo State Agricultural Development Programme and were analysed using trend analyses, Augmented Dickey-Fuller (ADF) test, Granger causality test and index of market concentration. Results showed that the prices of onion, chilli pepper and fresh pepper were non-stationary in their various level forms but stationary at first difference; while prices of fresh tomato and sweet pepper in urban markets were stationary at their level form at probability of 5% respectively. The indices of market concentration for onion, sweet pepper, fresh pepper, chilli pepper were less than one suggesting high short-run marketintegration, whereas fresh tomato achieved low short-run marketintegration. Further, urban markets were the leading markets for onion, chilli pepper and sweet pepper, while rural markets were the leading markets for fresh tomato and fresh pepper.
of diversification towards the high value crops (Sidhu et al., 2010). Further, it also becomes difficult to comprehend trade policy as several obstructions such as stocking limits, inefficient markets, weak supply chains and trade cartels often restrict the efficient functioning of the markets (Chengappa et al., 2012). In India, there exist several studies, which have analyzed marketintegration in food grain crops such as wheat, rice etc. (Ghosh, 2003; Ghosh, 2011; Ghoshray and Ghosh, 2011; Acharya, et al., 2012; Ghosh, 2012; Sekhar, 2012). The existing literature on marketintegration in horticultural crops is quite scanty (Basu, 2006; Beag and Singla, 2014; Wani, et al., 2015), while no such studies except Sendhil et al., (2014) and Reddy et al. (2012) exist in onion, which analyze marketintegration and pricetransmission in spatially separated markets. Both the studies were conducted in pre-2011 period during which the prices of onion were generally stable and as such impact of price shocks in one market was not visible in other markets. The formulation of valid study on the marketintegration in onion has potential application for the development of agricultural markets. Against this backdrop, the existing study analyses marketintegration in onion and its pricetransmissionanalysis in selected markets of India.
Marketintegrationanalysis is important in explaining the performance of markets in response to changes in the prices of commodities. A well-integrated market system is essential to household food security especially in both food deficit regions of the country. Flexible prices are thought to be responsible for efficient resource allocation and pricetransmission is useful in integrating markets both vertically and spatially. The study examined the extent of marketintegration of oil palm wine (OPW) and raphia palm wine (RPW) rural and urban markets’ prices in South East, Nigeria. Multi-stage sampling method was used to select 240 respondents (120 wholesalers and 120 retailers). Primary time series data of retail prices of oil palm wine and raphia palm wine were collected every four local market days. Data were analyzed using co-integration, error correction and Granger causality tests. Results of the analyses indicated that palm wine prices in all markets in the area were integrated but RPW prices indicated better integration than OPW prices. Furthermore, the price causality test revealed that past rural prices of OPW did not Granger cause its current urban prices, while the past urban prices of OPW Granger caused its current rural prices. On the other hand, past rural prices of RPW Granger caused its current urban prices whereas the past urban prices did not Granger cause its current rural prices. Government at Federal, State and Local levels should construct new link roads and rehabilitate the existing ones to ensure proximity of markets.
Vietnam, and the United States and concluded that international rice markets were partially integrated, with U.S. and Thai rice prices leading Vietnamese and Indian prices. However, possible asymmetric pricetransmission in the international rice market is ignored. To fill this gap, Ghoshray (2008) adopted a methodology analogous to the Engle-Granger two-step estimation: Enders and Siklos’s 2001 momentum threshold autoregressive model (M-TAR) is first applied to the deviation from the long-run equilibrium to investigate threshold integration between price series; for those price series with threshold integration, an asymmetric error correction model (AECM) is further estimated to capture asymmetric pricetransmission. Ghoshray found threshold integration between Thailand and Vietnam prices for high and medium rice. Additionally, Vietnam adjusted its prices faster when the price gap between the two countries was narrowing than when it was widening. These results implied that Vietnam was engaging in price undercutting behavior for world high- quality rice exports in order to compete with Thailand. Though intuitive, Ghoshray’s M-TAR-AECM methodology does not have a foundation in statistic theory, and thus the estimator properties are not well understood. We contribute to the literature by studying marketintegration and possible asymmetric pricetransmission in Thailand, Vietnam, and the United States with Hansen and Seo’s 2002 TVECM model, which is based on well-developed statistical theory. Besides the traditional top two exporters, Thailand and Vietnam, the United States is an interesting case to include in the analysis because it is the only major exporter not in south or southeast Asia.
This study, by taking average prices of producers and retailers from nine (9) different regions in Ethiopia, un- dertakes the milk price co-integrationanalysis. The methodology of the paper is both descriptive and quantita- tive in nature. The descriptive analysis indicates that the two price series are moving together which can be a sign that there is an association between producers’ price and retailers’ price, for the period between 2004 and 2013. This situation is also revealed by the trends of the percentage change in the two price series. Secondly, result of the F-statistics shows that the extents of variations in the two prices are the same which is another indi- cation that the two prices are associated. With regard to the quantitative analysis, the two prices were found to be associated which indicated the possibility of co-integration between them. This is also affirmed by the Jo- hansen’s test of co-integration implying that there is possibility of long-run relationship between the two price series, as they are expected to have common stochastic trend overtime. The policy implication is that the mar- kets are co-integrated in terms of pricetransmission. However, the negative sign of the estimate of the coeffi- cient of adjustment parameter on producers price (adjustment p ) shows that when the average price of producer is
As stated by Goletti and Tsigas (1995), knowledge of the extent to which markets are integrated is crucial for the success of market liberalisation policies and for investment decisions on marketing infrastructure by government. Indeed, the success of the reform process could be constrained by numerous structural deficiencies in the local markets, while the availability of marketing infrastructure, as well as transaction and transportation costs, action of traders, government policies on export taxes and exchange rates, have a paramount effect on pricetransmission. The exchange rate misalignment plays a major role in the rate of transmission. An increase in the world price may not pass to producer price due to the overvaluation of local currencies (Abdulai, 2000; Baffes & Gardner, 2003; Goletti & Tsigas, 1995). However, following on other similar marketintegration studies, this study uses the nominal exchange rate instead of the real exchange rate to calculate the price of coffee in US cents per pound (Krivonos, 2004). 9
Certainly, so reducing the set of pairs, the pattern becomes rougher and looses many details. However, it is believed to be in good agreement with the detailed pattern, based on Gluschenko (2002), where results of analysis across pairs of Russian economic territories are compared with those across the territory-Russia pairs. Theoretically, if two regions are integrated (or tending to integration) with the national market, then they should be integrated (tending to integration) with one another. Practically, this might fail, but only because of low power of unit root tests. There is a caveat though. There may be integration or long-run price convergence between two (and more) regions without integration with, or convergence to, the national market. Such a fact would imply that there are “price convergence clubs” among regional markets, an analog of convergence clubs in economic growth (see, e.g., Barro and Sala-i-Martin, 1992). Using comparison with the benchmark rather than all pairwise comparisons, this issue remains open. It is to be clarified by additional analyses which is performed in Gluschenko (2004b, 2004c).
Generally, meat suppliers have limited opportunities to exercise the market power during a year in most of the production cycles but there is a positive marketing margin between the wholesale and retail markets. However, this margin simply may be attributed to the marketing costs incurred by marketing agents. Also, in line with this finding the simulation result reveals that sellers in wholesale market loss only 0.34% of their revenue because of the buyers’ market power. The probability of market power exercise associated with the probability of regimes is only about less than 30%. There is a high level of the marketing margin in this regime, namely, imposing the higher prices in the retail market is possible for the suppliers of the wholesale market for a short period. On the other hand, there is serious threat of market power exercise in some cases to the extent that it was even observed that not only there is no opportunity for wholesale suppliers to increase the retail price in the second regime with over 70% probability after an increase in the marginal costs but also the coincidence of mass supply of the substitute goods with the increase in final production prices forces them to decrease the prices. Based on the results, it can be implicitly found that the mass supply by many individual units may be the reason for the limited exercise of market power in by wholesale market buyers. This means that increase in meat supply is possible considering the industrial supply of meat in many seasons or periods of a year and an increase in the number of competitors in the retail market limits the exercise of market power. Large fluctuations in the forage supply and production is not yet expected to affect the wholesale market in the industrial meat production since there is the possibility of forage storage in addition to the animal-feed imports. Furthermore, the difference between the coefficients of the wholesale prices shows that the price increase at the wholesale level in the second regime with higher probability is transmitted to the retail level with a higher coefficient indicating that it can be important in terms of policy- making. In other words, if the first regime is considered to be in accordance with the mass supply period, the price increase is strongly transmits to the retail level with an increase in the wholesale price leading to an increase in general level of prices due to the necessity of keeping meat in the consumption basket. However, the longer period in the second regime can be desirable to regulate the market considering that the price increase in the wholesale level and sever transmission of the increased price to the retail market do not take place at the same time. Further, dealing with the meat price increase is possible.
By definition, a stationary price level cannot change in the long run to clear the market precisely because stationarity implies a long term, constant value. However, as market conditions can change due to many factors, prices need to react to those changes in order to clear the market. Therefore, our analytical framework requires that the log nominal price follows a non-stationary process, otherwise they would not be market- clearing prices. If the price follows a stochastically stationary process, this reveals a poorly developed market, or a market where some participants may have market power. Our view of market efficiency follows that proposed by Lo (2004, 2005) for the Adap- tive Market Hypothesis, in which transitory arbitrage situations in the time domain and under uncertainty are allowed. Specifically, the (log) price series can be represented by an ARIMA(p, 1, q) model, with p > 0 and/or q > 0. In this case, the persistent behaviour implied in such models represents transitory arbitrage possibilities. This clearing mar- ket condition is not implied for the Efficient Market Hypothesis, including “weak-form” efficiency, because a persistent component in prices is permitted. 1
The empirical analysis in this section considers the historical annual series of wheat prices in seven cities in the USA, namely New York (NY), Philadelphia (P), Alexandria (A), Cincinnati (CI), Chicago (CH), Indianapolis (I), and San Francisco (SF). All of these cover a common period in the second part of the 19th Century. 4 The sources of data are given in Jacks (2005, 2006). Nominal prices are annual averages, and are expressed in US dollars. The selection of the markets is based on data availability and geographical representativeness. Markets in the coastal zones and inland territories in the 19th Century USA are represented. The series of nominal prices are shown in Figure 1, and their relative prices are given in Figure 2.
Sesameexportprice increases 1%, sesameexport quantity increases 0.5534%, but the price impact is not significant. When the population increases 1%, the sesameexport quantity increases also by 0.1530%, and it is significant obviously. When sesame production on partner countries increases 1%, its import quantity increases 0.1766% absolutely. When the GDP increase 1%, the import sesame quantity increase by 0.0269, and it enable the country to use budget for import product, but it is not significant. When the distance between Sudan and partner countries is 1%, the sesameexport quantity increase 0.7417%, possible reason is that agricultural structure is deferent from each other, as benefit sesame trade between them. When the sesame consumption increased by 1%, the sesame ex- ports production decreased by 0.0431, and this influence exports quantity. When two partner countries speak same language the sesameexport quantity increase by 1.899% than other countries, and it is easy for communicate trade and busi- ness. In the following, we ran the gravity model to 14 countries with Sudan, and got the relative results in the following, respectively.
between two price variables. A necessary condition for Granger causality tests is that each of the price series is stationary. The unit root tests described above found that all price series in level are non- stationary, therefore the analysis of Granger causality tests are conducted on first differentials. The basic idea of Granger (1969) causality theory is to test the null hypothesis that changes in one variable are not able to predict the other. Granger causality tests allow us to make some inferences about the direc- tion of information flows between two price series. Since the Granger causality test is very sensitive to the number of lags included in the regression, both the Akaike Information Criterion (AIC) and Schwarz Information Criterion (SIC) are used in order to find an appropriate number of lags. The causality tests results are presented in Table 4. The results show that the null hypothesis that change in the producer prices does not Granger cause change in the wholesale and retail prices is rejected at 1% significance level. There is a feedback from retail to producer prices. However, we fail to reject the null hypothesis that change in the wholesale prices does not Granger cause change in the producer prices at any significance levels. This implies that changes in the producer prices of raw milk clearly lead changes in the wholesale prices and not vice versa. The results indicate that dairy farmers in Slovakia are not price takers but can influence market prices. In the UK liquid milk market, for instance, the causation of price setting is from wholesaler to farmer and not vice versa (Shabbar and Grigoryev 2011). Furthermore, the causality direction between wholesale and retail prices flows in both directions. This means changes in the price of liquid milk in one market will affect the other. These two prices are interdependent and there is no clear price leader and follower between them. This result is in consistent with findings of Shabbar and Grigoryev (2011), who also found bi-
The empirical findings of positive asymmetries indicate that final consumers are more likely to experience a decrease in their surpluses from a price increase at the farm level than an increase in their surpluses from a farm price decrease. However, the estimation of possible welfare losses that may exist due to asymmetric pricetransmission along the food supply chains examined in the present study requires additional research in terms of further analysis of the price variation of food products under examination, estimating margins, consumer surplus and total welfare. The possible presence of high consumer welfare losses may require intervention by antitrust authorities. Recent studies have supported the argument that retailers are continually gaining market power over farmers along the food supply chain and enjoy a certain advantage over farmers because of an increase in the margins between consumer prices and farm prices (EC, 2009; Saitone and Sexton, 2012). Possible abuse of market power by retailers may have caused a widening of gross margins (i.e. the gap between the retailer and the farmer price) for a wide variety of food products. However, additional factors might have contributed to the widening of gross margins, such as the increase of agricultural and food imports, which have benefited food retailers, and the higher productivity growth in the farm sector compared to that of the retail sector, among others.
Clothing & Footwear; Gross Rent, Fuel & Power; and Transport & Communications. Most importantly, price convergence exists for the three major consumers’ expenditures items. Evidence of mean reversion among these price groups suggested that the prices of these goods and services tend to converge over time. The results also revealed that there are significance differences in price levels across Peninsular Malaysia, Sabah and Sarawak for a few goods and services. Price groups for most of the non-tradable goods like Medical Care & Health Expenses; Recreation, Entertainment, Education & Culture Service; and Miscellaneous Goods & Services show little evidence of convergence. These markets were characterized by substantial price disparity. To sum up, evidence of stationary among the price groups of Food; Gross Rent, Fuel & Power; and Transport & Communication strongly support price convergence and marketintegration within Malaysia since the expenditures of three items comprises of 75% of the total consumers expenditure. With regard to the degree of persistence of deviations from PPP after a shock, our empirical estimates showed a half-life of 6.75 years for Malaysia. Among the commodity/price groups, half-life for the tradable goods is roughly 1-2 years and for nontradable good is about 10 years. Tradable goods prices adjust more rapidly than both nontradable goods and the overall index. In conclusion, the greater the good towards the nontraded end, the less likely as PPP to hold or price converges, and the longer the expected half-life of the adjustment process.
Asia has a low degree of export concentration despite it is identified as a region with the highest export dependency. However, the case of Sri Lanka draws much attention with opposite characteristics. Exportmarket structure and products are labeled as highly concentrated. Though, the concentration pattern can be identified in both production and exportmarket, the objective of this study is only focusing on exportmarket diversification but excludes investigation on product diversification. Sri Lanka’s exports were highly depended on the EU and North-American markets recorded at 69.6% in 1999, of which market shares for USA and UK were 39.9 % and 13.4%, and later in 2000 which were 41.2% and 13.70%, respectively. Others were shared among other EU member countries. The export is partnering countries in this market are UK, Germany, Belgium, Netherlands, France, Italy, Turkey, Canada, and the USA. The rest of the market share is recorded of some Arabic, Asian, and other countries. However, the motivation of this study was triggered because of the notable change in the geographical exportmarket share of Sri Lanka since 2000. That is the market share for the USA market has declined from 41.2% in 2000 to 21.28% in 2010, and then has a slight improvement to 27.7% in 2015, whereas the market share of UK declined from 13.7% in 2000 to 10% in 2015. At the same time, market share of Asian, Arabic, and other number of countries that have very less market share each, together have an improvement during this period. Further, it should be noted here that while the overall export performance of Sri Lanka is on the decline there is a change in the structure of market share. Therefore, this study measures the degree of geographical exportmarket diversification and investigates whether this exportmarket diversification can be motivated to be used as a one of the strategies by policy makers among other policy moves such as investment promotion, import substitution, trade liberalization etc.
There is a large and expanding literature on market performance in developing countries. Starting with the classic works by Lele (1971) and Jones (1972), the literature now covers a wide range of countries and a number of sophisticated methods [e.g. Ravallion (1986); Hayami and Kawagoe (1993); Baulch (1995); Goletti, Ahmed, and Farid (1995)]. As is shown in Baulch (1996), most of the recent, sophisticated time- series models have failed to incorporate the non-linearity caused by the existence of transaction costs and non-continuous trade flows. Therefore, instead of applying these time-series methods, this paper goes back to the arbitrage condition for prices in a spatial or intertemporal competitive equilibrium [Takayama and Judge (1971); William and Wright (1991)] that forms the basis of the recent models.