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Citation Information

Type Journal Article - International Journal of Agriculture and Forestry
Title Analysis of Monthly Price Transmission of Local and Foreign Rice in Rural and Urban Markets in Akwa Ibom State, Nigeria (2005 to 2013)
Author(s)
Volume 4
Issue 1
Publication (Day/Month/Year) 2014
Page numbers 6-18
URL http://article.sapub.org/10.5923.j.ijaf.20140401.02.html
Abstract
The study examined the price transmission and market integration of local and foreign rice in rural and urban markets of Akwa Ibom State in Southern region of Nigeria. Average monthly prices (measured in naira per kilogram) of local and foreign rice in rural and urban markets were used in the analysis. The data came from the quarterly publication of the Akwa Ibom State Agricultural Development Programme (AKADEP). The data covered January 2005 to June 2013. The findings show that, prices of local and foreign rice in rural and urban markets has constant exponential growth rate of 0.59% which suggests perfect co-movement for rural and urban prices of local and foreign rice in the study area. Also, the Pearson correlation coefficient matrix revealed that, the rural price of local and foreign rice has linear symmetrical relationships with their corresponding urban prices. The result connotes the existence of symmetric market information flows between the rural and urban rice markets in the state. The Granger causality test revealed bidirectional relationship between rural and urban price of local and foreign rice in Akwa Ibom State, Nigeria. The results of the co-integration test revealed the presence of co-integration between the rural and urban prices of local and foreign rice as well as support the hypothesis of perfect price transmission between the two markets in the study area. The coefficients of the price variable in the co-integration equations for local and foreign rice markets converge to unity which connotes perfect market integration in the long run. The results of the error correction model (ECM) also confirm the existence of the short run market integration between the rural and urban prices of local and foreign rice in the study area. In addition, the result shows that, the price of local rice in both rural and urban markets adjusted faster than prices of foreign rice once there is an exogenous shock in the marketing process of rice in Akwa Ibom State. The index of market concentration (IMC) supports the high short run market integration between prices in rural and urban markets for local and foreign rice commodities and the quick adjustment of rural price of local rice in relative to rural price of foreign rice. Based on the finding, it is recommended that, the state government should continue to provide marketing infrastructures to improve the symmetric nature of information among participants in rice marketing in the state. Attempt should be made to reduce excessive externality costs in rice marketing in order to fully reap the benefit of rice market integration in the state.

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