Pricing Contacts and Price Leadership in the Market For Imported Rice In Southwest Nigeria
Department of Agricultural & Resource Economics, The Federal University of Technology, P.M.B. 704, Akure, Ondo State, Nigeria
Rice Genomics and Genetics, 2015, Vol. 6, No. 5 doi: 10.5376/rgg.2015.06.0005
Received: 07 Apr., 2015 Accepted: 10 Jun., 2015 Published: 16 Jun., 2015
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Preferred citation for this article:
Agunbiade B.O., Mafimisebi T.E., and Ikuemonisan E.S., 2015, Pricing Contacts and Price Leadership in the Market For Imported Rice In Southwest Nigeria, Rice Genomics and Genetics, Vol.6, No.5 1-5 (doi: 10.5376/rgg.2015.06.0005)
As Nigeria relies on importation for 56% of its national annual rice consumption, rice availability and prices are major welfare determinants in resource-poor households. Consequently, rice market integration, which will occasion price stability and pricing efficiency, are vitally important. This study examined pricing contacts in the imported rice market (IRM) in Southwest, Nigeria, using time-series data which were first subjected to stationarity tests. The major analytical tools used were growth rate model, coefficient of variation (CV) and Johansen co-integration model. Average growth in price was highest in Osun Market (33.4%), followed by Oyo Market (31.3%) and Ondo Market (29.8%). The highest average growth rate was recorded in year 2008 while negative growth rate was obtained across all IRM locations in the year 2010. This could be linked to lifting of the ban on rice imports that engendered increased importation immediately afterwards. Retail prices were more volatile in Oyo Market (35.8%) and least volatile in Ogun Market (31.1%). The generally low price variability implied that consumers can effectively plan rice expenditure. The ADF and PP tests revealed that all prices were not stationary at their levels but they attained stationarity after first-differencing. Pair-wise market integration tests revealed 14 out of 15 market pairs had prices which were spatially integrated on the long-run. Johansen’s multiple co-integration model results indicated 4 co-integration vectors out of 6 meaning that prices were stationary in 4 directions and non-stationary in 2. The Granger causality model showed that IRM locations deficient in imported rice were driving the prices in market locations with surplus of the commodity. It was recommended that the problem posed by highly inefficient and fragmented distribution and transportation systems be addressed for the rice traders and consumers to take full advantage of the high spatial market integration in the region.
Retail price; Urban markets; Imported rice; Price co-movements; Market linkage; Southwest zone; Nigeria