This study examined the dynamism of price movement between markets and its implication on pricing efficiency in maize markets. Primary data were collected using interview guides. A total of 240 respondents were selected using stratified random sampling technique in 6 rural and 6 urban markets in Ogun State. Weekly retail prices of yellow and white maize for five years (January 1999-December 2003) were analysed using the Bivariate Cointegration test and the Granger causality test to detect the presence and level of price integration.
In Ogun State, domestic production of maize increased by 9 percent a year between 1990 – 2001. Although the growth in maize production may be attributed to cultivating more crop area and/or the adoption of improved open pollinated and hybrid maize varieties which provide the major stimulus for increased yield on the average. Annual growth rate of maize yields was 9.08 percent during 1990 - 2001. Most of the growth came from yellow maize, which increased at 8.92 percent annually, compared with 3.57 percent for white maize. In comparison with other states in South-West however, the Ogun state average yield of 1.41 metric tons per hectare is the lowest.
i. How integrated are the maize markets in the study area?
ii. Are there evidences of lead-lag relationship among spatial maize markets in Ogun State?
iii. Are there evidences of communication of information to integrate spatial markets?
iv. How long does it take information to become common knowledge across spatially dispersed markets (temporal effect)?
v. Are the market systems competitive or not?
Table of Contents
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background Information of Nigeria
1.2 Importance of Agriculture to Nigeria’s Economy
1.3 Economic Role of Maize in Nigeria
1.3.1 Trends in maize production and area harvested
1.4 Statement of Research Problem
1.5 The Basic Research Questions Include:
1.6 Research Objectives
1.7 Hypotheses of the Study
1.8 Justification of the Study
1.9 Scope of Research
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Previous Studies on Market Integration
2.2 Theoretical Frame Work
2.2.1 Concept of market integration
2.2.2 Concept of price transmission
2.2.3 Price transmission notions and components
2.2.4 Distinguishing the concept of Market Integration (MI), the law of one price (LOP) and market segmentation (MS) by definition;
2.2.5 Concept of structure, conduct and performance
2.2.6 Concept of non-stationarity and cointegration
2.3 Characteristics of Agricultural Commodity Retail Markets
2.4 Agricultural Marketing
2.5 Benefits of Market Development to Agricultural Commodity Marketing
CHAPTER 3
3.0 RESEARCH METHODOLOGY
3.1 Study Area
3.2 Data Sources and Method of Collection
3.3 Sampling Procedure
3.3.1 Abeokuta zone
3.3.2 Ikenne zone
3.3.3 Ijebu ode zone
3.4 Analytical Techniques
3.4.1 Descriptive statistic
3.4.2 Test of Series Stationarity and Equation Cointegration
3.4.3 Dynamic price relations
3.4.4 Granger-causality test
3.5 Limitations of the study
CHAPTER FOUR
4.0 RESULT PRESENTATION AND DISCUSSION
4.1 Marketing Characteristics of Maize Traders in Ogun state
4.1.1 Profile of Sample Maize Traders.
4.1.2 Access to Infrastructural Facilities
4.1.3 Marketing characteristics of sample maize traders.
4.1.4 Associated Cost with Maize Trading
4.1.5 Cost and Returns of Maize Retailing
4.1.6 Sources of Market information and Strategies for Price Fixing
4.2 Integration of Maize Markets
4.2.1 Unit root tests of Maize Price Series
4.2.2 Cointegration Test of Maize Price Series
4.3 Results of the normalized cointegration coefficients between Markets
4.3.1 Abeokuta zone
4.3.2 Ikenne zone
4.4 Granger Causality Test
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND POLICY IMPLICATION
5.1 Summary
5.2 Conclusions
5.3 Policy Implication
Research Objective & Focus Areas
The research examines the dynamism of price movements across different maize markets in Ogun State to determine the level of market integration, pricing efficiency, and the lead-lag relationships of price discovery. The study explores how market information transmission, infrastructure, and institutional frameworks affect the competitiveness of maize retailing.
- Analysis of spatial market integration and price co-movement.
- Evaluation of maize marketing characteristics and trader socio-economics.
- Investigation of lead-lag price discovery using Granger causality tests.
- Assessment of structural and institutional constraints on market efficiency.
Excerpt from the Book
2.2.3 Price transmission notions and components
Given prices for a commodity in two spatially separated markets P1t and P2t, the law of one price and the Enke – Samuelson – Takayama – Judge model postulate that at all points of time, allowing for transfer cost (C), for transporting the commodity from markets 1 to market 2, the relationship between the prices is as follows: P1t = P2t + C (1)
If a relationship between two prices, such as (1) holds, the markets can be said to be integrated. However, this extreme case may be unlikely to occur, especially in the short run. At the other end of the spectrum, if the joint distribution of two prices were found to be completely independent, then one might feel comfortable saying that there is no market integration and no price transmission. In general, spatial arbitrage is expected to ensure that prices of a commodity will differ by an amount that in at most equal to the transfer cost with the relationship between the prices being identified as the following inequality: P2t – P1t = C (2)
The spatial arbitrage condition encompasses price relationships that lie between the two extreme cases of the strong form of the law of one price and the absence of market integration. Depending on the market characteristics, or the distortions to which markets are subject, the two price series may behave in a plethora of ways having quite complete relationships with prices adjusting less than completely or slowly rather than instantaneously and according to various dynamic structures are related in a non linear manner. Given the wide range of ways prices may be related, the concept of price transmission can be thought of as being based on three notions or components (Prakash, 1998; Balcombe and Morisson, 2002).
These are: co–movement and completeness of adjustment which implies that changes in prices in one market are fully transmitted to the other at all points of time.
Summary of Chapters
CHAPTER ONE: Provides an overview of the Nigerian agricultural landscape and the economic importance of maize, alongside the specific research problem and objectives regarding market integration.
CHAPTER TWO: Reviews the theoretical literature on market integration, the concepts of price transmission, and the Structure-Conduct-Performance (SCP) framework used to assess market competitiveness.
CHAPTER 3: Describes the research methodology, including the study area, sampling techniques for the 240 respondents, and the econometric models (unit root, cointegration, Granger causality) applied.
CHAPTER FOUR: Presents the analysis of marketing characteristics, descriptive statistics of traders, and the empirical results regarding the integration of maize markets in Ogun State.
CHAPTER FIVE: Synthesizes the research findings, offers concluding remarks on the state of market integration in different zones, and proposes policy implications for market infrastructure and regulation.
Keywords
Market Integration, Maize, Ogun State, Price Transmission, Cointegration, Granger Causality, Agricultural Marketing, Pricing Efficiency, Spatial Arbitrage, Small-scale Traders, Structural Adjustment, Market Competitiveness, Food Security, Transaction Costs, Infrastructure.
Frequently Asked Questions
What is the fundamental focus of this research?
The work investigates the dynamics of maize price movements across different spatial markets in Ogun State to determine if these markets are integrated and efficient.
What are the primary thematic areas covered in this study?
The study covers trader characteristics, market structure, the role of market associations, transaction costs, and the technical analysis of price relationships using econometric time series models.
What is the main research objective?
The primary goal is to determine the efficiency of price movement between maize markets and to identify the presence and level of long-run integration and lead-lag relationships in the study area.
Which scientific methods are employed in this analysis?
The research uses stratified random sampling for primary data collection and applies the Augmented Dickey-Fuller unit root test, the Johansen cointegration test, and the Granger causality test for empirical analysis.
What is the scope of the main section of the dissertation?
The main body focuses on the socio-economic profile of traders, the cost-returns analysis of maize retailing, and the statistical testing of cointegration and causality between various rural and urban maize markets.
Which keywords characterize this work?
Key terms include market integration, maize, Ogun State, price transmission, cointegration, and market competitiveness.
What did the study conclude regarding markets in the Abeokuta zone compared to other zones?
The results reveal that markets in the Abeokuta zone show the highest level of integration, whereas markets in the Ijebu Ode zone appear to be segmented or independent.
Why are market associations relevant to the findings?
The study found that while traders belong to associations, these groups often lack the power to effectively regulate prices or overcome major logistical constraints like poor infrastructure.
How does transport cost influence the findings?
Transport costs represent a significant portion of total transaction costs, exacerbated by poor road networks and unstable petroleum pricing, which directly impact the level of market integration.
- Arbeit zitieren
- Iruansi Itoandon (Autor:in), 2007, Spatial Retail Price Integration of Maize Markets in Ogun State, München, GRIN Verlag, https://www.grin.com/document/182670
