Price Variability, Co-integration and Leadership in the Market for Locally Produced Rice: A Case Study of Southwest Zone of Nigeria

Most studies on local rice in Nigeria were geared toward increasing production, consumption or competitiveness. Achieving these requires a study on extent of pricing contacts in the market for local rice. Secondary data consisting of urban monthly retail price series in the six southwest states of Nigeria were collected and analyzed. Analytical techniques included Augmented Dickey Fuller (ADF), Johansen Co-integration and Granger Causality models. Empirical results indicated that growth in retail prices was highest in 2004 and in Ogun (48.69%) and Ondo (45.36%) implying that local rice was more costly in these states. Retail prices were more volatile in Lagos (37.3%) while the least price volatility was recorded in Ogun (30.4%). The ADF test showed all price series were non-stationary at their levels but were stationary after first-difference. Pair-wise market integration model indicated that prices were co-integrated at either 1% or 5% levels of significance connoting high degree of marketing efficiency. Multiple co-integration model also indicated five co-integrating equations in six, at 5% level thus validating the result of pair-wise market co-integration tests. Granger causality model revealed that the supply-deficient markets in Lagos and Osun were driving prices in other states. These results may have arisen from the storability of rice and closeness of the market locations. Despite this very high level of linkage, there is the need for all stakeholders in the market to continue to effectively perform their roles so that economic benefits derivable from this scenario of strong pricing contacts can be fully realized and sustained.

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 Record created 2017-04-01, last modified 2018-01-22

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