Intercommodity price transmission: an analysis of Tanzanian maize and rice markets
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Date
2017
Authors
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Publisher
Sokoine University of Agriculture
Abstract
The overall objective of the present study was to examine price linkages between maize
and rice to inform food policy in Tanzania. The specific objectives were: i) to analyze
trends in monthly wholesale prices for maize and rice in selected markets; ii) to determine
the degree of price transmission between maize and rice; iii) to determine the direction of
causality between maize and rice prices. A purposive sampling was used to draw a sample
of ten (10) markets /regions. The study used monthly wholesale prices for maize and rice
from July 1992 to December 2012. The data were obtained from the Ministry of Industry
and Trade in Tanzania. The study employed descriptive and econometric (Co-integration
and causality techniques) analyses. Microsoft Excel, SPSS and STATA were used during
the analyses. Prices of the considered commodities follow an upward trend with frequent
fluctuations in specific periods. This trend displays some co-movement. Seasonal indices
follow the cropping cycle for the commodities under investigation. Price variation for the
two commodities is consistently high in all markets. Moreover, many of these are
connected. ECM reveals that many of the market pairs denied price transmission between
the two commodities in the short-run with three (3) months lags. In many cases,
bidirectional causality was observed between the two commodities rather than
unidirectional causal reference. The study recommends that (i) the government should
make efforts to reduce price instability in agricultural markets (ii) The government should
improve transportation infrastructures including where the crops are produced so as to
ensure movement of crops in all weather conditions (iii) Also more researches on
intercommodity price transmission should be conducted and the analysis should exploit
factors like information on marketing and transfer costs.
Description
A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN
AGRICULTURAL ECONOMICS OF SOKOINE UNIVERSITY OF
AGRICULTURE, MOROGORO, TANZANIA. 2017
Keywords
Intercommodity price transmission, Rice markets, Maize markets, Food policy, Tanzania