Vulnerability of the Agricultural Commodity Markets in Ghana to Global Oil Price Fluctuations: An Empirical Analysis

Abstract

Despite the advocacy for climate change goals and encouragement for renewables, crude oil continues to dominate the energy markets. Crude oil price, however, is prone to global price fluctuations. Analyses of these effects on agricultural commodity markets in Ghana is neglected which this study seeks to answer. A nonlinear approach (NARDL) is employed in evaluating the effects of global oil price fluctuation on Ghana’s agricultural commodity market vulnerability, proxied by their producer prices. Different indicators are used since crude price fluctuations might have varying impacts on macroeconomic indicators in both magnitude and signs. Quarterly time series data are sourced from different institutions including data from the Bank of Ghana, FAO, and British Petroleum Statistical Review spanning from 1980: Q1 to 2019: Q4. Empirical results indicate that crude oil price fluctuations have different signs and magnitude for agricultural food commodities prices for both short- and long-runs. The findings of the study bring to bear how the agricultural activities in Ghana respond to variability in global crude oil prices. Policies mitigating changes in prices of animal products ought to be grounded on other issues instead of changes in crude oil prices. Also, programs such as “Planting for Food and Jobs” must be implemented in effectively. JEL Classification: Q02; C32; E31; H23