International Journal of Food and Agricultural Economics (Apr 2014)
MONTHLY PRICE ANALYSIS OF COWPEA (BEANS) AND MAIZE IN AKWA IBOM STATE, SOUTHERN NIGERIA
Abstract
The study examined the price transmission and market integration of Maize and Beans in the rural and urban markets of Akwa Ibom State, Nigeria. Average monthly prices (measured in naira per kilogram) of Maize and Cowpea in rural and urban markets were used in the analysis. The data was obtained from the quarterly publications of the Akwa Ibom State Agricultural Development Programme (AKADEP). The data covered the period; January 2005 to June 2013. The trend analysis showed that, prices of Maize and Beans in the rural and urban markets had exponential growth rates that were less than unity, which suggested a possible co-movement of these prices in the study area. Also, the Pearson correlation coefficient generated for the pair of rural and urban prices of Maize and Beans revealed significant linear symmetric relationships. The result implies the existence of symmetric market information flows between the rural and urban markets for Maize and Beans in the state. The Granger causality test revealed bi-directional relationships between the rural and urban price of Maize and Beans in the study area. The co-integration test revealed the presence of co-integration between the rural and urban prices of Maize and Beans. The coefficients of the price variables in the co-integration equations for Maize and Beans markets converged to unity or law of one price which implied perfect market integration in the long run. The results of the error correction model (ECM) also confirm the existence of the short run market integration between the rural and urban prices of Maize and Beans in the study area. In addition, it was discovered that, the rural price of Maize adjusted faster to the stable state in the long run than the urban price. Likewise, the urban price of Beans adjusted faster than its corresponding rural price. The index of market connection (IMC) supported the high short run market integration for prices of Maize and Beans in rural and urban markets. Based on the findings, it is recommended that, the Akwa Ibom State government should continue to provide marketing infrastructures and reduced externality costs in order to improve further the symmetric nature of information flow among Maize and Beans markets in the state. Also, individuals, trade unions, NGOs’ and government should established market information units and awareness programmes on mass media to facilitate efficient communication flows of Beans and Maize markets in the state.
