Epsilon Archive for Student Projects

Abstract

World food price hikes in 2007/2008 and 2012 plunged several people into hunger and poverty in developing countries. The situation stimulated responses from policy makers in some of these countries by trying to boost local production of crops in which they are self-sufficient. Integrated agricultural marketing systems are needed in the process in order to ensure efficient distribution and improvement in welfare of all actors involved in the consumption and production chain. The food balance sheet for Ghana shows that the country is self-sufficient in root and tuber crops such as cassava and yam. The main objective of the study is to determine the extent to which regional yam markets are integrated. Using monthly wholesale price series from 2006 to 2013, the study assesses the integration dynamics between five regional yam markets in Ghana. From the consistent threshold autoregressive model of cointegration, the study found that regional yam markets in Ghana are integrated. Thus, prices between local markets (Kumasi, Tamale, Techiman and Wa) and the reference market (Accra) are interdependent on each other both in the long-run and short-run, although there were some evidences of unidirectional interdependence. The Kumasi-Accra, Tamale-Accra and Techiman-Accra market pairs exhibited asymmetric adjustments whiles Wa-Accra market pair exhibited a symmetric adjustment. From the impulse response estimations, we found that different time periods are required for equilibrium to be restored when there is a shock in one pair of the four market combinations considered. The speed of adjustments was also dependent on the direction (positive or negative) of the shock or deviation. Overall, adjustment periods range between 8 months to 27months with the minimum adjustment time occurring between Techiman-Accra. In some cases, price shocks were persistent and required a long time to adjust. The integration found between regional markets could be attributed to improvement in ICT tools, such as mobile phones, as has been noted in some reviewed studies. The high and persistent adjustment times recorded between some market pairs may however, be attributed to comparatively low value-to-volume ratio of yam compared to other market commodities. This makes the cost of transportation a major portion of its price setting.