Analysis of Rice Market Integration and Price Transmission in the North East/West Zones, Nigeria.

Abstract

The study analyses rice market integration in the North East and the North West zones in Nigeria. Rice price data from 1999 - 2018 was obtained from the National Bureau of Statistics (NBS), National Agricultural Extension Research and Liaison Services (NAERLS), and the Federal Ministry of Agriculture and Rural Development (FMARD). The data were subjected to analysis using the Augmented Dickey-Fuller test, Johansen Cointegration test, Error Correction Model, and Multiple Regression model. The result reveals that market price series were not stationary at level but became stationary after the first difference at either p < 0.01 or p < 0.05. The findings also establish that 58% of the markets were integrated. However, the speed of price adjustment to long-run equilibrium for most states is very slow. The result also reveals that the significant factors that determine the cointegration of rice markets are: the distance between markets (p < 0.001) and per capita production (p < 0.001) in the supplying market. Also, good road infrastructure leads to a higher degree of market integration. The study recommends the implementation of viable pricing policies, rehabilitation of the existing road networks, construction of feeder roads, and adoption of measures to increase rice production.