Market Integration and Spatial Price Transmission in Niger Grain Markets

Seydou Zakari, Liu Ying and Baohui Song

African Development Review, 2014, vol. 26, issue 2, 264-273

Abstract: This paper investigates price transmission from international and regional markets to Niger domestic grain markets using monthly wholesale prices. Cointegration and error correction models were employed to analyze the degree of price transmission. Tests of causality were also performed. In general, the results showed that grain markets in Niger respond to negative and positive shocks in regional and international markets differently. Maize and rice markets have high speed of adjustments to world prices compared to millet and sorghum markets. The speed of adjustment of prices to the long‐run equilibrium varies between 30 percent, 35 percent, 48 percent and 40 percent respectively for millet, sorghum, maize and rice prices. Nigeria, Burkina‐Faso, Mali, Togo and Vietnam markets have shown significant transmission in Niger markets. Supply and demand shocks in these markets will definitely affect Niger food prices. Based on this analysis, we suggest that Niger should develop a proper trade policy with its neighboring countries to facilitate regional market integration. This will enable Niger to import cereals from regional surplus‐producing areas to supply its food shock regions to reduce the negative impacts of price shocks on households. For rice, Niger should encourage local production to limit high dependence on international markets.

Date: 2014
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