Producer to retailer price transmission in cereal markets of Ethiopia

Muhammed Usman and Mekbib Haile

Food Security: The Science, Sociology and Economics of Food Production and Access to Food, 2017, vol. 9, issue 4, No 13, 815-829

Abstract: Abstract This paper investigates price transmission between producer and retail prices of teff, wheat, and maize in Amhara and Oromia, the two major cereal markets in Ethiopia. Market and cereal specific asymmetric error correction models were estimated to analyze producer-retail price transmission using monthly data from 2001 to 2011. For seven out of eight crop-market combinations, with the exception of the Amhara wheat market, we found no evidence of asymmetric price transmission from producer to retail prices in the long run. Neither contemporaneous nor long-run price transmission asymmetry was found in either the Amhara or Oromia teff markets. This was also the case for the maize market except that there existed a short-run asymmetric price transmission that disappeared in the long run in Oromia. We therefore conclude that there is no strong empirical evidence to support the purported ‘market power’ or ‘inventory holding’ behaviour in the Ethiopian cereal markets to explain asymmetric vertical price transmission in the long run. The evidence of asymmetric price transmission for the Amhara wheat market, unlike the wheat market in Oromia, may indicate some differential in the quality of infrastructure and the length and complexity of wheat value chains between these two markets. Symmetric price adjustments in these cereal markets suggest that input price changes may have positive long run implications for food security and welfare of the poor in Ethiopia.

Keywords: Asymmetry vertical price transmission; Error correction model; Cereals; Ethiopia (search for similar items in EconPapers)
JEL-codes: C32 D40 Q13 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s12571-017-0692-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ssefpa:v:9:y:2017:i:4:d:10.1007_s12571-017-0692-0

Ordering information: This journal article can be ordered from
http://www.springer. ... ulture/journal/12571

DOI: 10.1007/s12571-017-0692-0

Access Statistics for this article

Food Security: The Science, Sociology and Economics of Food Production and Access to Food is currently edited by R.N. Strange

More articles in Food Security: The Science, Sociology and Economics of Food Production and Access to Food from Springer, The International Society for Plant Pathology
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().